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Tech outlook: brighter locally than nationally
By Shelia Watson
Contributing Writer
When Paul Graham, a nationally known programming language designer and author of several books on technology, spoke at the Future of Web Applications conference in October, he made several predictions of the tech industry’s outlook from a macro view.
• Because the cost of starting a company is going down, there will be more and more tech startups.
• Because the process of acquiring a smaller tech company is becoming a more standard practice, there will be more acquisitions.
• There will be a greater need for “startup hubs”—like Silicon Valley—to help nurture the businesses.
Closer to home, the predictions for local tech companies is definitely bullish.
“You’ve got more money coming into the knowledge economy locally than any other year, and more companies are maturing and starting to do more hiring,” said Ernest Andrade, executive director of the Charleston Digital Corridor, the city of Charleston’s economic development entity. “That bodes well for the tech professionals and companies in this area.”
Andrade said he could envision more startups coming into the area, although a large part of what the economic development community is working with is growing the companies that are already in place, helping them become more successful.
“We’ve always had a market-driven approach, responding to the needs in the marketplace,” he said. “Tomorrow if we discover that the need is to focus more on startups, we would address that. We’re structured to attend to needs efficiently and quickly. We can tailor a program and partner with people and companies to make things happen. The key is remaining agile enough to do that.
“And with all of us working together, all of the organizations and agencies dedicated to growing a knowledge economy, then that is what will make us a hub like Silicon Valley.”
Andrade noted that part of the life cycle for some companies is to grow to a level that makes the company an attractive acquisition.
“We’ve had some companies here that have experienced that,” he said. “Digital Lifestyle Outfitters, for instance, was bought for a large sum this past year. That was huge. And things like that make other companies take a look at this community.”
Putting Charleston on the map has long been a goal of economic development agencies, and the tech industry has played a large role in achieving that goal.
“I think a large influence on our booming tech industry is having SPAWAR and Seahawk located here,” Andrade said. “That’s a huge boost in visibility for this community.”
“The creative cluster was one of the areas that the Angelou Economics report recommended we spend energy growing,” said Karen Kuchenbecker, who works in marketing communications and strategic planning for the Charleston Regional Development Alliance.
“That sector is all about the knowledge economy, and if you look around at what’s happening with the economy, not just here but in other places, you’ll see something of an evolution toward an IT-based economy.”
However, looking at Charleston and other areas does not necessarily provide an apples-to-apples comparison.
“We don’t have quite the same situation as somewhere like Silicon Valley or the Research Triangle Park,” Kuchenbecker said. “But the (Angelou Economics) consultants certainly believed we were fertile ground to grow that sector here.”
Besides, depending on the comparison, being different may not be so bad. A BusinessWeek analysis published in October called the national outlook on the tech industry “less than comforting,” with slowing sales and profit growth making the tech stocks “less of a haven” for investors. However, the analysis did note that the stocks of several companies, including Amazon and Cisco Systems, remained solid during the market’s recent wild swings.
That cautionary note seems to have influenced the tech industry’s work force for the worst.
A recent study conducted by Harris Interactive on behalf of Spherion Corp. found that the IT employee confidence index dropped 1.5 points in the third quarter of 2007, despite high demand for skilled technology professionals.
Specific results of the study show that:
• 26% of technology workers believe there are more jobs available.
• 40% think the economy is getting weaker.
• 57% are confident they can find a new job.
Activity in the tri-county area paints a more optimistic view, one that should give local tech workers a dash of hope. Last month, the Charleston Digital Corridor released a report that noted a surge in tech salaries, with workers in the Digital Corridor companies making an average $83,256 per year. That figure is more than double the area’s average wage of $37,056, which is based on data from the South Carolina Employment Security Commission.
Andrade said the higher tech wages reflects the strength of the area’s knowledge economy.
“I can tell you from talking to many people in the community that no one is pessimistic,” he said.
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