Apple dives deeper into Austin’s talent pool

This story was written by Lori Hawkins and appeared in the Austin American-Statesman.

Apple dives deeper into Austin’s talent pool

The tech giant’s California-style campuses, including a new engineering center, are adding thousands of jobs in Central Texas.

Apple Inc., which recently completed its expansive campus in Northwest Austin, has been discreetly building a core engineering team across town, fueling a new wave of growth in Central Texas.

The California-based technology giant is pulling back the curtain on its new engineering center, which sits on a bluff in Southwest Austin, near Capital of Texas Highway and Bee Caves Road.

Apple, the world’s largest computer electronics company, employs about 500 engineers at the seven-story Capital Ridge office building, Johny Srouji, an executive at Apple, told the American-Statesman.

The newly constructed 215,000-square-foot building has the ability to hold 1,000 workers, and Apple intends to fill it, he said.

“We have been quietly building out this team, which is one of our most important engineering groups,” said Srouji, Apple’s senior vice president, hardware technologies. “They play a very critical and integral role — they are designing chips that go into all the devices we sell.”

The Austin team, which the company began building several years ago, is now Apple’s biggest research and development group outside of its Cupertino, Calif., headquarters. When Apple decided to expand engineering work outside of Cupertino, Central Texas was the natural choice, Srouji said.

“The reason we came to Austin is there is a strong pool of talent,” said Srouji, who previously lived in Austin during stints at IBM and Intel. “There are lots of high-tech companies, and also the University of Texas.”

Apple’s growth in Austin

The Capital Ridge operation is just one piece of Apple’s multi-million dollar investment in Austin. Apple recently completed its sprawling 38-acre campus on West Parmer Lane in Northwest Austin.

The campus, which is responsible for running the company’s business operations for the entire Western Hemisphere, features seven limestone-and-glass office buildings with a combined 1.1 million square feet. The site includes restaurants; smoothie and coffee bars; a full-scale gym with saunas and a wellness center with services including medical, dental and eye care along with acupuncture and massage.

Work done at the site, known as the Americas Operations Center, includes finance, human resources, corporate sales, customer support, information systems and accounting.

Meanwhile, last year, Apple bought the nearby Riata Crossing complex, which has four buildings with 350,000 square feet of space. The company, which had been leasing it, has declined to say what work will be done there.

Apple is in line to receive $35 million in tax incentives from the city, county and state for its Austin expansion. To date, the company has received $10.5 million in incentives payments from the state-operated Texas Enterprise Fund, documents show.

The company says it has already created more than 6,000 jobs in Austin. add the amount of jobs created since the incentives deal. That makes Central Texas Apple’s largest U.S. hub outside of Cupertino.

The ripple effects are already being felt, economic experts say. Austin economist Brian Kelsey estimates that the Capital Ridge operation alone, with 500 engineering jobs, would result in at least $140 million in new earnings and create about 1,000 spinoff jobs.

“For every one new engineering job created at Apple, we could expect to see approximately two additional jobs created in the region,” Kelsey said.

Apple’s investment, Kelsey said, shows the depth of Central Texas’ tech roots, which can be traced back to IBM and chip makers like AMD, before Austin became known as a global software center and a top place to launch a startup.

“Austin’s tech credentials are well established, but most of the headlines lately have been about startups, access to capital, and the like,” Kelsey said. “Apple’s recent investment serves as a reminder that Austin is a key center of innovation for companies of all sizes, including one of the largest employers and most recognized brands on the planet.”

Austin ‘an ideal fit”

Apple began hiring building its engineering operation in Austin in 2010, with a 100-person team. Over the past several years, the group has been spread out at different locations.

Now, the Capital Ridge site will provide a single base for its 500-person team and give Apple room for a major expansion push.

The company said the group has a range of high-level hardware and software engineering expertise, but declined to give specifics. Jobs in Austin currently posted on the Apple website include CAD engineers, CPU microarchitecture engineers, physical design engineers and power integrity engineers.

“The chip development work they do goes into hundreds of millions of devices every year,” Srouji said. “If they miss a beat, we don’t ship.”

The Capital Ridge offers amenities similar to the Americas Operations Center, including a cafe, espresso bar and a wellness center that offers preventative and urgent care, as well as acupuncture, massage and physical therapy. It also has a fitness center with group and private classes and terraces for Friday afternoon beer bashes.

Roger Kay, an analyst with Massachusetts-based Endpoint Technologies Associates Inc., said building and retaining a world class team in Austin is critical to Apple’s continued growth.

“They have an almost infinite need for really good engineers, and the supply is limited,” he said. “They’ve got plenty of money, but they have fished out Silicon Valley pretty much entirely. For Apple to find more talent, they have to reach out further afield.”

Austin, Kay said, is the right place to mine for talent.

“Thanks to Dell, AMD, NXP and Samsung, all that very specific talent that Apple needs resides in Austin,” he said. “It’s an ideal fit.”

Which tech jobs pay the most in Austin?

This article was written by Lilly Rockwell and appeared in 512 Tech at the Austin American-Statesman.

Which tech jobs pay the most in Austin?

We’ve obtained a fresh batch of data on tech salary wages in Austin, thanks to the helpful folks at Idaho-based Economic Modeling Specialists International.

Their data looks at all the tech-based industry job codes in Austin. This is different from breaking jobs out by title — for instance, managers versus engineers — and it can include non-tech jobs, such as marketing.

