Information Technology: No Signs of a Slowdown

When it comes to innovation and a talented workforce, these are the locations that merit a close look.

The information technology (IT) industry sector continued growing in 2007, adding 91,400 net jobs for a total of 5.9 million jobs in the U.S., according to the American Electronics Association (AeA), the nation’s largest high-tech trade association. The AeA recently released its 11th annual Cyberstates report detailing national and state trends in high-tech employment, wages, and other key economic factors for all 50 states, the District of Columbia, and Puerto Rico. The report, Cyberstates 2008: A Complete State-by-State Overview of the High-Technology Industry, shows that the 2007 gains (1.6%) are on top of job gains of 139,000 in 2006 and 87,400 in 2005. Cyberstates 2008 is based on U.S. Bureau of Labor Statistics data.

“While we are certainly pleased to report that the technology industry added jobs nationally and across nearly every state, national tech growth slowed in 2007, making the story good but not great,” says Christopher Hansen, president and CEO of AeA. “Tech jobs make critical contributions to the U.S. economy in terms of innovation, and pay extremely well—the average tech industry wage is 87 percent higher than the average private sector wage. In 47 cyberstates the average high-tech wage is at least 50 percent higher than the average private sector wage, and in four cyberstates this differential is more than 100 percent. While these are the types of jobs every state wants to attract, the labor market remains tight, with unemployment rates below two percent across many tech occupations.”

An examination of the sectors reveals that software services added 82,600 jobs in 2007, up for the fourth year in a row. Engineering and tech services added 45,800 jobs in 2007, also up for the fourth year in a row, putting it at an all-time high. On the downside, high-tech manufacturing lost 29,800 net jobs in 2007. Seven of the nine tech manufacturing sectors lost jobs in 2007.

“AeA is concerned that future growth is being jeopardized unless the U.S. prepares itself for a vastly more competitive global marketplace,” says Hansen. “The tech industry and the country risk an impending slide in U.S. global competitiveness, caused by negligence on the part of our political leaders to adequately invest in scientific research, improve our education system, and allow the best and brightest from around the world to work in the U.S.”

Here are some of the cities and regions that are creating the right conditions for information technology growth.

When IT Needs Talent, IT Needs Austin, TX

Technology runs on talent, and nothing is more valuable to a technology company than a deep and renewable reservoir of experience. It’s that depth of talent that sets Austin, Texas apart as a center for IT innovation.

According to a 2008 study by American City Business Journals, Austin was ranked the 12th strongest metro area in the U.S. for brainpower, based on residents’ educational attainment.  Within the 100 miles surrounding Austin are 38 colleges and universities working closely with local employers to produce world-class research and an educated, motivated workforce. Key among these is the University of Texas at Austin, a leading research university that every year graduates a new crop of talented engineers and innovators. This provides an almost endless pool of young, well-educated talent and a fertile source of new ideas.  It’s no accident that Austin inventors have been assigned patents at a rate that has outstripped other metropolitan areas during the past five years—a fact that led The Wall Street Journal to rank Austin one of the most inventive cities in the U.S. in 2006.

A workforce this educated and productive doesn’t happen by chance. Austin’s business friendly and entrepreneurial environment was fueled by visionary leaders who recognized decades ago that Austin could be a hub for innovation at the dawn of the 21st century. They took action to turn Austin into a “technopolis” through a unique partnership of business, community and government leadership. As a result, Austin has become a hub of technology development and manufacturing, with its roots in semiconductor manufacture. The expansion of software technology in the 1990s accelerated Austin’s focus on IT, and Austin businesses are now playing a leading role in the next generation of IT innovation.

One important tool for helping continue this is “Opportunity Austin,” a regional strategy designed by the Austin Chamber of Commerce to create jobs and drive economic prosperity for the 1.5 million residents of the five-county metropolitan area. Opportunity Austin focuses on capitalizing on existing strengths, recruiting and targeting diverse sectors, stimulating entrepreneurship and new enterprises, marketing Austin effectively and improving regional competitiveness.

Austin’s talent advantage is why leading IT companies like Perficient, a consulting firm that serves Global 2000 clients throughout the U.S., are based in Austin. As Perficient’s chairman and CEO, Jack MacDonald, who serves as the vice chairman of technology on the Board of Directors at the Austin Chamber, explains, “Austin has one of the best educated and more entrepreneurial workforces in the nation, and maybe the world—and that’s what you need if you’re building a high-growth high-tech company.”

MacDonald and other CEOs like him appreciate the Austin area’s affordability, which makes labor costs lower and makes it easier to attract and retain talent, especially the young, educated “creative class.” Austin offers considerably more affordable living than other major tech centers, with a median home price 16% less than the national average, and one of the lowest state and local tax burdens in the nation.

