Texas Information Technology Services - Office of the Governor ...
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<strong>Texas</strong> <strong>Information</strong><br />
<strong>Technology</strong> <strong>Services</strong><br />
Industry Report<br />
2012<br />
www.<strong>Texas</strong>WideOpenForBusiness.com<br />
<strong>Office</strong> <strong>of</strong> <strong>the</strong> <strong>Governor</strong> | Economic Development & Tourism
Contents<br />
Overview…………………………………………………………………. 1<br />
Computer Systems Design & <strong>Services</strong>.…………………….. 9<br />
Data Processing & Hosting………………………………………. 13<br />
S<strong>of</strong>tware …………………………………………………………………. 16<br />
Online Content Providers…...……………………………………<br />
IT <strong>Services</strong> Across Industries…………………………………….<br />
20<br />
23
Overview<br />
I<br />
nformation technology (IT) services are an<br />
important and growing part <strong>of</strong> <strong>the</strong> <strong>Texas</strong> economy,<br />
directly employing over 156,500 across <strong>the</strong> state.<br />
The <strong>Texas</strong> IT services industry is significantly<br />
specialized in <strong>the</strong> computer systems design and in <strong>the</strong><br />
data processing and hosting areas, more than any o<strong>the</strong>r<br />
state except California. These two areas account for<br />
<strong>the</strong> majority <strong>of</strong> <strong>the</strong> state’s IT services firms and<br />
employment.<br />
This report covers <strong>the</strong> broad and diversified range <strong>of</strong><br />
IT services companies, including s<strong>of</strong>tware; gaming<br />
and Internet publishing; web search portals and<br />
services; data storage, processing and hosting;<br />
computer systems design and consulting; Internet<br />
service providers; and related services.<br />
While information technology workers are concentrated<br />
in traditional IT sectors such as s<strong>of</strong>tware and<br />
computer systems design, <strong>the</strong>se skilled pr<strong>of</strong>essionals<br />
are also employed across a range <strong>of</strong> industries, from<br />
financial services to energy to health care. As a result,<br />
IT services are embedded throughout most industries.<br />
The rise <strong>of</strong> online services and cloud computing has<br />
changed <strong>the</strong> scope <strong>of</strong> IT services, leading to fur<strong>the</strong>r<br />
industry fragmentation. These changes have fostered a<br />
related trend, in which companies from o<strong>the</strong>r industries<br />
are increasingly moving into <strong>the</strong> IT services<br />
<strong>Texas</strong> is more specialized in data processing<br />
& hosting and computer systems design<br />
services than most o<strong>the</strong>r states.<br />
arena. Examples <strong>of</strong> companies following this trend are<br />
<strong>the</strong> world’s No. 3 supplier <strong>of</strong> PCs, Dell Inc., and one<br />
<strong>of</strong> <strong>the</strong> nation’s largest communications companies,<br />
AT&T, both <strong>of</strong> which are headquartered in <strong>Texas</strong>.<br />
These firms have both acquired IT consulting and<br />
s<strong>of</strong>tware companies over <strong>the</strong> past few years in order to<br />
expand <strong>the</strong>ir IT service <strong>of</strong>ferings.<br />
<strong>Texas</strong> IT <strong>Services</strong> Employment<br />
by IT Service Sector<br />
Data note: This report covers activities categorized in <strong>the</strong> North American Industry<br />
Classification System (NAICS): Computer Systems Design etc. (5415); Data Processing<br />
etc. (518); S<strong>of</strong>tware Publishers (5112); Internet Publishing etc. (51913);<br />
and Specialized Telecommunications etc. (517919).<br />
Source: <strong>Texas</strong> Workforce Commission<br />
1
OVERVIEW<br />
State <strong>of</strong> <strong>the</strong> Industry in <strong>Texas</strong><br />
As home to nearly 14,000 IT services firms, <strong>Texas</strong> has<br />
achieved a significant number <strong>of</strong> national top 10<br />
rankings related to <strong>the</strong> industry. The state’s status as<br />
an IT services industry leader is streng<strong>the</strong>ned by<br />
proactive government support, a large venture capital<br />
network, a concentration <strong>of</strong> skilled IT services<br />
workers, multiple top-tier research institutions, and a<br />
top-ranked business climate.<br />
<strong>Texas</strong>’ position as a technology services hub has made<br />
<strong>the</strong> state a top location for international corporations.<br />
According to consulting firm FDI Intelligence, IT and<br />
<strong>Texas</strong> Ranked No. 2 High-Tech State<br />
In 2010, <strong>Texas</strong> was ranked as <strong>the</strong> No. 2 state for<br />
high-tech employment by <strong>the</strong> national industry<br />
association TechAmerica Foundation in its<br />
annual Cyberstates report, a state-by-state<br />
analysis <strong>of</strong> <strong>the</strong> U.S. high-tech industry. The<br />
report found that <strong>Texas</strong>’ multiple high-tech<br />
sectors employed more than 456,400 at 27,900<br />
establishments.<br />
TechAmerica’s analysis shows that <strong>the</strong> largest<br />
2010 high-tech employment gains in <strong>Texas</strong> were<br />
in computer systems design and related<br />
services. In addition, <strong>Texas</strong> ranked among <strong>the</strong><br />
top three states in employment in 9 <strong>of</strong> <strong>the</strong> 15<br />
high-tech sectors covered by TechAmerica.<br />
2<br />
s<strong>of</strong>tware was <strong>the</strong> number one sector for foreign direct<br />
investment in <strong>Texas</strong> between 2007-2011. More than<br />
60 IT companies from 20 countries established or<br />
expanded operations in <strong>Texas</strong> during that period.<br />
$1.6 billion<br />
Amount invested by venture capital firms in<br />
279 <strong>Texas</strong> IT services and s<strong>of</strong>tware companies<br />
from 2005-2010, according to consulting firm<br />
PricewaterhouseCoopers.<br />
Top <strong>Texas</strong>-based IT services companies ranked by<br />
sales are listed throughout this report. They include<br />
Fortune 1000 companies Dell Inc. (Round Rock, TX)<br />
and BMC S<strong>of</strong>tware (Houston).<br />
<strong>Texas</strong> is also home to some <strong>of</strong> <strong>the</strong> nation’s fastest<br />
growing IT services firms. They include Saxon-<br />
Global (Irving), S<strong>of</strong>tLayer Technologies (Dallas),<br />
Vintage IT <strong>Services</strong> (Austin), One Source Networks<br />
(San Antonio), and Kinnser S<strong>of</strong>tware (Austin), all <strong>of</strong><br />
which ranked on Inc. Magazine’s Inc. 500, a list <strong>of</strong> <strong>the</strong><br />
nation’s fastest growing private companies.<br />
<strong>Texas</strong>-based IT <strong>Services</strong> firms ranked on <strong>the</strong> Fortune 500<br />
<strong>Texas</strong>-based IT <strong>Services</strong> firms ranked on <strong>the</strong> Inc. 500
OVERVIEW<br />
Major IT <strong>Services</strong> Companies with Operations in <strong>Texas</strong><br />
Selection <strong>of</strong> firms with total corporate revenues exceeding $500 million<br />
Representative sample only Sources: D&B, company websites<br />
3
OVERVIEW<br />
<strong>Texas</strong> Enterprise Fund<br />
IT <strong>Services</strong>-Related Awards<br />
Company City Description Jobs<br />
Award<br />
(Millions)<br />
Apple Austin S<strong>of</strong>tware and hardware 3,635 $21.0<br />
eBay Austin E-commerce 1,050 $2.8<br />
Facebook Austin Social media 200 $1.4<br />
Frito-Lay Plano IT division for food manufacturing 125 $1.1<br />
Rackspace Hosting<br />
Windcrest<br />
(San Antonio)<br />
Data hosting 4,000 $22<br />
TD Ameritrade Fort Worth Online financial services 490 $1.2<br />
Virtual Computing Environment (VCE) Richardson Cloud computing services 434 $2.4<br />
The Advisory Board Co. Austin S<strong>of</strong>tware 200 $0.5<br />
State Government<br />
Initiatives<br />
Incentive Programs<br />
In 2003, <strong>the</strong> <strong>Texas</strong> Legislature passed legislation<br />
authorizing <strong>the</strong> $295 million <strong>Texas</strong> Enterprise Fund<br />
(TEF), a “deal closing” fund created to attract businesses<br />
and new jobs to <strong>Texas</strong>. The Legislature<br />
reauthorized <strong>the</strong> TEF most recently in 2011. As <strong>of</strong><br />
March 2012, <strong>the</strong> TEF has awarded approximately<br />
$52.4 million to IT services-related projects. The<br />
table shown above details <strong>the</strong>se projects and <strong>the</strong><br />
10,134 jobs <strong>the</strong>y have committed to create.<br />
In 2004, Gov. Rick Perry announced a state industry<br />
cluster initiative to focus state economic development<br />
efforts in six key areas, one <strong>of</strong> which is <strong>Information</strong><br />
and Computer <strong>Technology</strong>.<br />
In 2005, Gov. Rick Perry and <strong>the</strong> <strong>Texas</strong> Legislature<br />
authorized <strong>the</strong> $200 million <strong>Texas</strong> Emerging Technol-<br />
4<br />
TOTAL 10,134 $52.4<br />
ogy Fund (TETF) to promote breakthrough technological<br />
innovations across multiple industries, including<br />
computer and information technology. The TETF was<br />
reauthorized most recently in 2011. To date, over<br />
$33.6 million from <strong>the</strong> TETF has been awarded for IT<br />
services-related projects with over $29.9 million going<br />
to commercialize start-up companies and over $3.6<br />
million awarded to universities. For details on IT<br />
services-related TETF awards, see <strong>the</strong> table on page<br />
25.<br />
In 2007, Gov. Rick Perry and <strong>the</strong> <strong>Texas</strong> Legislature<br />
passed legislation authorizing <strong>the</strong> <strong>Texas</strong> Moving<br />
Image Industry Incentive Program with an appropriation<br />
<strong>of</strong> $20 million and a 5% cash grant percentage<br />
applicable to eligible video game production projects.<br />
In August 2011, in recognition <strong>of</strong> <strong>the</strong> economic<br />
impact <strong>of</strong> <strong>the</strong> video game industry in <strong>Texas</strong>, <strong>the</strong> <strong>Texas</strong><br />
Film Commission increased <strong>the</strong> maximum potential<br />
cash grant percentage applicable to video game<br />
productions to 17.5% <strong>of</strong> <strong>the</strong>ir eligible, project-specific<br />
<strong>Texas</strong> spending, depending on game budget levels.