In the 10 highest-paid tech industries, the average annual wages exceed six figures.

The highest-paying industry, on average, is classified as “computer storage device manufacturing.” That industry pays an average annual salary of $216,470, and with benefits included it rises to $252,783.

But the people who work in that field are fairly specialized – there are only 96 people within this industry in the Austin area, according to EMSI.

Other highly-paid tech industries in Austin fall under the chip or computer manufacturing and “software publishers.” The most common tech industry in Austin – software programming, which employs more than 20,000 people  – pays an annual average of $102,035 or $116,644 with benefits included.

Some of the lowest-paid industries include tech manufacturing, such as “electronic circuit manufacturing,” which basically means manufacturing electronic cables.

These employers pay an average salary of $41,623, which rises to $48,583 with benefits included.

EMSI compiled this salary information from sources such as the U.S. Bureau of Labor Statistics, American Community Survey and the U.S. Bureau of Economic Analysis.

The industry categories included in this data were culled as part of a study done by Austin economist Brian Kelsey last year for the Austin Technology Council.

Below is the full list of tech wages compiled by EMSI, excluding industries that had no workers or “insufficient data.”

Industry Description Number of Positions in Austin Average Current Wages & Salaries Average Current Total Earnings (Including Benefits)
Computer Storage Device Manufacturing 96 $216,470 $252,783
Telephone Apparatus Manufacturing 428 $185,364 $216,371
Electronic Computer Manufacturing 8,697 $172,727 $201,702
Semiconductor and Related Device Manufacturing 9,723 $135,057 $157,665
Software Publishers 5,306 $125,847 $150,009
Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing 383 $123,380 $143,988
Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing 36 $117,952 $135,519
Semiconductor Machinery Manufacturing 330 $109,148 $128,544
Satellite Telecommunications 17 $104,350 $125,849
Audio and Video Equipment Manufacturing 36 $108,069 $125,603
Instruments and Related Products Manufacturing for Measuring, Displaying, and Controlling Industrial Process Variables 502 $107,298 $125,179
Data Processing, Hosting, and Related Services 4,415 $103,141 $124,321
Computer Systems Design Services 13,049 $104,912 $119,918
Other Communications Equipment Manufacturing 336 $100,544 $117,374
Engineering Services 10,550 $102,309 $117,056
Custom Computer Programming Services 20,722 $102,035 $116,644
Other Electronic Component Manufacturing 730 $98,529 $114,891
Computer Terminal and Other Computer Peripheral Equipment Manufacturing 2,503 $96,524 $112,715
Other Computer Related Services 1,291 $94,620 $107,964
All Other Miscellaneous Electrical Equipment and Component Manufacturing 247 $80,448 $107,464
Research and Development in Biotechnology 990 $93,743 $107,234
Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology) 2,637 $93,476 $106,673
Analytical Laboratory Instrument Manufacturing 86 $91,900 $106,631
Optical Instrument and Lens Manufacturing 219 $90,389 $106,604
Computer and Computer Peripheral Equipment and Software Merchant Wholesalers 18,976 $89,464 $102,160
Bare Printed Circuit Board Manufacturing 42 $87,222 $99,904
Wired Telecommunications Carriers 5,530 $80,418 $98,116
Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals 892 $83,679 $97,583
Computer Training 211 $77,352 $93,677
Wireless Telecommunications Carriers (except Satellite) 1,389 $75,671 $92,142
All Other Telecommunications 160 $74,398 $89,212
Telecommunications Resellers 580 $70,387 $85,730
Testing Laboratories 781 $74,585 $85,473
Computer Facilities Management Services 268 $76,302 $85,421
Internet Publishing and Broadcasting and Web Search Portals 1,851 $73,484 $82,594
Electromedical and Electrotherapeutic Apparatus Manufacturing 20 $71,049 $79,053
Totalizing Fluid Meter and Counting Device Manufacturing 369 $66,720 $77,802
Other Measuring and Controlling Device Manufacturing 164 $60,374 $69,788
Printed Circuit Assembly (Electronic Assembly) Manufacturing 2,560 $54,070 $63,106
Electronic Connector Manufacturing 467 $41,623 $48,583

All wage data is from 2016.

Austin tech industry debates next moves after Prop 1 vote

This article was written by Lilly Rockwell and Lori Hawkins and appeared in 512 Tech, Austin American-Statesman.

Austin tech industry debates next moves after Prop 1 vote

Could vote have long-term impact on Austin’s reputation as a tech industry leader?

The Proposition 1 vote on ride-hailing regulations was emotionally charged and divisive for the Austin tech community, with some contending that a vote against it put Austin’s reputation as an innovation hub at risk.

Now that Austin voters have officially rejected the ballot proposition, and Uber and Lyft have kept their promise and left the city, many tech investors and entrepreneurs are surveying the damage – if any – to Austin’s status as a technology center.

Joshua Baer, founder of Capital Factory, the downtown technology incubator, has been a critic of the proposed regulations. He said he believes the vote sent signals that Austin is hostile to startups.

“Losing Uber and Lyft is a major setback to our reputation as an innovative city and technology hub that is already impacting decisions made by venture capitalists and Fortune 500 executives,” Baer said Monday. “It’s critical that the tech community and City Council come together… before our reputation is damaged further.”

But others scoffed at the notion that the Prop 1 vote could do any long-term damage to Austin’s entrepreneurial reputation. Austin economist Brian Kelsey said the vote is unlikely to have negative ripple effects on startups.

