Texas Information Technology Services - Office of the Governor ...

Texas Information
Technology Services
Industry Report
2012
www.TexasWideOpenForBusiness.com
Office of the Governor | Economic Development & Tourism

Contents
Overview…………………………………………………………………. 1
Computer Systems Design & Services.…………………….. 9
Data Processing & Hosting………………………………………. 13
Software …………………………………………………………………. 16
Online Content Providers…...……………………………………
IT Services Across Industries…………………………………….
20
23

Overview
I
nformation technology (IT) services are an
important and growing part of the Texas economy,
directly employing over 156,500 across the state.
The Texas IT services industry is significantly
specialized in the computer systems design and in the
data processing and hosting areas, more than any other
state except California. These two areas account for
the majority of the state’s IT services firms and
employment.
This report covers the broad and diversified range of
IT services companies, including software; gaming
and Internet publishing; web search portals and
services; data storage, processing and hosting;
computer systems design and consulting; Internet
service providers; and related services.
While information technology workers are concentrated
in traditional IT sectors such as software and
computer systems design, these skilled professionals
are also employed across a range of industries, from
financial services to energy to health care. As a result,
IT services are embedded throughout most industries.
The rise of online services and cloud computing has
changed the scope of IT services, leading to further
industry fragmentation. These changes have fostered a
related trend, in which companies from other industries
are increasingly moving into the IT services
Texas is more specialized in data processing
& hosting and computer systems design
services than most other states.
arena. Examples of companies following this trend are
the world’s No. 3 supplier of PCs, Dell Inc., and one
of the nation’s largest communications companies,
AT&T, both of which are headquartered in Texas.
These firms have both acquired IT consulting and
software companies over the past few years in order to
expand their IT service offerings.
Texas IT Services Employment
by IT Service Sector
Data note: This report covers activities categorized in the North American Industry
Classification System (NAICS): Computer Systems Design etc. (5415); Data Processing
etc. (518); Software Publishers (5112); Internet Publishing etc. (51913);
and Specialized Telecommunications etc. (517919).
Source: Texas Workforce Commission
1

OVERVIEW
State of the Industry in Texas
As home to nearly 14,000 IT services firms, Texas has
achieved a significant number of national top 10
rankings related to the industry. The state’s status as
an IT services industry leader is strengthened by
proactive government support, a large venture capital
network, a concentration of skilled IT services
workers, multiple top-tier research institutions, and a
top-ranked business climate.
Texas’ position as a technology services hub has made
the state a top location for international corporations.
According to consulting firm FDI Intelligence, IT and
Texas Ranked No. 2 High-Tech State
In 2010, Texas was ranked as the No. 2 state for
high-tech employment by the national industry
association TechAmerica Foundation in its
annual Cyberstates report, a state-by-state
analysis of the U.S. high-tech industry. The
report found that Texas’ multiple high-tech
sectors employed more than 456,400 at 27,900
establishments.
TechAmerica’s analysis shows that the largest
2010 high-tech employment gains in Texas were
in computer systems design and related
services. In addition, Texas ranked among the
top three states in employment in 9 of the 15
high-tech sectors covered by TechAmerica.
2
software was the number one sector for foreign direct
investment in Texas between 2007-2011. More than
60 IT companies from 20 countries established or
expanded operations in Texas during that period.
$1.6 billion
Amount invested by venture capital firms in
279 Texas IT services and software companies
from 2005-2010, according to consulting firm
PricewaterhouseCoopers.
Top Texas-based IT services companies ranked by
sales are listed throughout this report. They include
Fortune 1000 companies Dell Inc. (Round Rock, TX)
and BMC Software (Houston).
Texas is also home to some of the nation’s fastest
growing IT services firms. They include Saxon-
Global (Irving), SoftLayer Technologies (Dallas),
Vintage IT Services (Austin), One Source Networks
(San Antonio), and Kinnser Software (Austin), all of
which ranked on Inc. Magazine’s Inc. 500, a list of the
nation’s fastest growing private companies.
Texas-based IT Services firms ranked on the Fortune 500
Texas-based IT Services firms ranked on the Inc. 500

