Re:locate business profile: The US tech sector

The business of technology is continuing to shift rapidly. Re:locate’s Mark E Johnson considers how the US’s tech sector is responding to economic, demographic and social trends to stay ahead in this highly competitive market.

The business of technology is continuing to shift rapidly. Re:locate’s Mark E Johnson considers how the US’s tech sector is responding to economic, demographic and social trends to stay ahead in this highly competitive market.Stretched between the established poles of Silicon Valley in California and Silicon Alley in New York, the US tech sector has ballooned massively since the 1990s, nearly doubling from 2.2 million jobs in 1997 to 3.9 million in 2012. With slowing growth and staffing challenges a growing factor, however, its current outlook is mixed.“The technology industry is highly susceptible to economic variances because so much of technology spending today is discretionary, versus in the past when enterprise spending dominated. With tech now heavily skewed toward consumer demand, local economies largely drive how much is purchased,” said Eric Openshaw, vice-chairman and US technology, media and telecommunications leader for Deloitte, in a look-ahead earlier in the year.Beyond the macro outlook, Mr Openshaw pointed to ‘patent trolls’ – entities that acquire and sit on patents solely for the purpose of seeking out infringements of their intellectual property – as a looming, widescale concern. Frequently, the claims are based in loose, conceptual language and have served to strangle innovation.There are more positive factors driving change and giving cause for optimism, however. In October 2013, the US Securities and Exchange Commission proposed new rules for crowdfunding that, when finalised, will enable companies to solicit investment of small sums of capital directly from a large number of backers. This has a lot of potential for start-ups and entrepreneurs looking to bring new and innovative products to marketSimilarly, the US still offers one of the best environments for companies seeking venture capital, with larger corporates showing interest in setting up their own funds to fuel expansion.Big data boomingThe gathering and analysis of big data is a growth area for the tech industry at the moment. An increasingly high volume of information is becoming available, and companies across a range of sectors are scrambling to make use of it to understand consumer bases better and optimise their processes.Big data is creeping into everything from retail to city planning to politics. Some commentators pointed to the Obama campaign’s proficient use of data to model voter behaviour as a crucial component in the US President’s re-election in 2012, for example.Much of the data is emerging simply because of the continuing shift online of everyday social, consumer and leisure activity. Companies such as Google and Facebook, with pervasive web presences and growing proliferations of services, are in a prime position to gather such data.Other opportunities, both for the development of big data and in their own right, are emerging in the fields of ‘wearables’ and the ‘internet of things’. Wearables include devices such as smart watches that monitor and aggregate data on the wearer’s activity for health applications as well as running ‘push notifications’ from smartphones.The internet of things, a related segment of the market, is the networking of devices ranging from consumer items such as white goods right through to physical city infrastructure such as bridges. By fitting objects with data-gathering sensors and computational ability, it is hoped that traditionally non-networked devices can have their performance coordinated and optimised. Cisco Systems, AT&T, ARM Holdings, General Electric and Intel have all made moves in this area. While both market segments show promise, however, some analysts have questioned whether genuine demand for the products exists or whether the products are solutions chasing problems.Led by Netflix, companies that have previously operated as platform holders/service providers have made strong moves into TV content production and ownership. Amazon, Sony and Microsoft (through their online gaming services) have all made the move into production of premium television content recently. There has even been speculation that Rupert Murdoch’s recent bid to buy Time Warner was prompted by fear that his existing media holdings would be unable to compete with the encroaching tech companies as they shifted further into content production.Mergers and acquisitionsThe tech sector continues to see high levels of merger and acquisition (M&A) activity. From 2012 to 2013, the overall M&A market increased 4.1 per cent, while the tech sector saw an increase of 30.5 per cent.Cloud computing is an area of significant activity, though US think tank the Information Technology and Innovation Foundation estimated earlier in the year that US cloud computing companies could lose as much as $35 billion through 2016 in foreign markets as a result of the Snowden revelations of government spying.Elsewhere, M&A activity remains high in software, with companies looking to industry-specific software solutions in fields like healthcare, retail and banking. Larger companies such as Microsoft (with its acquisition of Nokia), Google (with investments in areas as diverse as artificial intelligence and satellite technology) and Facebook (which purchased the much-hyped virtual reality company Oculus Rift) have used M&A to step into and develop new business areas.Top talent in demandWhile the outlook and performance of the tech sector is mixed, the demand for talent remains high, and competition for the best hires is stiff.“In a recent Dice hiring survey, 54 per cent of hiring managers and recruiters in the West said the inability to find qualified talent was lengthening position fill times. In the North East, 46 per cent of hiring managers said the same,” Shravan Goli, president of tech recruitment site Dice.com, told Re:locate.While these areas were viewed as the poles of the US tech scene, however, Mr Goli stressed that they were not the only ones in which talent was in demand. “The tech job growth isn’t limited to the East and West Coasts, though, as Texas was the fastest-growing state for tech positions in the first half of the year.” The top five US states for growth in tech jobs in 2014 were rounded out by Florida, North Carolina, Oregon and Washington.In terms of industry segments, John Reed, senior executive director of Robert Half Technology, told Re:locate, “We’re seeing a lot of movement on the mobile side – a mobile-ear or two ago; now it’s a requirement if you want to reach an increasingly mobile audience.”Shravan Goli echoed this, and added, “Companies are leaning on technology professionals with big-data experience to help gain better insight into their customers’ behaviour.”Security is also increasingly an area of focus, according to John Reed. “Security has become a chief concern for companies as breaches become more common. As a result, positions like data security analyst and information systems security manager are hot right now.”In some instances, the solution for talent shortages is reaching out beyond US borders. “Some companies are bringing in international hires, particularly large organisations. The need for technology talent is acute, and companies are leaving no stone unturned when it comes to hiring the people they need for mission-critical IT initiatives,” said Mr Reed.One domestic source of personnel set to come on stream, however, is Microsoft. The company announced recently that it would lay off some 20,000 staff over the next year as it consolidated and realigned its workforce following the purchase of Nokia.“It’s still too soon to see how this will impact the tech workforce, but my bet is these knowledgeable, talented professionals will have a variety of opportunities,” said Shravan Goli, noting that Microsoft’s home state of Washington alone had created 1,600 new tech jobs in the first six months of 2014. That said, he added, “Those willing to relocate to other areas like Texas will be all the more successful.”Promoting diversityIn Silicon Valley in particular, there’s been a recent trend towards tech companies attempting to increase their diversity, particularly in their notoriously white, male upper ranks.“If you look at the big picture, in the first half of the year, 35 per cent of technology positions were filled by women, according to data from the Bureau of Labor Statistics. I’ve heard organisations, like one university in Maryland, explicitly say that applications from women are more sought-after. Another large university, in Connecticut, says they actively encourage women to apply for positions. A large investment bank touts itself as one of the Top Companies for Executive Women, a scheme set up by the National Association for Female Executives (NAFE), to attract women tech professionals,” said Shravan Goli.Looking forward, the huge demand for hires puts tech talent in a strong position. “Professionals are feeling more confident about their prospects. They are more likely to jump ship than they were even a year ago, so it’s a good time for businesses to get their arms around their best people.“Training has become a more coveted benefit in today’s market. Technology professionals want to make sure their skills remain relevant in a constantly changing market. If they feel their skills are stagnating, that’s going to drive them to leave.”For Us and technology news and articles, visit relocatemagazine.com/americas/usa and relocatemagazine.com/technology 

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