Education Initiatives<br />
In 2005, <strong>the</strong> <strong>Texas</strong> Legislature established <strong>the</strong> <strong>Texas</strong><br />
Science, <strong>Technology</strong>, Engineering and Ma<strong>the</strong>matics<br />
(T-STEM) Initiative. Modeled on national STEM<br />
programs, T-STEM focuses on educating and graduating<br />
more <strong>Texas</strong> students in STEM fields critical for<br />
maintaining a skilled and competitive state workforce.<br />
T-STEM is part <strong>of</strong> <strong>the</strong> <strong>Texas</strong> High School Project and<br />
aims to more closely align high school curriculums<br />
with admission requirements for competitive colleges.<br />
Under <strong>the</strong> initiative, 51 T-STEM academies have been<br />
created, serving approximately 15,000 students<br />
annually. The Legislature most recently reauthorized<br />
<strong>the</strong> program in 2011.<br />
Electronic Arts Expands in Austin<br />
In January 2012, video game publisher Electronic<br />
Arts (EA) opened its new EA Sports division <strong>of</strong>fices<br />
in Austin, <strong>Texas</strong>. EA’s expansion<br />
was initially announced<br />
by Gov. Rick Perry in July 2011.<br />
EA already employed approximately<br />
450 in Austin at <strong>the</strong><br />
time <strong>of</strong> <strong>the</strong> announcement,<br />
and <strong>the</strong> expansion is expected<br />
to create an additional 300<br />
direct and contract positions.<br />
Based in California, EA is a<br />
leading interactive entertainment<br />
s<strong>of</strong>tware company that<br />
develops and distributes its<br />
products worldwide.<br />
Frank Gibeau, President <strong>of</strong> EA,<br />
praised <strong>Texas</strong> <strong>Governor</strong> Rick<br />
Perry's role in recruiting EA to<br />
<strong>the</strong> state, saying Perry "really<br />
understands our industry and<br />
wants it to be a key part <strong>of</strong> <strong>the</strong><br />
<strong>Texas</strong> economy."<br />
EA will seek financial incentives<br />
from <strong>the</strong> <strong>Texas</strong> Film<br />
Tax Legislation<br />
OVERVIEW<br />
In June 2011, Gov. Rick Perry signed <strong>Texas</strong> House<br />
Bill 1841, which improved <strong>the</strong> <strong>Texas</strong> business climate<br />
for hosting and data center companies. The bill<br />
states that an individual or business whose only<br />
activity in <strong>the</strong> state is Internet hosting is not “engaged<br />
in business” in <strong>the</strong> state and <strong>the</strong>refore does not have to<br />
collect <strong>Texas</strong> sales and use taxes from customers. The<br />
bill reversed a 2010 rule change made by <strong>the</strong> <strong>Texas</strong><br />
Comptroller <strong>of</strong> Public Accounts, which said that<br />
renting a space on a server in <strong>Texas</strong> effectively<br />
established a business presence in <strong>the</strong> state.<br />
Commission as part <strong>of</strong> its expansion deal.<br />
Separately, EA also operates a branch <strong>of</strong> its Bioware<br />
video game development division in Austin.<br />
<strong>Texas</strong> <strong>Governor</strong> Rick Perry, EA President Frank Gibeau, and EA Sports COO Daryl Holt<br />
at July 2011 announcement event in Austin<br />
5
OVERVIEW<br />
IT <strong>Services</strong> Workforce<br />
<strong>Texas</strong>’ IT services workforce is <strong>the</strong> second largest in<br />
<strong>the</strong> nation, with more than 156,500 pr<strong>of</strong>essionals<br />
employed at nearly 14,000 IT services firms. These<br />
workers are highly skilled and well paid, earning an<br />
average annual salary above $90,000. The largest IT<br />
subsector in <strong>the</strong> state is computer systems design,<br />
which encompasses <strong>the</strong> activities <strong>of</strong> custom computer<br />
programming, s<strong>of</strong>tware consulting, systems integration,<br />
computer facilities management, and related<br />
services. This subsector accounts for nearly 70% <strong>of</strong> IT<br />
services employment in <strong>Texas</strong> (see table below).<br />
In addition to <strong>the</strong> total employment at firms dedicated<br />
to IT services, a separate workforce <strong>of</strong> roughly<br />
180,000 Texans are employed in IT pr<strong>of</strong>essions across<br />
all o<strong>the</strong>r industries. These workers include computer<br />
programmers, network analysts, s<strong>of</strong>tware developers<br />
and o<strong>the</strong>r technicians embedded within sectors such as<br />
manufacturing, financial services, health care, and<br />
o<strong>the</strong>rs. (See page 21 for more detail about <strong>the</strong> IT<br />
workforce across industries.)<br />
6<br />
Compared to <strong>the</strong> U.S. as a whole, <strong>the</strong> <strong>Texas</strong> workforce<br />
is significantly more concentrated in data processing,<br />
hosting, and related services than o<strong>the</strong>r states, according<br />
to <strong>the</strong> U.S. Bureau <strong>of</strong> Labor Statistics. <strong>Texas</strong> also<br />
ranks No. 1 nationally for employment in <strong>the</strong> combined<br />
ISP and data processing sector.<br />
<strong>Texas</strong> ranks No. 1 in <strong>the</strong> U.S. in combined<br />
ISP and data processing employment.<br />
From 2007-2011, employment in <strong>the</strong> major IT<br />
services sectors in <strong>Texas</strong> increased by 11%. Internet<br />
publishing led <strong>the</strong> way as <strong>the</strong> only segment that saw<br />
continuous employment increases each year during<br />
that period (see graph on next page). Despite a<br />
temporary downturn in 2009, <strong>the</strong> computer systems<br />
design segment experienced overall employment<br />
increases <strong>of</strong> nearly 20% between 2007 and 2011.<br />
Additionally, both <strong>the</strong> s<strong>of</strong>tware publishing and data<br />
processing & hosting sectors declined slightly over <strong>the</strong><br />
four-year period, but began rebounding in 2011.<br />
<strong>Information</strong> <strong>Technology</strong> <strong>Services</strong> Employment in <strong>Texas</strong><br />
Second Quarter 2011<br />
Sector (Industry Code) Employees Firms<br />
-U.S. Bureau <strong>of</strong> Labor Statistics<br />
Average<br />
Annual Wage<br />
Computer Systems Design and Related <strong>Services</strong> (5415) 108,676 12,106 $90,064<br />
Data Processing, Hosting and Related <strong>Services</strong> (518) 26,787 702 $85,228<br />
S<strong>of</strong>tware Publishers (5112) 16,433 666 $111,124<br />
Internet Publishing, Broadcasting, and Search Portals (51913) 3,208 421 $69,992<br />
Specialized Telecommunications & Internet Service Providers (517919) 1,416 96 $67,548<br />
TOTALS 156,520 13,991 $90,832<br />
Computer-Related Pr<strong>of</strong>essions in All O<strong>the</strong>r Industries* 180,350 NA $75,015<br />
*Approximate. Based on 2010 data.<br />
Source: <strong>Texas</strong> Workforce Commission
Employment<br />
<strong>Texas</strong> IT <strong>Services</strong> 5-Year Employment Trends by Sector, 2007 to 2011<br />
Source: <strong>Texas</strong> Workforce Commission. Data from second quarter <strong>of</strong> each year.<br />
Education & Research<br />
The IT services industry is dependent on a highly<br />
educated workforce and first rate research and development<br />
(R&D) activities. <strong>Texas</strong>’ higher education<br />
institutions continue to graduate record numbers <strong>of</strong><br />
students, and in addition, <strong>the</strong>re is a steady migration <strong>of</strong><br />
college graduates to <strong>Texas</strong> from o<strong>the</strong>r states and<br />
countries. <strong>Texas</strong> is home to some <strong>of</strong> <strong>the</strong> nation’s top<br />
ranked computer schools. The state’s universities are<br />
conducting increasing amounts <strong>of</strong> IT services-related<br />
R&D, leading to more patent and startup activity.<br />
<strong>Texas</strong> Universities<br />
In spring 2010, <strong>Texas</strong> graduated 18,780 students<br />
with IT services-related degrees, according to <strong>the</strong><br />
National Center for Education Statistics.<br />
In <strong>the</strong> 2010-11 academic year, <strong>Texas</strong> ranked No.<br />
3 nationally for <strong>the</strong> number <strong>of</strong> schools (21)<br />
<strong>of</strong>fering video game design and development<br />
degrees, according to <strong>the</strong> Entertainment S<strong>of</strong>tware<br />
Association.<br />
Five <strong>Texas</strong> <strong>Information</strong> <strong>Technology</strong><br />
Schools Rank in U.S. Top 100<br />
In 2010, five <strong>Texas</strong> universities landed on U.S.<br />