OVERVIEW
Major IT Services Companies with Operations in Texas
Selection of firms with total corporate revenues exceeding $500 million
Representative sample only Sources: D&B, company websites
3

OVERVIEW
Texas Enterprise Fund
IT Services-Related Awards
Company City Description Jobs
Award
(Millions)
Apple Austin Software and hardware 3,635 $21.0
eBay Austin E-commerce 1,050 $2.8
Facebook Austin Social media 200 $1.4
Frito-Lay Plano IT division for food manufacturing 125 $1.1
Rackspace Hosting
Windcrest
(San Antonio)
Data hosting 4,000 $22
TD Ameritrade Fort Worth Online financial services 490 $1.2
Virtual Computing Environment (VCE) Richardson Cloud computing services 434 $2.4
The Advisory Board Co. Austin Software 200 $0.5
State Government
Initiatives
Incentive Programs
In 2003, the Texas Legislature passed legislation
authorizing the $295 million Texas Enterprise Fund
(TEF), a “deal closing” fund created to attract businesses
and new jobs to Texas. The Legislature
reauthorized the TEF most recently in 2011. As of
March 2012, the TEF has awarded approximately
$52.4 million to IT services-related projects. The
table shown above details these projects and the
10,134 jobs they have committed to create.
In 2004, Gov. Rick Perry announced a state industry
cluster initiative to focus state economic development
efforts in six key areas, one of which is Information
and Computer Technology.
In 2005, Gov. Rick Perry and the Texas Legislature
authorized the $200 million Texas Emerging Technol-
4
TOTAL 10,134 $52.4
ogy Fund (TETF) to promote breakthrough technological
innovations across multiple industries, including
computer and information technology. The TETF was
reauthorized most recently in 2011. To date, over
$33.6 million from the TETF has been awarded for IT
services-related projects with over $29.9 million going
to commercialize start-up companies and over $3.6
million awarded to universities. For details on IT
services-related TETF awards, see the table on page
25.
In 2007, Gov. Rick Perry and the Texas Legislature
passed legislation authorizing the Texas Moving
Image Industry Incentive Program with an appropriation
of $20 million and a 5% cash grant percentage
applicable to eligible video game production projects.
In August 2011, in recognition of the economic
impact of the video game industry in Texas, the Texas
Film Commission increased the maximum potential
cash grant percentage applicable to video game
productions to 17.5% of their eligible, project-specific
Texas spending, depending on game budget levels.

Education Initiatives
In 2005, the Texas Legislature established the Texas
Science, Technology, Engineering and Mathematics
(T-STEM) Initiative. Modeled on national STEM
programs, T-STEM focuses on educating and graduating
more Texas students in STEM fields critical for
maintaining a skilled and competitive state workforce.
T-STEM is part of the Texas High School Project and
aims to more closely align high school curriculums
with admission requirements for competitive colleges.
Under the initiative, 51 T-STEM academies have been
created, serving approximately 15,000 students
annually. The Legislature most recently reauthorized
the program in 2011.
Electronic Arts Expands in Austin
In January 2012, video game publisher Electronic
Arts (EA) opened its new EA Sports division offices
in Austin, Texas. EA’s expansion
was initially announced
by Gov. Rick Perry in July 2011.
EA already employed approximately
450 in Austin at the
time of the announcement,
and the expansion is expected
to create an additional 300
direct and contract positions.
Based in California, EA is a
leading interactive entertainment
software company that
develops and distributes its
products worldwide.
Frank Gibeau, President of EA,
praised Texas Governor Rick
Perry's role in recruiting EA to
the state, saying Perry "really
understands our industry and
wants it to be a key part of the
Texas economy."
EA will seek financial incentives
from the Texas Film
Tax Legislation
OVERVIEW
In June 2011, Gov. Rick Perry signed Texas House
Bill 1841, which improved the Texas business climate
for hosting and data center companies. The bill
states that an individual or business whose only
activity in the state is Internet hosting is not “engaged
in business” in the state and therefore does not have to
collect Texas sales and use taxes from customers. The
bill reversed a 2010 rule change made by the Texas
Comptroller of Public Accounts, which said that
renting a space on a server in Texas effectively
established a business presence in the state.
Commission as part of its expansion deal.
Separately, EA also operates a branch of its Bioware
video game development division in Austin.
Texas Governor Rick Perry, EA President Frank Gibeau, and EA Sports COO Daryl Holt
at July 2011 announcement event in Austin
5