“Prop. 1 may be a setback in how the outside world views our seriousness in local policy making, but branding Austin as ‘anti-innovation” is ludicrous,’ ” Kelsey said. ” If the existence of two ride-sharing companies locally has an impact on your business model, then I’d say Prop. 1 should probably be the least of your concerns.”

Saturday’s vote, with 56 percent voting against Proposition 1, means the Austin City Council-approved ride-hailing regulations are in effect. These rules, opposed by Uber and Lyft, require fingerprint-based background checks and vehicles to have an identifying “trade dress,” among other regulations.

Though Uber and Lyft have until April 2017 to fully comply, both made the decision to leave the Austin market entirely, effective Monday morning.

Initially, many tech workers and entrepreneurs said they thought the vote would get industry support because of general opposition to more regulation of emerging technology business models.

But they now say Uber and Lyft’s aggressive marketing tactics derailed the discussion.

“I think it backfired in the tech community,” said Austin entrepreneur Richard Bagdonas, who supported the proposition. “I have talked to many people who said ‘I’m pro-Uber and pro-Lyft, but the number of flyers, calls and texts I received pushed me over the edge.’ “

Political consultant Mark Littlefield, who advised the anti-Prop 1 group “Our City, Our Safety, Our Choice,” said the amount of money pumped into this race – more than $9 million – from Uber and Lyft had a backlash effect.

“The narrative started to change” by the end of April, said Littlefield, who was doing polling throughout the campaign. “It became less and less about the policy and more and more about the personalities.

Some tech leaders, worried about whether the tech community would vote at all, mobilized to try and get out the vote. Baer, for example, participated in a news conference last month to encourage participation in the process.

“I must admit, I don’t think this is a slam dunk,” he said at the event with former Mayor Lee Leffingwell. “I’m worried about it. I think it’s going to be hard to get the tech community to realize it and vote. They’re quick to like things on Facebook or tweet about things. But it’s hard to get people out at the polls.”

Baer’s hunch was correct.

Turnout for Prop 1 was dominated by “traditional” voters who reliably show up to vote in state and local elections, Littlefield said.  Early voting data showed that 70 percent of the Prop 1 voters were these traditional voters, he said.

“I’ve seen it time and time again,” he said. “There are people who will vote in May elections and there are people that no matter how vitally important the results of the May election are to their own personal interests, they simply do not vote.”

Political experts said Uber and Lyft underestimated whether support for their service translated into votes.

Take David Goss. He’s a 40-year-old systems engineer for EMC Corp. in Austin. He regularly uses Uber when he’s going downtown for drinks and needs a sober ride home. On paper, Goss sounds like he would be for Prop 1.

But Goss said he voted against the measure. “I do love Uber, I use it all the time,” Goss said. But he said he wasn’t in favor with just letting Uber and Lyft write their own regulations.

“I definitely felt that there was some middle ground, we needed to find a way to ensure the rides were safe and make sure the employees were treated fairly,” he said.

Austin marketing veteran and entrepreneur Josh Jones-Dilworth, who opposed the proposition, said he watched as the discussion — and tech workers’ opinions — morphed.

“It started as a safety issue, and then it became an innovation issue, and then evolved into a corporate bullying issue,” Jones-Dilworth said. “It’s a complex issue, and there was never a consensus. I know a lot of people who changed their mind. And I know a lot of people who stayed on the sidelines because they thought this was a no-win situation.”

David Broockman, a business professor at Stanford University and an Austin native, said startups like Uber and Lyft view themselves as the underdog taking on an established industry: taxis.

“In Silicon Valley there is a tendency to view startups as David against Goliath,” he said, but that doesn’t always translate outside the Bay area, he said, where they are viewed instead as the Goliaths.

Bagdonas, the entrepreneur, agreed with Baer that Austin’s rejection sent a message to the tech industry outside of Texas.

“We have now created an environment that scares investors. New companies are probably going to have a tougher time raising money in Austin if they’re doing something that the City Council can get their hands on,” he said.

Rather than a set back, Jones-Dilworth said he believes the discussion and vote got a productive conversation going.

“I don’t think that one hyper-political issue with no clear mandate is going to set us back much at all,” he said.

Chip Rosenthal, an engineer and former chair of civic hacking group Open Austin, also said he believes Austin will come out ahead in the ride-hailing debates by developing an innovative compromise that will be emulated in other cities.

City leaders might already be working on one.

Mayor Steve Adler’s office put out a statement Monday detailing the steps he and the rest of the Austin City Council will take to ensure Austinites will be able to continue using ride-hailing services.

Some of his next steps include “talking with Uber and Lyft,” though a spokesman for the mayor’s office wouldn’t confirm whether talks are ongoing. It also mentions the possibility of creating a TNC nonprofit.

Adler’s statement also said he is creating an ad hoc committee made up of members of the tech community, including Baer, Jones-Dilworth and Eugene Sepulveda, CEO of the Entrepreneurs Foundation.

“I hope the speed at which the mayor, this council and community leaders address issues impacting riders and drivers signals to the rest of the world that Austin is absolutely open for business, that we value innovation and entrepreneurship, and that these things don’t have to be in conflict with local control,” Sepulveda said.

What the tech industry’s slowdown means for Austin

This article was written by Lilly Rockwell and appeared in 512 Tech in the Austin American-Statesman.

What the tech industry’s slowdown means for Austin

Recently I wrote about the dreary headlines dominating the tech world these days.