News & World Report’s Top U.S. computer<br />
science school rankings:<br />
No. 8: The University <strong>of</strong> <strong>Texas</strong> at Austin<br />
No. 20: Rice University (Houston)<br />
No. 47: <strong>Texas</strong> A&M—College Station<br />
No. 79: The University <strong>of</strong> <strong>Texas</strong> at Dallas<br />
OVERVIEW<br />
No. 90: The University <strong>of</strong> <strong>Texas</strong> at Arlington<br />
7
OVERVIEW<br />
8<br />
<strong>Texas</strong>’ IT patent output increased<br />
by nearly 90% from 2000-2010.<br />
In fiscal year (FY) 2010, $188.1 billion were<br />
invested in computer and ma<strong>the</strong>matical sciences<br />
R&D at <strong>Texas</strong> universities, an increase <strong>of</strong> almost<br />
13% from FY 2009, according to <strong>the</strong> <strong>Texas</strong><br />
Higher Education Coordinating Board<br />
(THECB). That total represents approximately<br />
8% <strong>of</strong> all <strong>Texas</strong> university R&D funding.<br />
The ten <strong>Texas</strong> universities with <strong>the</strong> largest IT<br />
services-related R&D expenditures in FY 2010<br />
(see table below) accounted for 85% <strong>of</strong> <strong>the</strong><br />
state’s total.<br />
Top Ten <strong>Texas</strong> Universities for<br />
IT <strong>Services</strong>-Related R&D<br />
by FY 2010 Expenditures<br />
Institution<br />
-U.S. Patent and Trademark <strong>Office</strong><br />
Total R&D<br />
(Millions)<br />
University <strong>of</strong> <strong>Texas</strong> (UT) at Austin $79.1<br />
<strong>Texas</strong> A&M University $20.6<br />
Rice University $15.2<br />
University <strong>of</strong> Houston $10.3<br />
UT at Dallas $9.3<br />
<strong>Texas</strong> Tech University $8.6<br />
UT at El Paso $8.2<br />
UT at Arlington $3.8<br />
UT at San Antonio $1.9<br />
University <strong>of</strong> North <strong>Texas</strong> $1.6<br />
TOTAL $159.1<br />
Source: <strong>Texas</strong> Higher Education Coordinating Board<br />
The state <strong>of</strong> <strong>Texas</strong> achieved <strong>the</strong> following<br />
rankings in 2011 from <strong>the</strong> National Science<br />
Foundation (NSF) regarding doctorates awarded<br />
in IT-related fields:<br />
<strong>Texas</strong> Top-Ranked for<br />
IT-Related Doctorates<br />
No. 3 for Science and Engineering doctorates<br />
awarded by state, with 1,930 conferred<br />
No. 3 for Ma<strong>the</strong>matics doctorates awarded<br />
by state, with 92 conferred<br />
No. 4 for Computer and <strong>Information</strong> Science<br />
doctorates by state, with 111 conferred<br />
Innovations and Patents<br />
<strong>Texas</strong>’ growing strength in information technology is<br />
evident in <strong>the</strong> trend <strong>of</strong> patent output from <strong>the</strong> state.<br />
In 2010, <strong>Texas</strong> ranked No. 3 nationally for <strong>the</strong><br />
number <strong>of</strong> IT services-related utility patents<br />
issued, with 2,070. This figure includes all data<br />
processing and computer-related technology<br />
patents as defined by <strong>the</strong> U.S. Patent and<br />
Trademark <strong>Office</strong> (USPTO).<br />
From 2000-2010, 15,450 <strong>Texas</strong> IT servicesrelated<br />
utility patents were issued. <strong>Texas</strong>’ IT<br />
patent output increased by nearly 90% during<br />
this time span, growing from 1,092 patents in<br />
2000 to 2,070 patents in 2010.
Computer Systems Design & <strong>Services</strong><br />
Overview<br />
T<br />
exas is home to more than 12,100 computer<br />
systems design (CSD) and related services<br />
firms employing over 108,600 workers. This is<br />
<strong>the</strong> largest IT subsector in <strong>Texas</strong>, accounting for<br />
nearly 70% <strong>of</strong> <strong>the</strong> state’s IT services employment.<br />
Employment in <strong>the</strong> state’s CSD sector grew nearly<br />
20% between 2007 and 2011, which is attributable to<br />
<strong>the</strong> increasing importance <strong>of</strong> enterprise computer<br />
services to government, education, and businesses<br />
across industries.<br />
Within <strong>the</strong> CSD sector, <strong>the</strong> computer systems design<br />
services area (NAICS 541512) dominates in terms <strong>of</strong><br />
Computer Systems Design Employment in <strong>Texas</strong><br />
Second Quarter 2011 (NAICS 5415)<br />
both firms and workers (see <strong>the</strong> table below). Major<br />
companies doing business in <strong>Texas</strong> in this segment<br />
(see <strong>the</strong> list on page 12) are also primarily within <strong>the</strong><br />
computer systems design services area, which includes<br />
many outsourcing and consulting firms and a growing<br />
number <strong>of</strong> cyber security companies.<br />
Sector (Industry Code) Examples Employees Firms<br />
Computer Systems Design <strong>Services</strong> (541512)<br />
Customer Computer Programing <strong>Services</strong><br />
(541511)<br />
O<strong>the</strong>r Computer Related <strong>Services</strong> (541519)<br />
Computer Facilities Management <strong>Services</strong><br />
(541513)<br />
Computer hardware & s<strong>of</strong>tware<br />
consulting firms<br />
Computer & Internet design<br />
service firms<br />
S<strong>of</strong>tware installation & disaster<br />
recovery service firms<br />
Cisco-EMC Joint Venture Launches<br />
Headquarters in <strong>Texas</strong><br />
In March 2011, <strong>the</strong> State <strong>of</strong> <strong>Texas</strong> announced<br />
a $2.45 million TEF investment in <strong>the</strong> Virtual<br />
Computing Environment (VCE) Company, a<br />
Cisco-EMC joint venture with operations in<br />
Dallas, Massachusetts, and Silicon Valley. VCE<br />
has since opened a new headquarters in Richardson<br />
and begun hiring what<br />
will eventually total more than<br />
430 workers. The project is expected<br />
to generate $35 million<br />
in capital investment.<br />
VMWare and Intel are also investors<br />
in <strong>the</strong> firm, which focuses on cloud<br />
computing, data management and security,<br />
and next-generation data centers.<br />
Average<br />
Annual Wage<br />
53,396 6,260 $90,012<br />
47,661 5,533 $91,781<br />
5,016 287 $83,616<br />
Data processing facility operators 2,599 122 $73,216<br />
TOTALS 108,673 12,106 $90,064<br />
Source: <strong>Texas</strong> Workforce Commission<br />
9
COMPUTER SYSTEMS DESIGN<br />
Workforce Concentrations<br />
The map at right identifies <strong>the</strong> state’s Workforce<br />
Development regions with above-average<br />
specializations in computer systems design and<br />
related services. The highlighted regions are not <strong>the</strong><br />
only areas in <strong>Texas</strong> where<br />
workers in this sector can be<br />
found, but ra<strong>the</strong>r represent<br />
areas with <strong>the</strong> greatest<br />
concentrations relative to <strong>the</strong><br />
size <strong>of</strong> <strong>the</strong> local labor force.<br />
This analysis compares <strong>the</strong><br />
portion <strong>of</strong> each <strong>Texas</strong><br />
region’s workforce<br />
employed in <strong>the</strong> sector to <strong>the</strong><br />
portion <strong>of</strong> <strong>the</strong> entire U.S.<br />
workforce employed in that<br />
sector. The comparison<br />
provides a ratio that<br />
measures how intensively a<br />
certain region is specialized<br />
in this industry, and ranks it<br />
as “moderate,” “above<br />
average,” or “high.”<br />
Dell Expands IT <strong>Services</strong> Footprint<br />
10<br />
Data: <strong>Texas</strong> Workforce Commission, Q4 2010<br />
In September 2009, Round Rock, <strong>Texas</strong>-based Dell<br />
Inc. purchased Plano, <strong>Texas</strong>-based Perot Systems<br />
for $3.9 billion, a move that combined two iconic IT<br />
brands. Perot Systems has since been<br />
fully integrated into Dell’s services<br />
division. In addition to being a global<br />
leader in manufacturing computer<br />
systems, such as data-storage hardware,<br />
Dell provides s<strong>of</strong>tware-as-aservice,<br />
infrastructure consulting, and<br />
o<strong>the</strong>r IT services.<br />
Computer Systems<br />
Design and Related<br />
<strong>Services</strong><br />
Concentration<br />
Moderate<br />
Above Average<br />
High<br />
North Central Region<br />
Computer Systems Design<br />
Dallas County<br />
Computer Facilities Mgmt.<br />
Computer Systems Design<br />
Before <strong>the</strong> acquisition, nearly half <strong>of</strong> IT consultant<br />
Perot System’s revenue came from <strong>the</strong> healthcare<br />
industry, where it served <strong>the</strong> electronic medical<br />
record needs <strong>of</strong> more than 1,000 hospitals. Ano<strong>the</strong>r<br />