Austin is one of the top regions in the country for venture capital investment: venture capitalists poured more than $650 million into Austin during 2007, and on a per capita basis, only Boston, San Francisco, and San Jose take in more venture capital investment than Austin.

Perficient is hardly alone in seeing the advantages of an Austin headquarters. Many IT companies, among them ACS Dateline, Austin Logistics, Bazaarvoice, Borland Software, BreakingPoint Systems, Motive, National Instruments, nGenera, Postilion, and Troux Technologies, call Austin home. Other leading companies have a significant presence in the Austin metro area, including CA, CSC, Google, IBM, Motorola, Northrop Grumman Information Technology, Sun Microsystems and Unisys Corp. All told, one third of the private sector payroll in Austin is generated by technology companies.

The result of this is a city with an economy that continues to thrive, and robust job growth. The Texas Workforce Commission reported that in 2007 the Austin area experienced 3.1% job growth, while the U.S. average was 1.1%. In 2008 the Austin-Round Rock metropolitan area was ranked as the fourth best-performing [large] city in the nation at creating and sustaining jobs [by the Milken Institute], vaulting up 16 places from the prior year. The Milken report called Austin “a thriving example of a 21st-century knowledge-based community,” which has continued to be among the country’s leaders in job growth—and in the importance of the high-tech sector to its local economy.

Another national ranking, this one by Trade & Industry Development magazine, identifies Austin as one of the five leading cities in the U.S. at driving a successful local IT sector. These cities employ people in computer and math sciences at more than twice the national average, and spend nearly four times the national average on research & development.

Schertz: A Premier Location in Texas

Schertz, TX is on the path to become a premier Texas community thanks to unique social, environmental and economic advantages. The City of Schertz, located 15 miles northeast of downtown San Antonio, saw a 35% jump in population between 2000 and 2007. The growth through 2007 is attributable to a diverse economic base, close proximity to San Antonio, an excellent utility and information infrastructure and a population primarily comprised of military veterans and college-educated workers. Its stature as a city with access to fiber capabilities and its workforce has helped numerous Fortune 1000 companies open operations within the city limits. Due to the large military, financial, telecommunication, and healthcare industries, the San Antonio area has an expansive fiber network consisting of over 10,000 fiber sheath miles and over 700,000 fiber strand miles. Interstate 35, which runs parallel to the state’s main fiber optic lines, intersects Schertz and affords many of the businesses in the industrial parks to utilize these fiber capabilities. AT&T and Verizon, who are the city’s primary fiber optic providers, are able to customize redundancy and scalability solutions for their end users. Some Fortune 500 companies have already seized Schertz’ comparative advantage and opened data centers and other operations dependent on expansive fiber capabilities and economically competitive utility rates.

Companies choosing Schertz are able to meet their data and power needs because of the fiber and power providers’ ability to offer unique redundancies for critical operational capacities. As more companies learn about the city and its advantages, Schertz is confident the city and its economic development partners can accommodate the growth well into the future. The city’s three industrial parks, which comprise more than 600 acres at full capacity, continue to attract new investment. CPS Energy, which has over 670,000 electric customers, is the primary electricity provider to the city’s industrial parks and is competitive when compared to other utilities across the state and nation. It has a total generation capacity of 5,510 megawatts from a variety of sources and maintains a reserve generation capacity in excess of 18%. It also offers an economic incentive rider applicable to companies that bring, or add, at least 10MW of new electric load to Schertz. Fortune 1000 companies such as Valero, Verizon, Tesoro, Sprint, and PSS World Medical have operations within the city, and smaller, innovative firms such as VRTX Technologies, Cal-Tex and ITM chose Schertz as headquarters for their operations. The steadied expansion of its industrial economic base has brought primary employers whose goods and services serve national and international markets. Schertz has quality utilities and services with property taxes that are 40% lower than in San Antonio. Immediate access to two major thoroughfares, rail lines and close international airport access provide excellent transportation options for the movement of goods and services.

In 2007, Schertz received two accolades—Forbes magazine ranked Schertz “The 91st Fastest Growing Suburb in the U.S.” and Money magazine named it number 40 of “the Top 100 Best Places to Live in the U.S.” These awards help solidify what its residents already knew— Schertz is the place to be for continued economic prosperity. This growth has helped provide the region with an adequate labor pool for an increasingly diverse economic base. The city’s labor pool, coupled with the region’s 925,000 area workers, offers businesses the skills, education, and long-term employees they need to compete in today’s global markets. Partly fueled by San Antonio’s tremendous growth in various economic sectors, including information technology, Schertz is a welcoming and open place for businesses that depend on technology to drive growth and innovation. With nearly 32,000 residents and many more expected well into the future, Schertz continues to attract the families and quality workforce needed to help the city shape itself as a premier Texas destination.