Companies like Intel are announcing major layoffs, while other large tech employers, like Apple and Microsoft, are watching their stock prices plummet.

So what does this all mean for Austin? Could the tech industry downturn lead to layoffs here?

Over the past week I interviewed several local tech industry experts to try to answer this question. As expected, their reactions were mostly incredulous. The Austin tech industry prides itself on its exceptionalism.

I was reminded that the Austin tech ecosystem is fairly diverse. No longer does Dell Inc. and the semiconductor industry dictate the health of the local tech economy, though they certainly have a significant impact.

People like Barbary Brunner, head of the Austin Technology Council, said Intel’s layoffs  – the company announced last month it was eliminating 12,000 jobs – were mostly just a reflection of poor management.

She warned against taking the example of Intel and applying it to other tech firms. That’s a fair point, though local chipmakers have also struggled in recent months, reporting falling sales and profits not in line with analyst expectations.

Brunner distinguishes between what’s going on with the bigger, legacy tech firms and the startups and medium-sized companies such as HomeAway or Indeed that populate Austin’s tech landscape.

Even so, Brunner acknowledges that hiring data recently has revealed a detectable tech industry slowdown.

“What we’re seeing happen in Austin right now is that companies are absorbing all the hiring they have done over the last five years,” Brunner said. Translation: Hiring in the local tech sector has slowed down.

Local economic development expert Brian Kelsey said employment growth has cooled off from the “torrid pace of the economic recovery.” Last year, tech job growth in Austin was about 4 percent compared to 3 percent nationally.

The latest forecasts are predicting a 2.4 percent tech job growth in 2016 compared to 1.6 percent nationally.

“As of right now, there are still segments within tech that are expected to see relatively strong employment growth this year,” Kelsey said. And certain areas, like custom computer programming and systems design, are still expected to have job growth in the range of 4 percent to 6 percent in 2016.

“There were nearly 9,000 job postings advertised for core tech related positions in the Austin region as of March, which was only about 8 percent off the pace from a year ago,” Kelsey said.

Brunner echoed those comments, saying tech workers in Austin shouldn’t be worried about losing their jobs, though, interestingly, she made the caveat that people who work for larger employers like Dell should be more concerned.

She might be right about that. Some of Austin’s biggest tech employers could be shedding additional jobs this year, or they have already done so in recent months. For instance, both Dell and Advanced Micro Devices downsized their workforce last year. Dell eliminated 10,000 jobs and AMD said it would cut 500.

“If I wanted a job in tech, Austin is one of the best places I would come,” Bruner said. “We have an incredibly fertile environment here. Particularly if you want to be in early-to-mid-stage companies.”

Welcome to the Panel Economy

It’s upon us. The time of year locals love to hate and hate to love. When the “old Austin” vs “new Austin” bickering reaches its fever pitch crescendo, increasing to new levels of absurdity each year.

When usually reasonable minded people convince themselves that live tweeting panels somehow counts as productive economic activity.

When the Panel Economy, as a friend so aptly put it recently, blurs the line between what’s real and worth paying attention to and what’s personal brand marketing, which I’m still not really sure how to define or make sense of.

Economic development outfits from cities around the US have apparently joined the party like never before this year in an attempt to convince SXSW intelligentsia that their markets are viable alternatives to the usual suspects. So, in the spirit of promoting fair competition, here’s a quick update on 2015 performance and 2016 projections for some of the tech-driven regional economies around the US.

We’re defining tech here in the same way we do for the research we’ve published with the Austin Technology Council, relying primarily on the CompTIA/TECNA definition used in their annual Cyberstates report, but with an additional industry category that captures one of Austin’s largest tech employers. Our adapted CompTIA/TECNA definition includes 49 six-digit NAICS industries, and we rely on data from EMSI, which includes self-employment.

The first table below focuses on metropolitan statistical areas (MSAs) with at least 50,000 employees in the tech sector and a location quotient of at least 1.5, or, in other words, places where the concentration of tech employment is at least 50% greater than the US economy as a whole.

Economic development analysts like to quibble over where to draw that line–1.5, 1.3, 1.2–to delineate degrees of concentration, but for our purposes here 1.5 is good enough because it captures most of the usual suspects and excludes markets like New York (0.9) and Los Angeles (1.0) that have large tech sectors simply because they are very large markets overall with a lot of employees in most sectors.

Atlanta, you have a strong case (1.36) to argue while you’re here, but we’re leaving you off this list.

large_tech_regions_table

As expected, San Jose and San Francisco are leading the pack of large and highly concentrated tech markets ranked by job growth in 2015. Raleigh and Portland, with fewer than 100,000 tech employees, get a bit of a boost here since we’ve used percentage growth to create the ranking, but impressive nonetheless. I’m a bit surprised that Austin is not a few spots higher on the list, but 3.4% annual job growth is nothing to be ashamed of. EMSI’s projections for 2016 seem to reflect the slowdown that many of the macro soothsayers have been predicting now for several years, with only San Francisco and Seattle in the 3.0%+ range.

Austinites love to complain about how the city is turning into California, even though much of that ire should really be directed at Florida. But for those of you in Austin worried about becoming the “next Silicon Valley,” don’t fret, we have a really long way to go. Value-added is the tech sector’s contribution to Gross Domestic Product (GDP) at the regional level. Basically, it is tech’s share–direct, no multiplier–of the total regional economy. Tech accounts for $98.3 billion of San Jose MSA’s GDP, or approximately one-half of the total, according to EMSI’s estimates. That’s nearly as large as Austin MSA’s entire GDP ($107.7 billion). Further, Austin’s economy is much more diversified than Silicon Valley’s economy. Tech here makes up only about 21% of Austin MSA’s GDP.