25% <strong>of</strong> its revenues came from <strong>the</strong> government<br />
sector. As a result, Dell immediately<br />
expanded its reach into both <strong>of</strong> <strong>the</strong>se<br />
markets.<br />
Dell employs over 100,000 workers and<br />
connects with over 5.4 million customers<br />
daily. The company’s 2011 revenues<br />
exceeded $61 billion, 29% <strong>of</strong> which were<br />
derived from s<strong>of</strong>tware and services.<br />
Central <strong>Texas</strong><br />
Custom<br />
Programming<br />
<strong>Services</strong><br />
Gulf Region<br />
Computer Systems Design<br />
Capital Region<br />
Custom Programming <strong>Services</strong><br />
Computer Systems Design
COMPUTER SYSTEMS DESIGN<br />
Central <strong>Texas</strong>’<br />
MILITARY INSTALLATIONS<br />
Cyber Security Hub San Antonio has emerged in recent years as a cyber<br />
security national center <strong>of</strong> excellence, with roots<br />
reaching back several decades to security opera-<br />
UNIVERSITY OF TEXAS AT<br />
SAN ANTONIO (UTSA)<br />
The Center for Infrastructure Assurance and<br />
Security (CIAS) was established in 2001 as part <strong>of</strong><br />
<strong>the</strong> UTSA’s cyber security program launch. In 2002,<br />
<strong>the</strong> NSA designated UTSA as a Center <strong>of</strong> Academic<br />
Excellence in <strong>Information</strong> Assurance Education,<br />
making it <strong>the</strong> first <strong>Texas</strong><br />
university to receive this<br />
honor. The CIAS works to<br />
improve <strong>the</strong> overall<br />
security <strong>of</strong> state and community technology<br />
infrastructures.<br />
The Institute for Cyber Security (ICS) was created<br />
at UTSA in 2007 with <strong>the</strong> assistance <strong>of</strong> a $3.5<br />
million TETF grant. The center is run by Executive<br />
Director Ravi Sandhu, a nationally recognized<br />
leader in cyber security. ICS conducts basic and<br />
applied research in cyber security and pursues<br />
development <strong>of</strong> commercializable technologies<br />
and services.<br />
UNIVERSITY OF TEXAS AT<br />
AUSTIN<br />
The Center for Identity (CFI) at <strong>the</strong> University <strong>of</strong><br />
<strong>Texas</strong> at Austin was established in 2010 to research<br />
and develop<br />
innovations to protect<br />
identities in cyber and<br />
physical environments.<br />
The CFI collaborates with government, corporate,<br />
and o<strong>the</strong>r academic entities.<br />
tions at local Air Force bases.<br />
In 2009, <strong>the</strong> U.S. Air Force activated<br />
<strong>the</strong> 24th Air Force, also known<br />
as <strong>the</strong> Air Force Cyber Command,<br />
at Lackland Air Force Base in San<br />
Antonio. The city is also home to<br />
<strong>the</strong> National Security Agency’s<br />
(NSA) <strong>Texas</strong> Cryptology Center, an<br />
NSA data center, as well as approximately<br />
80 defense contractors, many <strong>of</strong> whom are<br />
focused on information security. The City <strong>of</strong> San<br />
Antonio estimates <strong>the</strong> local economic impact <strong>of</strong> IT<br />
and cyber business was $10 billion in 2010, which<br />
<strong>the</strong> city credits to its vibrant business community<br />
and major military installations.<br />
CyberPatriot, <strong>the</strong> national high school<br />
cyber defense competition co-created by<br />
UTSA’s CIAS<br />
TEXAS A&M UNIVERSITY<br />
<strong>Texas</strong> A&M University’s <strong>Texas</strong> Engineering Extension<br />
Service (TEEX) <strong>of</strong>fers web-based cyber security<br />
courses to U.S. citizens through its Adaptive Cyber-<br />
Security Training Online (ACT-Online) program.<br />
The training is certified by <strong>the</strong> U.S. Department <strong>of</strong><br />
Homeland Security and Federal Emergency Management<br />
Agency.<br />
11
COMPUTER SYSTEMS DESIGN<br />
Major Companies<br />
Top Computer Systems Design Companies with Operations in <strong>Texas</strong><br />
By Global Revenue<br />
12<br />
Company Name<br />
Primary<br />
Location(s)<br />
Hewlett-Packard Plano<br />
IBM<br />
Micros<strong>of</strong>t<br />
Austin, Dallas,<br />
Houston<br />
Austin, Irving,<br />
San Antonio<br />
Sector/Subsidiary<br />
Computer systems design services<br />
(HP Enterprise <strong>Services</strong>)<br />
Sales<br />
(Millions)<br />
$127,245<br />
Computer systems design services $106,916<br />
Computer systems design services $69,943<br />
Dell Inc. Round Rock, Plano Computer facilities management services $61,494<br />
NEC Irving<br />
Accenture<br />
Austin, Houston,<br />
San Antonio, Dallas<br />
Ray<strong>the</strong>on Garland<br />
Xerox Dallas<br />
Computer systems design services<br />
(NEC <strong>of</strong> America)<br />
$38,655<br />
Computer systems consulting $27,353<br />
Computer systems design services<br />
(Ray<strong>the</strong>on Intelligence and Info. Systems)<br />
Computer systems design services<br />
(Affiliated Computer <strong>Services</strong>)<br />
Computer Sciences Corp. Austin, Dallas, Houston Custom computer programming services<br />
L-3 Communications Rockwall<br />
Custom computer programming services<br />
(L-3 Communications ComCept)<br />
$24,857<br />
$22,626<br />
$16,042<br />
$15,170<br />
Capgemini S.A. Dallas, Houston Computer systems design services $11,530<br />
SAIC Inc. San Antonio, etc. Network mgmt., custom programming, etc. $11,120<br />
Cognizant Irving Custom computer programming services $6,120<br />
Infosys Technologies Ltd. Houston, Plano<br />
Custom computer programming services<br />
(Infosys Consulting)<br />
$6,041<br />
Avaya Inc. Coppell Computer systems design services $5,550<br />
BMC S<strong>of</strong>tware Houston, Austin Computer systems design services $2,065<br />
CompuCom Systems Dallas Computer systems design services $1,400<br />
INX Inc. Houston Computer systems design services $312<br />
PFSweb Inc. Allen O<strong>the</strong>r computer related services $275<br />
Solarwinds Austin Computer systems design services $198<br />
Representative sample only. Sources: D&B, LexisNexis, company websites<br />
Top 5:
Data Processing & Hosting<br />
Overview<br />
T<br />
exas is home to more than 700 data processing<br />
and hosting firms employing over 26,700<br />
workers with an average annual salary exceeding<br />
$85,000. The sector, which accounts for 17% <strong>of</strong><br />
<strong>the</strong> state’s IT services employment, includes companies<br />
<strong>of</strong>fering data processing and hosting services, as<br />
well as Internet service providers (ISPs) and web<br />
search portals.<br />
In 2010, one out <strong>of</strong> approximately every 10 U.S. Data<br />
Processing & Hosting (DPH) workers was employed<br />
in <strong>Texas</strong> and one out <strong>of</strong> approximately every 13 U.S.<br />
DPH firms was located in <strong>Texas</strong>, according to federal<br />
data. Additionally, <strong>Texas</strong> ranked No. 1 nationally for<br />
DPH sector employment.<br />
<strong>Texas</strong> is one <strong>of</strong> <strong>the</strong> nation’s top locations<br />
for data centers<br />
Some <strong>of</strong> <strong>the</strong> world’s largest hosting and data center<br />
companies call <strong>Texas</strong> home (see list on page 15).<br />
Companies on <strong>the</strong> list share considerable overlap with<br />
<strong>the</strong> closely related Computer Systems Design sector<br />
(see page 12).<br />
<strong>Texas</strong> Hosting Firm Grows Globally<br />
Founded in San Antonio, <strong>Texas</strong>, in 1998,<br />
Rackspace Hosting has become one <strong>of</strong> <strong>the</strong><br />
largest hosting and cloud computing companies<br />
in <strong>the</strong> country, with over 4,000 employees,<br />
172,000 customers, and eight data centers in<br />
<strong>the</strong> U.S., U.K., and China.<br />
In August 2007, <strong>the</strong> State <strong>of</strong> <strong>Texas</strong> announced a<br />
$22 million TEF investment in Rackspace, as<br />
part <strong>of</strong> state and local efforts to secure <strong>the</strong><br />
company’s expansion to a new facility in <strong>the</strong><br />
San Antonio suburb <strong>of</strong> Windcrest. The investment<br />
is<br />
projected<br />
to generate<br />
more<br />
than $100<br />
million in capital investment and approximately<br />
4,000 new jobs by 2015.<br />
In December 2011, Rackspace signed a longterm<br />
lease for over 58,000 sq. ft. in Richardson,<br />
<strong>Texas</strong>, where <strong>the</strong> company is planning a new<br />
data center.<br />
<strong>Texas</strong> is one <strong>of</strong> <strong>the</strong> nation’s top locations for data<br />