OVERVIEW
IT Services Workforce
Texas’ IT services workforce is the second largest in
the nation, with more than 156,500 professionals
employed at nearly 14,000 IT services firms. These
workers are highly skilled and well paid, earning an
average annual salary above $90,000. The largest IT
subsector in the state is computer systems design,
which encompasses the activities of custom computer
programming, software consulting, systems integration,
computer facilities management, and related
services. This subsector accounts for nearly 70% of IT
services employment in Texas (see table below).
In addition to the total employment at firms dedicated
to IT services, a separate workforce of roughly
180,000 Texans are employed in IT professions across
all other industries. These workers include computer
programmers, network analysts, software developers
and other technicians embedded within sectors such as
manufacturing, financial services, health care, and
others. (See page 21 for more detail about the IT
workforce across industries.)
6
Compared to the U.S. as a whole, the Texas workforce
is significantly more concentrated in data processing,
hosting, and related services than other states, according
to the U.S. Bureau of Labor Statistics. Texas also
ranks No. 1 nationally for employment in the combined
ISP and data processing sector.
Texas ranks No. 1 in the U.S. in combined
ISP and data processing employment.
From 2007-2011, employment in the major IT
services sectors in Texas increased by 11%. Internet
publishing led the way as the only segment that saw
continuous employment increases each year during
that period (see graph on next page). Despite a
temporary downturn in 2009, the computer systems
design segment experienced overall employment
increases of nearly 20% between 2007 and 2011.
Additionally, both the software publishing and data
processing & hosting sectors declined slightly over the
four-year period, but began rebounding in 2011.
Information Technology Services Employment in Texas
Second Quarter 2011
Sector (Industry Code) Employees Firms
-U.S. Bureau of Labor Statistics
Average
Annual Wage
Computer Systems Design and Related Services (5415) 108,676 12,106 $90,064
Data Processing, Hosting and Related Services (518) 26,787 702 $85,228
Software Publishers (5112) 16,433 666 $111,124
Internet Publishing, Broadcasting, and Search Portals (51913) 3,208 421 $69,992
Specialized Telecommunications & Internet Service Providers (517919) 1,416 96 $67,548
TOTALS 156,520 13,991 $90,832
Computer-Related Professions in All Other Industries* 180,350 NA $75,015
*Approximate. Based on 2010 data.
Source: Texas Workforce Commission

Employment
Texas IT Services 5-Year Employment Trends by Sector, 2007 to 2011
Source: Texas Workforce Commission. Data from second quarter of each year.
Education & Research
The IT services industry is dependent on a highly
educated workforce and first rate research and development
(R&D) activities. Texas’ higher education
institutions continue to graduate record numbers of
students, and in addition, there is a steady migration of
college graduates to Texas from other states and
countries. Texas is home to some of the nation’s top
ranked computer schools. The state’s universities are
conducting increasing amounts of IT services-related
R&D, leading to more patent and startup activity.
Texas Universities
In spring 2010, Texas graduated 18,780 students
with IT services-related degrees, according to the
National Center for Education Statistics.
In the 2010-11 academic year, Texas ranked No.
3 nationally for the number of schools (21)
offering video game design and development
degrees, according to the Entertainment Software
Association.
Five Texas Information Technology
Schools Rank in U.S. Top 100
In 2010, five Texas universities landed on U.S.
News & World Report’s Top U.S. computer
science school rankings:
No. 8: The University of Texas at Austin
No. 20: Rice University (Houston)
No. 47: Texas A&M—College Station
No. 79: The University of Texas at Dallas
OVERVIEW
No. 90: The University of Texas at Arlington
7