However, if anybody sees Mike Judge at SXSW, this in no way suggests that he shouldn’t do a Silicon Valley spinoff on the social entrepreneurship scene in Austin. Mr. Judge, you should totally do a Silicon Valley spinoff on the social entrepreneurship scene in Austin. #socent

Now, the smaller markets:

small_tech_regions_table

We’re defining small here as highly concentrated (tech LQ 1.5+) MSAs with 10,000-50,000 tech employees. Two of my favorites, Provo and Durham, make the cut, as well as a few others I know very little about (Palm Bay?). Provo’s economy appears to be at ludicrous speed, with merely ridiculous speed projected for 2016.

My advice to the economic developers and PR professionals, especially from non-coastal markets, in town for SXSW marketing their cities: print out a copy of these tables, add a column with average housing costs, and then make your pitch. We’re reaching a tipping point, even here in Austin.

Image Credit: http://the-gadgeteer.com/

Austin’s Indeed.com takes different tack on hiring tech talent

This story was written by Lori Hawkins and appeared in the Austin-American Statesman. It mentions a study that Civic Analytics completed for the Austin Technology Council on workforce availability in the tech sector.

A recent study by the Austin Technology Council underscored the hiring mindset held by many local tech companies.

Although 70 percent of those surveyed said they were having difficulties filling technical positions, 42 percent said they require applicants to have at least five years of work experience to even get consideration.

Only 12 percent of respondents said they hire recent college graduates or don’t require previous work experience.

At Indeed.com, company leaders are taking a different tack. The Internet job search company is focused on hiring engineering students directly out of college and providing extensive training to prepare them for their first job.

Indeed, which has grown to 500 employees in Austin, is one of the region’s fastest-growing Internet companies

Indeed has grown from 90 employees in Austin four years ago to more than 500 today. The company, which has been one of the more aggressive recruiters of engineering talent, is also hiring experienced developers.

This year, the company hired 54 graduates from 25 schools, including University of Texas, Carnegie Mellon University, Rice University, Georgia Tech, University of Illinois at Urbana-Champaign and MIT.

The new recruits have spent the past 12 weeks at Indeed’s offices in Northwest Austin, where they learned about the company, got to know company executives and broke into teams to come up with new Indeed products that they’ll pitch at an upcoming Shark Tank-style competition.

“There’s a huge benefit to bringing in people who don’t have experience,” said Chris Hyams, Indeed senior vice president of product. “Sometimes as companies get bigger they fall down in terms of new innovation. When you bring in people who are fresh out of college they are unburdened by the experience of what can’t work, and they are full of creativity about approaching problems from a new way that we might not have thought about.”

Indeed’s website aggregates job listings from thousands of websites, including job boards, newspapers, associations and company career pages. Job seekers search for listings on Indeed’s home page and can post their resumes for recruiters. The website, which is available in 55 countries and 28 languages, has 180 million monthly unique visitors worldwide.

In January, Indeed will move into a new 220,000-square-foot space at the Champion Office Park on North Capital of Texas Highway (Loop 360). The new offices can accommodate 1,500 employees, and Hyams said Indeed plans to fill them.

Founded in 2004, Indeed was acquired by Japan’s largest recruitment firm, Recruit Co., in 2012 for an undisclosed price. Under the deal, Indeed retained its name and operates an independent unit of Recruit.

According to financial reports filed by Recruit, Indeed posted revenue of $453 million in fiscal 2014, up 71 percent from the year before.

In addition to its Austin office, Indeed has operations in Seattle, San Francisco and Tokyo, and college hires have the option of working at those offices.

This year’s recruits spent the summer creating new apps and websites that could eventually become part of Indeed’s offerings. The teams developed 11 products, including a site that lets people post and respond to one-time job listings, such as language translation or logo design; and another that helps workers map out new career paths based on their work experience.

Shumeng Gu, who graduated from University of North Carolina at Chapel Hill in May, said she chose Indeed over other job offers because the company gives new hires big responsibilities.

“If you go to Facebook or another big company, you will likely spend your time just fixing bugs. At Indeed, you have ownership over what you’re working on,” Gu said. “The first week I got hired I put code into production, which is almost unheard of for someone at my level.”

Although it costs more to hire and train new workers, building your own talent has advantages, Hyams said.

“In Austin, we’re all trying to hire those same people with three to five years experience,” he said. “We decided this is a long-term plan for us, it’s not a short-term gain. We want to have sustainable growth, and the best way to get people with three years experience is to hire them at zero years experience. We now have a bunch of people with three years experience that we hired three years ago. Soon we’re going to have 54 more.”

Quantifying a Tech Talent Gap

The Austin Technology Council released preliminary findings from our tech talent study yesterday at the annual CEO Summit. With a data assist from EMSI, we estimated total demand for core tech occupations to be somewhere in the range of 2,500 to 3,500 job openings expected per year in Austin. The study included the usual secondary data–job postings, payroll records, etc.–and an employer survey conducted in April 2015 to provide a primary data check for what we observed in the EMSI estimates. The employer survey also captured some interesting perspective on the so-called skills gap or talent shortage facing leading regional tech markets like Austin. Summary findings are posted on the ATC website at the link above or you can download the presentation directly here (PDF).