centers because <strong>the</strong> state has plentiful resources to<br />
accommodate <strong>the</strong> unique operating requirements <strong>of</strong><br />
<strong>the</strong>se facilities. Hewlett Packard, for example, chose<br />
to locate data centers in Austin and Houston in recent<br />
years because <strong>the</strong>se cities <strong>of</strong>fered “availability and<br />
affordability <strong>of</strong> space, power and network bandwidth,<br />
as well as a lower probability <strong>of</strong> impact from natural<br />
disasters,” according to <strong>the</strong> company. These factors<br />
allow data centers in <strong>Texas</strong> to operate efficiently and<br />
reliably, ensuring that customers won’t experience<br />
service outages.<br />
13
DATA PROCESSING & HOSTING<br />
Workforce Concentrations<br />
The map at right identifies <strong>the</strong> state’s Workforce<br />
Development regions with above-average<br />
specializations in data<br />
processing, hosting, and related<br />
services. The highlighted<br />
regions are not <strong>the</strong> only areas in<br />
<strong>Texas</strong> where workers in this<br />
sector can be found, but ra<strong>the</strong>r<br />
represent areas with <strong>the</strong> greatest<br />
concentrations relative to <strong>the</strong><br />
size <strong>of</strong> <strong>the</strong> local labor force.<br />
This analysis compares <strong>the</strong><br />
portion <strong>of</strong> each <strong>Texas</strong> region’s<br />
workforce employed in <strong>the</strong><br />
sector to <strong>the</strong> portion <strong>of</strong> <strong>the</strong><br />
entire U.S. workforce employed<br />
in that sector. The comparison<br />
provides a ratio that measures<br />
how intensively a certain region<br />
is specialized in this industry,<br />
and ranks it as “moderate,”<br />
“above average,” or “high.”<br />
In April 2011, California-based Cisco Systems<br />
opened its new data center in Allen, <strong>Texas</strong>,<br />
featuring energy efficient technologies to support<br />
<strong>the</strong> company’s cloud and IT-as-a-service platforms.<br />
For data security purposes, <strong>the</strong> Allen facility mirrors<br />
Cisco’s Richardson, <strong>Texas</strong>, facility located 15 miles<br />
away. Cisco is a global leader in networking<br />
technology.<br />
14<br />
Data Processing, Hosting,<br />
and Related<br />
<strong>Services</strong><br />
Alamo Region<br />
Hosting<br />
Data: <strong>Texas</strong> Workforce Commission, Q4 2010<br />
New Data Centers Plug into <strong>Texas</strong><br />
In January 2012,<br />
Houston-based<br />
CyrusOne, a wholly<br />
-owned subsidiary<br />
<strong>of</strong> Ohio-based<br />
Cincinnati Bell,<br />
Concentration<br />
Moderate<br />
Above Average<br />
High<br />
Dallas/Fort Worth<br />
Data Management<br />
Capital Region<br />
Data Management<br />
announced plans to<br />
build <strong>the</strong> state’s<br />
largest data center,<br />
which will be<br />
located in <strong>the</strong><br />
Dallas area. When<br />
completed, <strong>the</strong><br />
700,000 sq. ft. facility will also be one <strong>of</strong> <strong>the</strong> largest<br />
data centers in <strong>the</strong> nation. CyrusOne also recently<br />
finished major data center expansions in Houston<br />
and Austin, adding over 102,000 sq. ft. in 2011 and<br />
2012. Cincinnati Bell is a major U.S. telecom and<br />
wireless services company.
DATA PROCESSING & HOSTING<br />
Major Companies<br />
Top Data Processing & Hosting Companies with Operations in <strong>Texas</strong><br />
By Global Revenue<br />
Company Name Primary Location(s) Sector/Subsidiary or Division<br />
Hewlett-Packard Plano<br />
Hosting & data centers<br />
(HP Enterprise <strong>Services</strong>)<br />
Sales<br />
(Millions)<br />
$127,245<br />
AT&T Dallas, Austin Hosting and cloud services $126,720<br />
NTT Group Dallas, Austin Web hosting (Verio Inc.) $124,350<br />
Verizon Communications Irving Data centers (Terremark Worldwide) $106,916<br />
IBM Austin, Dallas, Houston Hosting & data processing $99,870<br />
Micros<strong>of</strong>t San Antonio Enterprise data center $69,943<br />
Dell Round Rock Hosting & data centers $61,494<br />
Fujitsu Dallas Data centers $54,640<br />
Amazon.com Dallas/Fort Worth Enterprise data center $48,080<br />
Cisco Systems Allen, Richardson Data centers $43,220<br />
Xerox Dallas<br />
Hosting<br />
(Affiliated Computer <strong>Services</strong>)<br />
$22,626<br />
ADP El Paso, Dallas, etc. Data processing $9,880<br />
Sungard<br />
Houston, Austin,<br />
Richardson<br />
Data centers $4,990<br />
Cincinnati Bell Houston, Dallas, Austin Hosting & data centers (CyrusOne) $1,460<br />
Digital Realty Houston, Dallas, Austin Data centers $1,060<br />
Rackspace Hosting San Antonio, Dallas Hosting & data centers $1,025<br />
Internap Dallas, Houston Hosting & data centers $245<br />
S<strong>of</strong>tlayer Technologies Dallas, Houston Hosting & data centers $37<br />
Hostgator Houston, Austin Web Hosting $14<br />
Data Foundry Houston, Austin Data centers $12<br />
Linode Dallas Hosting & data centers N/A<br />
Alpheus Communications DFW, Austin, Houston Hosting & data centers N/A<br />
Representative sample only. Sources: D&B, LexisNexis, company websites<br />
Top 5:<br />
15
S<strong>of</strong>tware<br />
Overview<br />
T<br />
exas is home more than 660 s<strong>of</strong>tware publishing<br />
firms employing over 16,400. The sector<br />
account for 11% <strong>of</strong> <strong>the</strong> state’s IT services<br />
employment. It includes s<strong>of</strong>tware design, development<br />
and publication; computer and video game publishing;<br />
and providing support services to s<strong>of</strong>tware purchasers.<br />
Computer and video gaming has become a major part<br />
<strong>of</strong> <strong>the</strong> state’s s<strong>of</strong>tware publishing segment and entertainment<br />
industry. In fact, <strong>the</strong> latest data from <strong>the</strong><br />
Entertainment S<strong>of</strong>tware Association (ESA), a national<br />
industry group, indicates that <strong>Texas</strong> ranks No. 2<br />
nationally for computer and video game employment,<br />
with over 13,600 individuals directly and indirectly<br />
employed by <strong>the</strong> industry. The ESA fur<strong>the</strong>r reports<br />
16<br />
<strong>Texas</strong> ranks No. 4 nationally for s<strong>of</strong>tware<br />
publishing employment.<br />
-TechAmerica, 2011<br />
that entertainment s<strong>of</strong>tware is one <strong>of</strong> <strong>the</strong> nation’s<br />
fastest growing industry segments, valued at $4.9<br />
billion in 2009, according to <strong>the</strong> latest data available.<br />
U.S. consumers spent $25.1 billion on video games,<br />
hardware, and accessories in 2010 alone.<br />
<strong>Texas</strong> in <strong>the</strong> S<strong>of</strong>tware Game<br />
As home to 159 video game s<strong>of</strong>tware companies<br />
that employ 4,500 pr<strong>of</strong>essionals, <strong>Texas</strong> has<br />
earned a reputation as a center <strong>of</strong> video game<br />
development. Austin is <strong>the</strong> leading location in<br />
<strong>Texas</strong> for this industry, with 72% <strong>of</strong> <strong>the</strong> state’s<br />
video game jobs found <strong>the</strong>re. Dallas is home to<br />
23% <strong>of</strong> those jobs, followed by Houston with<br />
4%.<br />
Video game companies spend over $234 million<br />
per year in <strong>Texas</strong>, which represents an approximately<br />
150% increase in spending since 2006,<br />
according to <strong>the</strong> <strong>Texas</strong> Film Commission. See<br />
pages 4-5 for details on State <strong>of</strong> <strong>Texas</strong> video<br />
game industry incentives.<br />
In 2010, one out <strong>of</strong> approximately every 16 U.S.<br />
s<strong>of</strong>tware publishing workers was employed in <strong>Texas</strong>,<br />
and one out <strong>of</strong> approximately every 14 U.S. s<strong>of</strong>tware<br />
publishing firms was located in <strong>Texas</strong>, according to<br />
U.S. government data.<br />
The <strong>Texas</strong> s<strong>of</strong>tware industry has attracted strong<br />
venture capital (VC) support. In 2010 alone, VC firms<br />
invested over $142 million in 37 <strong>Texas</strong> s<strong>of</strong>tware<br />
companies, according to PricewaterhouseCoopers.<br />
From 2005 through 2010, VC firms invested over<br />
$1.1 billion in 224 <strong>Texas</strong> s<strong>of</strong>tware firms. To date, <strong>the</strong><br />
state’s <strong>Texas</strong> Emerging <strong>Technology</strong> Fund has invested<br />
approximately $32.6 million in s<strong>of</strong>tware-related<br />
projects. See page 25 for more details.