San Antonio: Building an IT Powerhouse

The IT industry in San Antonio, TX generates an annual economic impact of more than $5.3 billion and employs nearly 12,000 people, according to a 2005 IT Economic Impact Study commissioned by the Greater San Antonio Chamber of Commerce. This impact excludes data derived from the military, which is a significant employer of IT professionals in the San Antonio region. And, with the Department of Defense transforming San Antonio’s Fort Sam Houston into America’s hub for all military medical training and research, San Antonio expects a significant increase in IT activity between now and 2011.

In September, Microsoft Corporation held a grand opening for its San Antonio data center, which was described as a place “where the internet lives.” The data center will hold tens of thousands of servers supporting Microsoft’s large-scale, worldwide Web services for their Online and Live Services businesses.

“Microsoft is thrilled to continue our long-term relationship with the San Antonio community, working together to build the area as a center of innovation,” says Mike Manos, Microsoft’s general manager of data center services for Global Foundation Services. “Microsoft looked at 31 variables in narrowing its site selection to San Antonio, including the availability of fiber optic networks, affordable energy rates, and work and life balance for our employees that the city offered.”

“Microsoft’s announcement in 2007 generated the cluster effect we were hoping for,” says Mario Hernandez, President of the San Antonio Economic Development Foundation.

The San Antonio region is an area of 1.7 million people with a work force of more than 927,000. Surveys indicate that nearly 6,000 IT professionals are employed at just 13 large non-IT businesses.

San Antonio sees the growing need for IT professionals and has made a strong commitment to training a 21st century workforce. The Alamo Community Colleges system developed the Information Technology and Security Academy in 2005 for junior and senior high school students to obtain hands-on training in computer hardware, networking, programming and the fundamentals of information security. The University of Texas at San Antonio created the Center for Infrastructure Assurance and Security in 2001 as a research and operational unit of the university’s Information Assurance program.

IT Companies Love Paducah, KY

In the global economy of “I need it now,” IT is a 24/7 critical component of business.  Paducah/McCracken County in Kentucky exhibits a diverse utilization of IT from intricate call center operations to complex manufacturing and software development to river operations management. Often, customization is the key to optimizing the value of information.

Here are a few examples of how that is happening now in western Kentucky.

Located at the confluence of the Ohio and Tennessee Rivers, Paducah has long been recognized as a strategic location for river operations. Using IT in ways that are unique to their industry, Seamen’s Church Institute created the first simulator for river training and has utilized their computer-based simulation system to teach thousands of inland mariners. Instructors use this tool to improve a mariner’s navigational and bridge-management skills in a risk-free environment.

A one-of-a-kind company, Matrix Engineering is using IT to provide energy solutions. Its radical innovations in petcoke technology allow companies to utilize a mobile test unit and sophisticated software to evaluate the feasibility and effectiveness in using the significantly cheaper fuel petcoke as an alternative to the higher-priced natural gas or fuel oil. Matrix Engineering is the leader in the industry and the only company offering the mobile test unit and a “try before you buy” opportunity.

Walt Tyler of Dynatorch says “Without IT, my machines don’t do anything.”  His fast growing operation develops and manufactures high performance plasma CNC cutters. Today, Dynatorch clients include Nautilus and Kohler.

Credit Bureau Systems is an outbound call center that handles collections and billing services for 90 hospitals in 21 states. Credit Bureau Systems is now developing an Internet-based revenue cycle platform for physicians. This Web-based technology addresses the challenges of managing the billing and collection functions in physician offices and combines Zir Med’s expertise in healthcare Electronic Data Interface solutions with Credit Bureau Systems 56 years of experience in healthcare collections.

Since 1965, Computer Services, Inc. (CSI) has helped financial institutions and corporate entities simplify their data processing needs in compliance, security, fraud prevention, eBusiness and payment solutions. “Anticipation of faster data transfer has always been on the front burner at CSI,” says chairman John Williams.

The CSI communications network, one of the largest in the Midwest, is built around a high-speed, telecommunications system that connects nearly 24,000 on-line terminals including personal computers, teller terminals, ATMs and remote item processing systems.

CSI is the anchor tenant in the 42-acre Technology Center, a campus environment featuring 1.5 to 3.5 acre available lots along with massive planned green space. BellSouth maintains a self-healing fiber loop to the park that provides uninterruptible service. Another pristine site in Paducah/McCracken includes the Information Age Park, a premier light industrial and business park, fully served by utilities and a redundant fiber loop.