The first time I worked on a “workforce gap” study was in 2000, in my first economic development job at the Sonoma County Economic Development Board. We wanted to know annual labor demand for high-tech workers, as they were called at the time, especially in the North Bay’s telecom cluster. While the data and tools for measuring supply and demand in the labor market have improved considerably, some of the methodological challenges are the same today as they were fifteen years ago.

For example, labor markets don’t operate like commodity markets. Price of labor (wage) is not as responsive to relative movements in supply and demand, for a variety of very complicated reasons, especially when you try to measure market conditions for one particular industry sector. Firm-level versus industry-level issues are also extremely difficult to sort out. If larger, established corporations report less difficulty finding qualified workers compared to smaller, growth-stage companies, is there a talent shortage? A researcher’s gut reaction may be to look for differences in wages, benefits, working environment, etc. at large companies versus small companies, but what if all of those factors were comparable?

And then there are regional effects. Austin wages are assumed to be low relative to high-cost markets like San Francisco, Silicon Valley, or Washington DC, given cost of living differences. But to what extent are lower home prices, rents, and breakfast tacos able to make up for $20K or $30K in wages? Is the Austin premium still what we think it is, or have home prices, rents, and traffic increased enough here to reset the scale with California?

Much more work to do here with ATC and others. Stay tuned.

Report: Talent gaps put pinch on key parts of Austin’s tech sector

This story was written by Lori Hawkins & Dan Zehr, Austin American-Statesman, 05/28/15.

Report: Talent gaps put pinch on key parts of Austin’s tech sector

Some of the companies most vital to Austin’s economic growth might have the hardest time filling key high-tech positions, according to a study released this morning.

The Austin Technology Council report found that local employers will have as many as 3,500 unique open jobs each year in the region’s 19 core high-tech occupations — and that local colleges and universities awarded just 1,539 of the degrees needed for those jobs, fewer than any other major tech hub in the country.

Furthermore, Austin-area tech companies rarely hire those recent graduates and, even when recruiting outside talent, might face an increasingly difficult time paying high enough wages to attract qualified candidates.

The region’s median wage across the 19 core occupations was $80,454 per year, slightly less than the national median and significantly lower than in other tech hubs, particularly the leading $116,314 median tech wage in San Jose, the study found

“For two or three decades, we’ve been leaning so heavily … on our culture, our lifestyle piece,” said Julie Huls, the technology council’s executive director. “We’re going to begin to see more and more mature tech-market challenges, like salary, begin to be of greater importance.”

Huls stressed that the report included preliminary findings, and said some underlying questions remain about the state of the tech labor market in Austin. But she said the report underscored two key challenges – the disconnect between the local education pipeline and industry needs; and the disparity between salaries between Austin and other tech hubs.

“Local companies haven’t been forced to compete en masse with outside influences, and I think that will change,” Huls said. “Do I think we’re at a critical point today? No. Do I think some of our companies are starting to feel the pinch? Yes, I do.”

While part of the study looked across the tech industry and the 108,000 jobs it provides in the region — from giants such as Samsung and Dell to midsize software firms and a host of smaller startups — the report focused primarily on the region’s key technology occupations.

The analysis found 67,546 jobs in those 19 core occupations, including anything from software developers to network administrators. About one third of those workers were employed by companies outside the high-tech industry.

Overall, the data and responses compiled in the council’s report suggested the companies within Austin’s tech sector have managed to expand their business without filling most open positions.

However, 70 percent of respondents said they find it “difficult” to “extremely difficult” to fill job openings. And the hardest hit appeared to be firms in the “second stage” of growth – established companies that are still going through a key growth spurt.

Not only did these second-stage companies report a higher level of difficulty when filling new jobs, they expressed less confidence that the Austin market would be able to meet their workforce demands in the future.

“To the extent that Austin’s economic development is built on a foundation of those growth-stage companies, we need to ensure that those companies can find the skilled technical workers they need to say here and grow,” said Brian Kelsey, principal of Civic Analytics, which conducted the analysis.

Companies in that established but rapid-growth stage tend to create the majority of jobs in the tech industry, Kelsey said. And as technology companies provide 11.1 percent of Austin-area jobs, those expanding companies are a key driver of regional economic and payroll growth.

“That’s really Austin’s sweet spot,” Kelsey said. “We’re not a market here that’s driven, especially in tech, by large companies. … Our market depends on entrepreneurship and the ability of these second-stage companies to grow locally.”

Other regional workforce experts agreed that a talent shortage exists in certain occupations and industries. A recent report by Indeed, a global online job-search firm, found notable shortages of some high-tech and health care skills in Central Texas.

Austin enjoys a “diversity of the types of opportunities and talent,” including people whose skills can translate across a variety of occupations, said Tara Sinclair, the firm’s chief economist. But an analysis of their broad search activity indicated far fewer applicants than jobs that require specific technical skills.

“Employers are going to have to chase talent,” Sinclair said.

While Austin has had little trouble attracting workers with technical skills, it has struggled to create enough of its own. The pipeline of home-grown talent would only fill half the open high-tech jobs, even if all those graduates were to stay in Austin and land jobs.

Of all the top tech hubs in the country, Austin-area colleges and universities awarded the fewest core tech degrees in 2013, according to the council’s report.

While many local companies said they hire local workers, provide student internships or employ workers with associate degrees, the survey found that only 12 percent of respondents hire recent college graduates or do not require previous work experience. Forty-two percent of respondents said they require applicants have at least five years of work experience to even get consideration.