BMC Expands In Central <strong>Texas</strong><br />
Houston-based BMC S<strong>of</strong>tware, a Fortune 1000<br />
company, provides business management s<strong>of</strong>tware<br />
across distributed, mainframe, virtual and cloud<br />
environments to more than 15,000 worldwide<br />
customers. Approximately 96% <strong>of</strong> <strong>the</strong> Forbes Global<br />
100 companies and 81% <strong>of</strong> <strong>the</strong> Fortune 500 rely on<br />
BMC S<strong>of</strong>tware.<br />
In 2010 and 2011, BMC purchased two Austinbased<br />
s<strong>of</strong>tware companies, Phurnace and Stream-<br />
Step, bringing its employment in that city to over<br />
200 people. BMC employs approximately 6,000<br />
Workforce Concentrations<br />
The map at right identifies <strong>the</strong> state’s Workforce<br />
Development regions with above-average<br />
specializations in s<strong>of</strong>tware design and publishing. The<br />
highlighted regions are not<br />
<strong>the</strong> only areas in <strong>Texas</strong><br />
where workers in this sector<br />
can be found, but ra<strong>the</strong>r<br />
represent areas with <strong>the</strong><br />
greatest concentrations<br />
relative to <strong>the</strong> size <strong>of</strong> <strong>the</strong><br />
local labor force.<br />
This analysis compares <strong>the</strong><br />
portion <strong>of</strong> each <strong>Texas</strong><br />
region’s workforce<br />
employed in <strong>the</strong> sector to <strong>the</strong><br />
portion <strong>of</strong> <strong>the</strong> entire U.S.<br />
workforce employed in that<br />
sector. The comparison<br />
provides a ratio that<br />
measures how intensively a<br />
certain region is specialized<br />
in this industry, and ranks it<br />
as “moderate,” “above<br />
average,” or “high.”<br />
Data: <strong>Texas</strong> Workforce Commission, Q4 2010<br />
South Plains<br />
S<strong>of</strong>tware<br />
Design and<br />
Publishing<br />
Concentration<br />
Moderate<br />
Above Average<br />
High<br />
North Central Region<br />
Dallas County<br />
Capital Region<br />
SOFTWARE<br />
people worldwide and reported 2011 revenues <strong>of</strong><br />
$2.2 billion, making it one <strong>of</strong> <strong>the</strong> 20 largest<br />
s<strong>of</strong>tware companies in <strong>the</strong> world by revenues.<br />
BMC was founded in Houston in 1980 and grew<br />
rapidly over <strong>the</strong> next two decades. By 1998, <strong>the</strong><br />
company had already been added to <strong>the</strong> S&P 500,<br />
one <strong>of</strong> <strong>the</strong> most watched U.S. stock indices.<br />
17
SOFTWARE<br />
The challenge <strong>of</strong> digitizing patient records and<br />
hospital communications has led to an IT boom.<br />
According to U.S. government projections, employment<br />
<strong>of</strong> health information technicians is expected<br />
to increase by 20% through 2018--much faster<br />
than most o<strong>the</strong>r occupations. Below is a sample <strong>of</strong><br />
health care s<strong>of</strong>tware firms based in <strong>Texas</strong>.<br />
18<br />
S<strong>of</strong>tware Growth Sector:<br />
HEALTH CARE INFO TECHNOLOGY<br />
COMPANY<br />
DESCRIPTION<br />
Mobile medical records<br />
Austin<br />
Medical records, practice mgmt.<br />
Dallas<br />
Medical records, practice mgmt.<br />
Carrollton<br />
Medical data integration<br />
Frisco<br />
Medical records<br />
Round Rock / Plano<br />
Medical records<br />
Bedford<br />
Practice mgmt.<br />
Austin<br />
Home health practice mgmt.<br />
Austin<br />
Medical payment mgmt.<br />
Austin<br />
Medical records<br />
Dallas<br />
Hospital mgmt.<br />
Austin<br />
Practice mgmt.<br />
Dallas<br />
SXSW Interactive Showcases<br />
<strong>Texas</strong>’ High Tech and IT Industries<br />
Since 1993, Austin, <strong>Texas</strong>, has hosted <strong>the</strong> annual South<br />
by Southwest (SXSW) Interactive Festival, which<br />
showcases emerging multimedia technologies. The<br />
emergence <strong>of</strong> SXSW as a seminal industry event<br />
parallels <strong>the</strong> growing prominence <strong>of</strong> <strong>the</strong> <strong>Texas</strong> s<strong>of</strong>tware,<br />
social media, and gaming industries.<br />
SXSW Interactive has become one <strong>of</strong> <strong>the</strong> foremost<br />
national events for previewing <strong>the</strong> unfolding world <strong>of</strong><br />
technology. Leading companies like Dell and Facebook<br />
have rolled out new products at SXSW, and blockbuster<br />
social media platforms like Twitter and Foursquare<br />
have made <strong>the</strong>ir debuts at <strong>the</strong> Festival.<br />
Washington, D.C., S<strong>of</strong>tware Firm<br />
Expands in Austin<br />
In January 2012, <strong>the</strong> State <strong>of</strong> <strong>Texas</strong> announced a<br />
$500,000 TEF investment in The Advisory Board,<br />
a Washington D.C.-based global research,<br />
consulting, and technology firm partnering with<br />
125,000 leaders in 3,200 organizations across<br />
health care and higher education. The firm will<br />
invest $8.1<br />
million to expand<br />
s<strong>of</strong>tware development<br />
and<br />
technical support<br />
services infrastructure<br />
as well as create over 200 jobs at its<br />
Austin, <strong>Texas</strong>-based Crimson division. The<br />
Crimson division currently supports more than<br />
500 individual hospitals and 300,000 physicians.
Major Companies<br />
Top S<strong>of</strong>tware Companies with Operations in <strong>Texas</strong><br />
By Global Revenue<br />
Company Name Primary Locations Sector<br />
Sales<br />
(Millions)<br />
Hewlett-Packard Austin End-to-end s<strong>of</strong>tware solutions $127,245<br />
IBM Austin, Dallas, Houston End-to-end s<strong>of</strong>tware solutions $106,916<br />
Siemens Plano Product lifecycle mgt. solutions $98,958<br />
Micros<strong>of</strong>t<br />
Austin, Irving,<br />
San Antonio, Houston<br />
Utilities s<strong>of</strong>tware $69,943<br />
Oracle Corporation Austin, Dallas, Houston Database & file mgmt. s<strong>of</strong>tware $35,622<br />
SAP AG Houston, Irving<br />
Computer Sciences Corp.<br />
(CSC)<br />
Austin, Dallas,<br />
San Antonio<br />
Enterprise resource planning<br />
s<strong>of</strong>tware<br />
Enterprise, security, etc.<br />
s<strong>of</strong>tware<br />
$19,222<br />
$16,040<br />
eBay Austin eCommerce s<strong>of</strong>tware $11,652<br />
Symantec Dallas, Houston Security s<strong>of</strong>tware $6,190<br />
BMC S<strong>of</strong>tware Houston, Austin Business services s<strong>of</strong>tware $2,065<br />
Top Video Game Companies with Operations in <strong>Texas</strong><br />
By Global Revenue<br />
Company Name Primary Locations <strong>Texas</strong> Subsidiaries<br />
Sales<br />
(Million)<br />
Sony Austin Sony Online Entertainment $86,660<br />
Micros<strong>of</strong>t Austin<br />
Micros<strong>of</strong>t Studios & Twisted<br />
Pixel Games<br />
$69,943<br />
Nintendo Austin Retro Studios $12,240<br />
Activision Blizzard Austin, Dallas NA $4,755<br />
Electronic Arts Austin Bioware, EA Sports $3,589<br />
THQ Inc. Austin NA $665<br />
Zynga Inc. Austin, Dallas, McKinney Zynga With Friends (McKinney) $597<br />
NCs<strong>of</strong>t Corp Austin NA $573<br />
Multimedia Games Austin NA $128<br />
Aspyr Media Austin NA $16<br />
Representative samples only. Sources: Dun & Bradstreet, LexisNexis, company websites<br />
SOFTWARE<br />
Top 5:<br />
Top 5:<br />
19
Online Content Providers<br />
Overview<br />
T<br />
exas is home to more than 400 online content<br />
providers employing over 3,200 with an<br />
average annual salary <strong>of</strong> nearly $70,000. This<br />
sector accounts for approximately 2% <strong>of</strong> <strong>the</strong> state’s IT<br />
services employment. Online content providers<br />
enjoyed consistent employment increases from 2007<br />
to 2010, growing almost 45%.<br />
20<br />
Facebook “Likes” Austin<br />
In February 2010, <strong>the</strong> State <strong>of</strong> <strong>Texas</strong> announced a<br />
$1.4 million TEF investment in California-based<br />
Facebook to create a sales and operations <strong>of</strong>fice in<br />
Austin. Along with $200,000 in City <strong>of</strong> Austin incen-<br />
tives, this investment will assist <strong>the</strong> creation <strong>of</strong> 200<br />
jobs in <strong>the</strong> city.<br />
