Tech Industry Site Selection Activity Creating Huge Strain on Labor Markets
by King White, on Nov 27, 2018 4:45:11 PM
The demand for IT-related labor has exploded as companies rapidly deploy new technologies and products in the new age of exponential technology growth. The recent Amazon HQ2 site selection search is clear evidence of how intense and dramatic the process has become. As both tech and non-tech companies battle for IT labor such as software development and engineering talent, the site selection process has become more complex and the demand for economic incentives has increased. To help evaluate the impact on your site selection decisions, we have identified some of the recent IT project announcements and labor market trends.
Over 500,000 tech jobs needed over next decade
The U.S. Bureau of Labor Statistics (BLS) is projecting that employment of computer and information technology occupations will grow 13% from 2016 to 2026, which is faster than the average for all occupations. As a result, there will be demand for about 557,100 new tech jobs. The highest demand for these workers will be from cloud computing, the collection and storage of big data, and information security.
Colleges are only graduating about 42,000 computer science students per year
According to Integrated Postsecondary Education Data System (IPEDS), there were 41,207 U.S. college students who graduated with a computer science degree in 2017. If the demand is 50,000 new jobs per year based on the BLS projections, then there will be a deficit of over 8,000 jobs per year — creating challenges for employers unless we are importing the labor from other countries via H-1B visas. Metro areas such as Los Angeles, New York, Chicago, Boston and Northern California had the highest number of graduates. The following table identifies the top 10 states for computer science degree completions in 2017.
Top 10 States for Computer Science Degrees
|Rank||State||All Computer Science Degrees 2017|
Economic incentives play critical role in site selection decisions
Economic incentives are also playing an increasingly important role in site selection decisions for these tech projects as evidenced by the Amazon HQ2 search. These projects have garnered some of the biggest economic incentive packages which include cash grants, tax credits, tax abatements, training grants and a variety of statutory and discretionary state and local economic incentives. Here are a few examples of economic incentives awarded for technology projects:
- DXC Technologies was awarded $115 million for 2,000 tech jobs in Lousiana.
- Infosys was awarded $31 million for 2,000 tech jobs in Indianapolis.
- Amazon received over $100 million in economic incentives for 5,000 tech jobs in Nashville, Tenn.
- Cognizant received over $2 million in economic incentives for 1,000 tech jobs in Irving, Texas.
- Adobe received over $25 million in economic incentives for 1,260 tech jobs in Lehi, Utah.
Where are these tech companies expanding?
With the official announcement of Amazon’s HQ2 and HQ3, site selectors and companies are relieved as now they now know exactly where Amazon is expanding. However, there is plenty of other project activity out there that you should know about. To help you stay informed, Site Selection Group has identified where some of the recent tech projects have landed in the below table.
Tech Project Activity
|Company||Project Type||New jobs||Retained Jobs||Metro Area|
|Adobe Systems||Expansion||1,260||-||Provo-Orem, UT|
|Affirm||Expansion||566||-||San Francisco-Oakland-Hayward, CA|
|Amazon||New Site||5,000||-||Nashville-Davidson-Murfreesboro-Franklin, TN|
|Amazon||New Site||2,000||-||Boston-Cambridge-Newton, MA-NH|
|Amazon||New Site||2,000||-||New York-Newark-Jersey City, NY-NJ-PA|
|Amazon HQ2||New Site||25,000||-||New York-Newark-Jersey City, NY-NJ-PA|
|Amazon HQ3||New Site||25,000||-||Washington-Arlington-Alexandria, DC-VA-MD-WV|
|Appian Corp.||New Site||600||600||Washington-Arlington-Alexandria, DC-VA-MD-WV|
|Argo AI (Ford Motors)||Expansion||158||-||San Jose-Sunnyvale-Santa Clara, CA|
|Baker & McKenzie||New Site||300||-||Tampa-St. Petersburg-Clearwater, FL|
|Barracuda Networks||Expansion||115||-||Ann Arbor, MI|
|Booz Allen Hamilton||Expansion||208||-||Fayetteville, NC|
|BorgWarner||New Site||300||-||Indianapolis-Carmel-Anderson, IN|
|Cheetah Digital||Expansion||100||-||Indianapolis-Carmel-Anderson, IN|
|Cognizant||New Site||1,090||-||Dallas-Fort Worth-Arlington, TX|
|Cognizant||New Site||587||-||Salt Lake City, UT|
|Cognizant||Expansion||350||-||New York-Newark-Jersey City, NY-NJ-PA|
|Concur Technologies||Expansion||229||-||Minneapolis-St. Paul-Bloomington, MN-WI|
|Confluent||Expansion||616||-||San Jose-Sunnyvale-Santa Clara, CA|
|Dealertrack||New Site||357||500||New York-Newark-Jersey City, NY-NJ-PA|
|Deloitte||New Site||2,500||-||Phoenix-Mesa-Scottsdale, AZ|
|DXC Technology||New Site||2,000||-||New Orleans-Metairie, LA|
|Earnest||New Site||500||-||Salt Lake City, UT|
|eHealth Technologies||Expansion||160||215||Rochester, NY|
|Ernst & Young||New Site||600||-||San Antonio-New Braunfels, TX|
|Gartner||New Site||800||-||Dallas-Fort Worth-Arlington, TX|
|New Site||8,500||-||New York-Newark-Jersey City, NY-NJ-PA|
|Hyland Software||Expansion||500||1,507||Cleveland-Elyria, OH|
|Infor||Expansion||195||-||New York-Newark-Jersey City, NY-NJ-PA|
|Infosys||New Site||2,000||-||Indianapolis-Carmel-Anderson, IN|
|Infosys||New Site||2,000||-||Raleigh-Durham, NC|
|Infosys||New Site||1,000||-||Hartford-West Hartford-East Hartford, CT|
|Infosys||New Site||500||-||Dallas-Fort Worth-Arlington, TX|
|LendingClub||New Site||860||-||Provo-Orem, UT|
|NTT DATA Services||New Site||6,377||-||Dallas-Fort Worth-Arlington, TX|
|Paycom Software||New Site||1,000||-||Dallas-Fort Worth-Arlington, TX|
|Pluralsight||New Site||2,400||-||Salt Lake City, UT|
|Salesforce||Expansion||410||-||New York-Newark-Jersey City, NY-NJ-PA|
|SurveyMonkey||Expansion||430||-||San Francisco-Oakland-Hayward, CA|
|Tech Mahindra||New Site||38||100||New York-Newark-Jersey City, NY-NJ-PA|
|Wipro||Expansion||304||-||San Francisco-Oakland-Hayward, CA|
|Xactly Corp.||New Site||479||-||Denver-Aurora-Lakewood, CO|
|Yelp||New Site||500||-||Washington-Arlington-Alexandria, DC-VA-MD-WV|
|Zendesk||New Site||136||243||Madison, WI|
The demand for tech talent is not going away. Companies are fiercly competing for tech talent so it has become more important than ever to utilize site selection strategies to carefully pick your next location for expansion. Hopefully the labor trend data and project activity information provided will help you to think more strategically as you consider where to find tech talent.