“This is a significant barrier to getting more entry level technology workers into the pipeline,” Kelsey said.

When tech companies pass up less experienced engineers, they end up competing over the same limited pool of experienced workers, said Larry Warnock, a veteran Austin software executive.

“Everyone wants the five to seven years of experience, but the Austin tech community needs to embrace new talent,” said Warnock, who is president of software startup Boundary. “If you ask me to name 20 software companies in Austin that have been around for more than seven years, I can’t. We’re still in adolescence in development as a tech hub, so we don’t have that base of employees yet.”

That often leaves companies either poaching from one another or looking to draw workers from outside the area. To that end, Austin’s booming growth and existing talent pool might actually make it easier to hire here than elsewhere, said Drew Scheberle, senior vice president at the Greater Austin Chamber of Commerce.

“It’s not just Central Texas that needs these workers,” he said. “Everyone is after those (computer science) graduates.”

Like the council report, the chamber’s monthly analysis of job openings and talent gaps indicates that Austin does suffer from a shortage of qualified applicants for key computer science and other technical jobs.

However, its analysis also finds that local employers don’t have as hard a time hiring as in other major markets for information technology and software, Scheberle said, noting the influx of large outside employers opening or expanding operations here, such as Apple, Visa and Athenahealth.

“You can still hire here and people still want to move here,” he said.

In fact, Austin’s economic boom emerged in part from a virtuous cycle, in which a deep pool of skilled workers helped attract new companies — which in turn created jobs that drew more skilled workers.

According to data compiled by Hired, a tech-focused job site that officially launched in Austin this week, Austin companies tend to import a larger percentage of talent compared with other markets.

Roughly a third of the hires through the site were relocations to Austin, said Chelsea Cooper, general manager of the Austin office. Relocations accounted for roughly one in five hires in San Francisco, according to the company’s data.

Austin ranked in the top three locations Hired users noted in their search profiles, Cooper said, behind only San Francisco and New York.

For Austin startups, California often seems like a natural place to target for tech talent, but Warnock said companies would get better results by looking elsewhere.

“We tend to zero in on the West Coast, but people are anchored to Silicon Valley and the Bay Area by the massive number of opportunities there,” he said. “We need to focus on other regions and universities that are producing great engineering talent. That means looking to Illinois, Michigan, Houston and Georgia. To those places, we look like Silicon Valley.”


 

Austin tech scene braces for impact of Freescale’s sale

This article was written by Brian Gaar and appeared in the Austin American-Statesman on 03/03/15.

Austin tech scene braces for impact of Freescale’s sale

As the dust starts to settle from the announcement that Austin’s Freescale Semiconductor will be sold to a Dutch chipmaker, analysts say the city’s tech scene should be able to absorb any layoffs that might come with the loss of a corporate headquarters.

The news broke Sunday evening that Freescale is being acquired by NXP Semiconductors NV in a cash and stock merger worth more than $11 billion.

That could be a potentially big hit to Austin, as Freescale is one of the city’s biggest and most important technology companies. It employs about 5,000 in Central Texas and is a leading supplier of chips for the automotive and digital network industries. The company employs about 18,000 worldwide, with operations in more than 20 countries. Freescale’s stock surged on Monday following news of the planned deal, ending the day up 11.8 percent, or $4.25, to close at $40.36.

Freescale officials seemed to acknowledge that some layoffs could be forthcoming in a document filed with the U.S. Securities and Exchange Commission.

In a document titled “Freescale Employee Q&A,” the company wrote: “In any strategic combination, there will be synergies that result in some reductions. That will be the case here. While we are very early in the process, we expect the vast majority of Freescale’s team will have the opportunity to be integrated into the new company and have new opportunities for advancement and growth.”

However, economists and analysts interviewed by the American-Statesman agreed that, should layoffs happen, Austin’s tech scene is robust enough to absorb the hit.

“Losing the headquarters of a major technology company is unfortunate, but I don’t think it (will) negatively impact the Austin tech scene,” said analyst Patrick Moorhead of Moor Insights & Strategy.

Moorhead said he expects layoffs “based on the makeup of the acquisition,” but said the local job market will absorb them.

There are “always risks in losing a corporate headquarters,” said economist Brian Kelsey, principal of Austin-based Civic Analytics. “For example, most companies keep research and development activities close to home.

“Such investments in innovation can have important spillover effects for local economies,” he said. “So, if less R&D happens in Austin as a result of Freescale’s sale, then that is a potential downside.”

Estimates show that a net loss of one job in the semiconductor manufacturing industry in Austin takes another two jobs with it, Kelsey said, citing data from researcher EMSI.

“So, if there are significant layoffs at Freescale, and those workers can’t fill job openings in the industry elsewhere, then the local economy would feel it,” Kelsey said.

Austin’s semiconductor industry has shrunk in recent decades. It currently accounts for 10,000 to 15,000 jobs in Central Texas, down from about 30,000 two decades ago, according to Austin economist Angelos Angelou.

There’s also the question of Austin’s larger reputation as a tech hub. Freescale’s sale raises the question: Is losing the headquarters of a smaller semiconductor company offset by having a piece of a larger one? The new company will be the fourth-largest semiconductor company in the world, according to Freescale officials.

The presence of NXP in Austin could signal new opportunity, said Jon Roberts, principal of Austin economic development firm TIP Strategies.