Facebook opened its Austin <strong>of</strong>fice in May 2010 and<br />
doubled its Austin <strong>of</strong>fice space in October 2011.<br />
The Austin <strong>of</strong>fice represents Facebook’s first major<br />
U.S. expansion outside <strong>of</strong> California and is its se-<br />
cond largest operation center in <strong>the</strong> world.<br />
In February 2012, Facebook announced plans for<br />
an initial public <strong>of</strong>fering (IPO) <strong>the</strong> following May.<br />
The online content providers sector includes Internet<br />
publishing and broadcasting companies and web<br />
search portal operators. Major companies doing<br />
business in <strong>Texas</strong> in this sector (see list on page 22)<br />
include some <strong>of</strong> <strong>the</strong> world’s largest news and publishing<br />
companies, as well as a number <strong>of</strong> major Internet<br />
firms.<br />
<strong>Texas</strong> ranks No. 2 nationally for<br />
Internet services employment.<br />
-TechAmerica, 2011<br />
In 2010, one out <strong>of</strong> approximately every 32 U.S.<br />
Internet publishing workers was employed in <strong>Texas</strong><br />
and one out <strong>of</strong> approximately every 20 U.S. Internet<br />
publishing firms was located in <strong>Texas</strong>, according to<br />
federal data.<br />
Facebook <strong>of</strong>fices in downtown Austin
In April 2010, SocialMedia.org (formerly<br />
Social Media Business Council) an-<br />
nounced plans to move from Chicago,<br />
Illinois to Austin, <strong>Texas</strong>. The national<br />
organization, formed in 2007, moved to<br />
Austin because <strong>the</strong> city has become a<br />
hub <strong>of</strong> social media activity and has a<br />
vibrant entrepreneurial environment.<br />
SocialMedia.org serves as a virtual<br />
community for social media leaders to<br />
network and share best practices. Its<br />
members include major companies such<br />
as Dell, Micros<strong>of</strong>t, Yahoo!, AT&T,<br />
Walmart, Johnson & Johnson, Shell, and<br />
Toyota.<br />
SocialMedia.org Moves<br />
HQ to <strong>Texas</strong><br />
ONLINE CONTENT PROVIDERS<br />
eBay Locates 1,000-Employee<br />
Expansion in Austin<br />
In April 2011, <strong>the</strong> State <strong>of</strong> <strong>Texas</strong> announced a $2.8<br />
million TEF investment in eBay Inc. for <strong>the</strong> expansion <strong>of</strong><br />
its Austin facility.<br />
The company’s<br />
expansion will<br />
create more than<br />
1,000 high-paying<br />
jobs and generate<br />
an estimated $5.1 million in capital investment. The<br />
project will facilitate <strong>the</strong> expansion <strong>of</strong> various eBay Inc.<br />
business units, including PayPal units located in Austin.<br />
eBay Inc. connects millions <strong>of</strong> buyers and sellers<br />
globally through eBay.com, <strong>the</strong> world’s largest online<br />
marketplace, and PayPal, which enables individuals and<br />
businesses to make and receive online payments.<br />
Major Web <strong>Services</strong> Companies Headquartered in <strong>Texas</strong><br />
Online Retail / Plano<br />
Online Retail / Irving<br />
Dating <strong>Services</strong> / Dallas<br />
E-Commerce / Austin<br />
Online Directories / Dallas<br />
Financial <strong>Information</strong> / Austin<br />
<strong>Information</strong> <strong>Services</strong> / Austin<br />
Travel <strong>Services</strong> / Southlake<br />
Vacation Rentals / Austin<br />
Travel <strong>Services</strong> / Dallas<br />
Representative Sample Only<br />
21
ONLINE CONTENT PROVIDERS<br />
Major Companies<br />
Top Online Content & Web Service Providers with Operations in <strong>Texas</strong><br />
By Global Revenue<br />
22<br />
Company Name<br />
Primary<br />
Location(s)<br />
Sector/Subsidiary<br />
Sales<br />
(Millions)<br />
Amazon.com Dallas/Fort Worth E-commerce $48,077<br />
Google Austin<br />
Thomson Reuters<br />
Houston, Austin,<br />
Carrollton<br />
Web search portal & Internet<br />
publisher<br />
$37,905<br />
Online publisher (WestLaw) $13,807<br />
eBay Austin E-commerce (PayPal) $11,652<br />
Reed Elsevier Group<br />
Bloomberg L.P.<br />
Yahoo!<br />
Dallas, El Paso,<br />
Houston<br />
Dallas, Houston,<br />
Fort Worth<br />
Richardson,<br />
Fort Worth<br />
Online publisher (LexisNexis) $9,670<br />
Online publisher $6,250<br />
Web search portal & Internet<br />
publisher<br />
$4,984<br />
Facebook Austin Online social network $3,710<br />
IAC/InteractiveCorp Austin, Dallas<br />
Dun & Bradstreet<br />
Austin, Dallas,<br />
Houston<br />
SuperMedia Dallas<br />
Web search portal & publisher<br />
(match.com, citysearch.com)<br />
$2,059<br />
Online publisher (Hoover’s) $1,760<br />
Online publisher<br />
(superpages.com)<br />
$1,180<br />
Associated Press Dallas, Houston Online publisher $630.5<br />
HomeAway Austin E-commerce $168<br />
Bazaarvoice Austin E-commerce s<strong>of</strong>tware $64<br />
PR Newswire<br />
Dallas, Houston,<br />
San Antonio<br />
Online publisher $48<br />
Travelocity Southlake E-commerce N/A<br />
Representative samples only. Sources: Dun & Bradstreet, LexisNexis, company websites<br />
Top 5:
IT <strong>Services</strong> Across Industries<br />
hile information technology workers are<br />
W concentrated in traditional sectors such as<br />
s<strong>of</strong>tware and computer system design, <strong>the</strong>se skilled<br />
pr<strong>of</strong>essionals are also employed across a range <strong>of</strong><br />
industries, from financial services to energy to health<br />
care.<br />
FINANCE & INSURANCE MANUFACTURING WHOLESALE<br />
Financial services encompass<br />
many aspects <strong>of</strong> money<br />
management, including<br />
banking, insurance, credit, and<br />
investments. <strong>Texas</strong> is has one <strong>of</strong><br />
<strong>the</strong> largest financial workforces<br />
in <strong>the</strong> country, particularly<br />
specialized in consumer lending<br />
and property insurance. A large<br />
percentage <strong>of</strong> <strong>the</strong> workers in<br />
this technology-dependent<br />
industry are in IT occupations.<br />
Estimated IT Workers in <strong>Texas</strong><br />
24,950<br />
Sample Employers<br />
Financial Transactions / Austin<br />
Banking / Dallas (HQ)<br />
Investments / Westlake<br />
Insurance & Investments /<br />
San Antonio (HQ)<br />
Advanced manufacturing<br />
operations require information<br />
technology to improve<br />
efficiency, flexibility, and<br />
customer responsiveness. Most<br />
IT pr<strong>of</strong>essionals in <strong>the</strong> <strong>Texas</strong><br />
manufacturing sector are<br />
employed by makers <strong>of</strong><br />
computer, electronic,<br />
automotive, aerospace, and<br />
chemical products.<br />
Estimated IT Workers in <strong>Texas</strong><br />
17,050<br />
Sample Employers<br />
Semiconductor Mfg. / Dallas (HQ)<br />
Aerospace Product Mfg. / Fort Worth<br />
The boxes below present <strong>the</strong> estimated number <strong>of</strong> IT<br />
workers in <strong>the</strong> state in a given industry. 2011<br />
employment numbers have been projected by <strong>Texas</strong><br />
<strong>Office</strong> <strong>of</strong> <strong>the</strong> <strong>Governor</strong> staff, based on data from <strong>the</strong><br />
<strong>Texas</strong> Workforce Commission. These estimates are<br />
not <strong>of</strong>ficial government data.<br />
Automotive Mfg. /<br />
San Antonio<br />
Chemical Mfg. / Houston<br />
The wholesale process is an<br />
intermediate step in <strong>the</strong><br />
distribution <strong>of</strong> merchandise.<br />
This sector comprises two main<br />
types <strong>of</strong> businesses: merchant<br />
wholesalers that sell goods on<br />
<strong>the</strong>ir own account and business<br />
to business electronic brokers<br />
that arrange sales for o<strong>the</strong>rs. IT<br />
services for tracking inventories<br />
and managing logistics are key<br />
to this industry.<br />
Estimated IT Workers in <strong>Texas</strong><br />
15,025<br />
Sample Employers<br />
Automotive Wholesale /<br />
Houston (HQ)<br />
Food Wholesale /<br />
Houston (HQ)<br />
Food Wholesale /<br />
Houston (HQ)<br />
Petroleum Wholesale /<br />
San Antonio (HQ)<br />
21
IT SERVICES ACROSS INDUSTRIES<br />
ENERGY &<br />
ENGINEERING<br />
This sector includes companies<br />
that operate or develop oil and<br />
gas field properties, provide oil<br />
field support services, generate<br />