“I tend towards an optimistic view,” Roberts said. “Whatever we lose in the short term is a function of necessary re-orientation in the industry. With the right positioning, NXP can be a real boon to Austin.”

Kelsey argued that Austin’s reputation as a tech sector— Dell Inc. notwithstanding — has never been based on the number of corporate headquarters located here.

The presence of corporate headquarters helps stimulate activity in the tech sector overall, he said, as many of Austin’s smaller firms were started by people who perhaps moved to Austin for jobs at larger companies like Dell or Freescale and then eventually decided to become entrepreneurs.

But ultimately, “Austin’s reputation is built more on our entrepreneurial economy, not large Fortune 500 companies,” Kelsey said.

Apple’s Expansion in Austin

This article was written by Brian Gaar and appeared in the Austin American-Statesman on 02/22/15.

Apple’s Austin expansion moving swiftly, documents show

While Apple Inc. has been tight-lipped about its local presence, city and county documents obtained by the American-Statesman paint a picture of a company that’s moving full speed ahead with its expansion plans in Austin.

The technology giant has already created more than 900 full-time jobs in its Austin operation as of the end of 2013, the most recent year for which data is available, according to a report the company filed with Travis County. That’s on top of 3,100 local positions the company agreed to retain. As of the end of 2013, Apple reported 4,091 full-time employees in Austin.

What’s more, in a report last month to the city of Austin, Apple said it is about 67 percent completed with its Americas Operations Center, which it has valued at more than $348 million.

Taken in total, the documents suggest that Apple is outpacing its agreed-upon performance metrics, for which it is scheduled to receive millions in incentive payments from the city, county and state.

“All in all, I think the Apple deal has been good for Austin, especially since Apple is delivering ahead of schedule,” said tech industry analyst Patrick Moorhead of Moor Insights & Strategy.

In 2012, the Austin City Council approved $8.6 million in tax breaks for Apple in exchange for the Cupertino, Calif.-based company establishing its Americas Operations Center here. Apple also is in line for $21 million in state incentives for the project, along with between $5 million and $6 million from Travis County.

Apple, in turn, agreed to create more than 3,600 new full-time jobs in Austin while retaining at least 3,100 existing full-time jobs. The company also agreed to spend $282 million on new buildings and equipment in Austin over the next decade.

In its agreement with the city, Apple agreed to create 300 new full-time jobs in the first “employment year” of the contract. That year will be the first full calendar year after the issuance of the final certificate of occupancy for phase one of its Americas Operation Center. That hasn’t been issued yet, officials said.

From the city’s perspective, Apple is not required to submit a progress report until 2016, said Rodney Gonzales, deputy director of the city’s economic development department. The company would not receive city payments in the form of property tax rebates until after 2016, he said. Apple has so far received a $5.25 million incentives payment from the Texas Enterprise Fund, state records show.

For Apple as a whole, these are good times. Last month, the company reported another strong quarter thanks to its new plus-size iPhones, which helped the company smash sales records for the holiday season.

Apple said that it sold 74.5 million iPhones during the three months that ended Dec. 31, beating analysts’ expectations for the latest models of Apple’s most popular gadget, introduced in September. The surge in iPhone sales drove the company’s total revenue to $74.6 billion, up 30 percent from a year earlier.

Apple’s local project is planned to be built in two phases in Northwest Austin, near its current customer support center.

While the company agreed to spend $282 million on new buildings and equipment in Austin over the next decade, the total value of the project is estimated at more than $348 million, according to documents it provided to the city.

The company’s local investment is expected to include seven new office buildings with a combined 1 million or more square feet of space. Those buildings will house an estimated 3,600 new workers needed to support Apple’s continued growth. The average wage for those new jobs will be $54,000 a year in the first year of the expansion and will expand to $73,500 in the 10th year, according to the incentives agreement.

Apple’s local incentive deals were controversial, as critics argued that the technology giant didn’t need additional millions in incentives from taxpayer dollars.

However, Apple’s presence in Austin benefits the regional economy, said Brian Kelsey, principal of Civic Analytics, an Austin-based economic development firm.

“Given the company’s performance over the last few years, Apple shouldn’t have any trouble meeting their obligations under the tax incentive agreement with the city, so, from that perspective, it’s probably a ‘good’ deal,” he said. “Assuming the city’s cost-benefit analysis is reasonably accurate, Austin’s tax base is better off today with Apple’s larger presence here than it otherwise would have been.”

Incentives, he said, are the price cities pay for economic development projects on the scale of Apple. Kelsey called them a “calculated gamble.”

“Of course, you’re never likely to know what would have happened if the city of Austin refused to offer tax incentives,” Kelsey said. “Personally, I think economic development would be much improved if we didn’t have to give up revenue in the form of tax abatement that would go to fund schools, and especially perhaps career and technical education that would go a long way toward training future workers for tech firms.”

Others said that Apple’s presence will help further bolster Austin’s credentials as a tech hub.

“The Apple brand has the ability to attract other companies to Austin as well, because they trust that Apple has done their due diligence and chose Austin,” Moorhead said.

Jon Roberts, principal of Austin economic development firm TIP Strategies, said Apple’s presence helps create an ecosystem of innovative tech companies, which helps retain talent.

“We shouldn’t be playing this game,” said Roberts, referring to incentives. “But, given the fact that we are, are we using them in right way? And I’d say we’re using them as well as anyone is using them.”

Additional material from the Associated Press.