and distribute electricity, and<br />
provide architectural and<br />
engineering services. Houston,<br />
which is considered <strong>the</strong> energy<br />
capital <strong>of</strong> <strong>the</strong> nation, is home to<br />
more than 3,700 energy-related<br />
companies, including 16 <strong>of</strong> <strong>the</strong><br />
nation's top 20 oil pipelines.<br />
BUSINESS & TECHNICAL<br />
SERVICES<br />
Businesses in this sector are<br />
engaged in processes where<br />
human capital is <strong>the</strong> major<br />
input. These companies make<br />
available <strong>the</strong> knowledge and<br />
skills <strong>of</strong> <strong>the</strong>ir employees, selling<br />
expertise ra<strong>the</strong>r than goods. In<br />
<strong>Texas</strong>, an estimated 35,000 IT<br />
pr<strong>of</strong>essionals work for firms<br />
that provide legal, accounting,<br />
management consulting, R&D,<br />
advertising, design, and business<br />
support services.<br />
Sample Employers Sample Employers<br />
MEDICAL<br />
Medical facilities, such as<br />
doctor’s <strong>of</strong>fices, hospitals, and<br />
residential care centers, employ<br />
thousands in <strong>Texas</strong> for <strong>the</strong><br />
comprehensive management <strong>of</strong><br />
health information, such as<br />
electronic medical records. This<br />
does not include s<strong>of</strong>tware and<br />
o<strong>the</strong>r IT companies that provide<br />
services to <strong>the</strong> medical sector.<br />
Estimated IT Workers in <strong>Texas</strong> Estimated IT Workers in <strong>Texas</strong> Estimated IT Workers in <strong>Texas</strong><br />
3,650 Oil & Gas<br />
6,850 Engineering &<br />
Architecture<br />
1,700 Utilities<br />
11,700 Business Support<br />
8,300 Company Mgmt.<br />
7,650 Consulting <strong>Services</strong><br />
3,050 Scientific R&D<br />
2,300 Accounting <strong>Services</strong><br />
Oil & Gas / Irving (HQ) Business Outsourcing / Dallas (HQ)<br />
Oil & Gas / Houston (HQ)<br />
Electric Utility /<br />
Dallas (HQ)<br />
Engineering / Houston (HQ)<br />
Engineering / Irving (HQ)<br />
24<br />
Mgmt. Consulting / Houston, etc.<br />
Business <strong>Services</strong> / Dallas (HQ)<br />
Staffing <strong>Services</strong> / Kingwood (HQ)<br />
Accounting <strong>Services</strong> / El Paso, etc.<br />
6,850<br />
Sample Employers<br />
Specialized Hospital / Houston<br />
Medical Complex / Houston<br />
Medical Complex / Dallas
Appendix 1: IT-Related <strong>Texas</strong> Emerging <strong>Technology</strong> Fund Awards<br />
Company/Entity City Project Description<br />
Funding<br />
(Thousands)<br />
2Cimple Plano Interactive online video system s<strong>of</strong>tware $1,500<br />
Analogix Development Austin 3D movement-based game controller technology $250<br />
Ayata Austin Predictive Decision Management s<strong>of</strong>tware $1,600<br />
Bauhaus S<strong>of</strong>tware San Antonio Digital 2D animation s<strong>of</strong>tware solution $500<br />
Biometric Signature ID Dallas Biometric s<strong>of</strong>tware for identity verification $550<br />
Biscotti Allen Networking technology for high-definition video $1,000<br />
Bynari Irving Messaging and email integration s<strong>of</strong>tware $1,500<br />
Codekko Plano Network optimization s<strong>of</strong>tware solution $1,500<br />
DeviceFidelity Richardson Hardware-s<strong>of</strong>tware applications for mobile devices $3,000<br />
Enthuze San Antonio S<strong>of</strong>tware-based consumer research and social networking $1,650<br />
Image Trends Austin Improved digital imagery s<strong>of</strong>tware $1,000<br />
iLearning Gateway Dallas TeachingBOT tutoring s<strong>of</strong>tware $1,000<br />
Interoperate.biz Plano Rapid computer language translation s<strong>of</strong>tware $1,000<br />
Iridescent Networks Frisco S<strong>of</strong>tware for video delivery over <strong>the</strong> Internet $1,000<br />
Merkatum Austin Biometric and biographic identity resolution s<strong>of</strong>tware $1,000<br />
Modria Irving Supply chain management s<strong>of</strong>tware $1,000<br />
Net Watch Solutions Richardson S<strong>of</strong>tware for infrastructure management $500<br />
Net.Orange Dallas Clinical Pathways Management s<strong>of</strong>tware for health care $1,900<br />
Qcue Austin Dynamic pricing s<strong>of</strong>tware solution $1,000<br />
PrincipleS<strong>of</strong>t Plano Bandwidth enhancement s<strong>of</strong>tware for network applications $750<br />
SecureOrigins El Paso Logistics and supply chain s<strong>of</strong>tware security system $2,000<br />
Smart Imaging Tech. Houston Water borne pathogens analysis hardware/s<strong>of</strong>tware system $1,000<br />
SNRLabs Richardson Handset-laptop convergence s<strong>of</strong>tware $750<br />
Varaha Systems Dallas uMobility s<strong>of</strong>tware fixed-mobile convergence solution $1,500<br />
Veros Systems College Station Asset management s<strong>of</strong>tware solutions $1,500<br />
The University <strong>of</strong> <strong>Texas</strong><br />
at San Antonio (UTSA)<br />
San Antonio Recruitment <strong>of</strong> Dr. Ravi Sandhu as founding director <strong>of</strong> UTSA’s<br />
Institute for Cyber Security Research (ICSR)<br />
TOTAL<br />
$3,690<br />
$33,640<br />
25
Appendix 2: Selected Industry Resources<br />
Entertainment S<strong>of</strong>tware Association (ESA) at http://www.<strong>the</strong>esa.com/<br />
A national industry association for computer and video game publishing. The website <strong>of</strong>fers industry facts, economic<br />
data, and pr<strong>of</strong>iles <strong>of</strong> top states in <strong>the</strong> industry including <strong>Texas</strong>.<br />
Federal Cyber Service: Scholarship for Service (SFS) at www.sfs.opm.gov/<br />
SFS is a unique program designed to increase and streng<strong>the</strong>n <strong>the</strong> cadre <strong>of</strong> federal information assurance pr<strong>of</strong>essionals<br />
that protect <strong>the</strong> government's critical information infrastructure. This program provides scholarships that fully<br />
fund <strong>the</strong> typical costs that students incur while attending an approved institution <strong>of</strong> higher learning. The scholarships<br />
are funded through grants awarded by <strong>the</strong> National Science Foundation.<br />
SocialMedia.org at www.socialmedia.org/<br />
A national high technology-focused trade association for social media. The website <strong>of</strong>fers some newsletters, a<br />
blog, and information on virtual events.<br />
TechAmerica Foundation at www.techamerica.org<br />
This national tech industry trade association publishes <strong>the</strong> annual Cyberstates: The Definitive State-by State Analysis<br />
<strong>of</strong> <strong>the</strong> U.S. High-Tech Industry report, which includes a <strong>Texas</strong> pr<strong>of</strong>ile, and much more.<br />
<strong>Texas</strong> Film Commission (TFC) at www.governor.state.tx.us/film/<br />
TFC is a <strong>Texas</strong> <strong>Office</strong> <strong>of</strong> <strong>the</strong> <strong>Governor</strong> division that supports <strong>the</strong> state’s media industries. The website <strong>of</strong>fers information<br />
on TFC incentives, job hotlines, and more.<br />
<strong>Texas</strong> Emerging <strong>Technology</strong> Fund (TETF) at www.emergingtechfund.com<br />
The <strong>Texas</strong> <strong>Office</strong> <strong>of</strong> <strong>the</strong> <strong>Governor</strong>’s TETF program website area provides TETF awards information, program contacts,<br />
news, and more.<br />
<strong>Texas</strong> Game at texasgame.com/<br />
This website <strong>of</strong>fers fast facts and links to <strong>Texas</strong> video game industry resources.<br />
<strong>Texas</strong> Industry Pr<strong>of</strong>iles website at www.texasindustrypr<strong>of</strong>iles.com<br />
This <strong>Texas</strong> Workforce Commission website contains <strong>the</strong> 2005 <strong>Texas</strong> industry cluster reports, including <strong>Information</strong><br />
and Computer <strong>Technology</strong>, Regional Location Quotients data, <strong>the</strong> Clusters GIS Mapping tool, and much<br />
more.<br />
26
<strong>Office</strong> <strong>of</strong> <strong>the</strong> <strong>Governor</strong><br />
Economic Development and Tourism<br />
PO Box 12428, Austin, TX 78711<br />
512-936-0101<br />
www.<strong>Texas</strong>WideOpenForBusiness.com