OVERVIEW
8
Texas’ IT patent output increased
by nearly 90% from 2000-2010.
In fiscal year (FY) 2010, $188.1 billion were
invested in computer and mathematical sciences
R&D at Texas universities, an increase of almost
13% from FY 2009, according to the Texas
Higher Education Coordinating Board
(THECB). That total represents approximately
8% of all Texas university R&D funding.
The ten Texas universities with the largest IT
services-related R&D expenditures in FY 2010
(see table below) accounted for 85% of the
state’s total.
Top Ten Texas Universities for
IT Services-Related R&D
by FY 2010 Expenditures
Institution
-U.S. Patent and Trademark Office
Total R&D
(Millions)
University of Texas (UT) at Austin $79.1
Texas A&M University $20.6
Rice University $15.2
University of Houston $10.3
UT at Dallas $9.3
Texas Tech University $8.6
UT at El Paso $8.2
UT at Arlington $3.8
UT at San Antonio $1.9
University of North Texas $1.6
TOTAL $159.1
Source: Texas Higher Education Coordinating Board
The state of Texas achieved the following
rankings in 2011 from the National Science
Foundation (NSF) regarding doctorates awarded
in IT-related fields:
Texas Top-Ranked for
IT-Related Doctorates
No. 3 for Science and Engineering doctorates
awarded by state, with 1,930 conferred
No. 3 for Mathematics doctorates awarded
by state, with 92 conferred
No. 4 for Computer and Information Science
doctorates by state, with 111 conferred
Innovations and Patents
Texas’ growing strength in information technology is
evident in the trend of patent output from the state.
In 2010, Texas ranked No. 3 nationally for the
number of IT services-related utility patents
issued, with 2,070. This figure includes all data
processing and computer-related technology
patents as defined by the U.S. Patent and
Trademark Office (USPTO).
From 2000-2010, 15,450 Texas IT servicesrelated
utility patents were issued. Texas’ IT
patent output increased by nearly 90% during
this time span, growing from 1,092 patents in
2000 to 2,070 patents in 2010.

Computer Systems Design & Services
Overview
T
exas is home to more than 12,100 computer
systems design (CSD) and related services
firms employing over 108,600 workers. This is
the largest IT subsector in Texas, accounting for
nearly 70% of the state’s IT services employment.
Employment in the state’s CSD sector grew nearly
20% between 2007 and 2011, which is attributable to
the increasing importance of enterprise computer
services to government, education, and businesses
across industries.
Within the CSD sector, the computer systems design
services area (NAICS 541512) dominates in terms of
Computer Systems Design Employment in Texas
Second Quarter 2011 (NAICS 5415)
both firms and workers (see the table below). Major
companies doing business in Texas in this segment
(see the list on page 12) are also primarily within the
computer systems design services area, which includes
many outsourcing and consulting firms and a growing
number of cyber security companies.
Sector (Industry Code) Examples Employees Firms
Computer Systems Design Services (541512)
Customer Computer Programing Services
(541511)
Other Computer Related Services (541519)
Computer Facilities Management Services
(541513)
Computer hardware & software
consulting firms
Computer & Internet design
service firms
Software installation & disaster
recovery service firms
Cisco-EMC Joint Venture Launches
Headquarters in Texas
In March 2011, the State of Texas announced
a $2.45 million TEF investment in the Virtual
Computing Environment (VCE) Company, a
Cisco-EMC joint venture with operations in
Dallas, Massachusetts, and Silicon Valley. VCE
has since opened a new headquarters in Richardson
and begun hiring what
will eventually total more than
430 workers. The project is expected
to generate $35 million
in capital investment.
VMWare and Intel are also investors
in the firm, which focuses on cloud
computing, data management and security,
and next-generation data centers.
Average
Annual Wage
53,396 6,260 $90,012
47,661 5,533 $91,781
5,016 287 $83,616
Data processing facility operators 2,599 122 $73,216
TOTALS 108,673 12,106 $90,064
Source: Texas Workforce Commission
9

COMPUTER SYSTEMS DESIGN
Workforce Concentrations
The map at right identifies the state’s Workforce
Development regions with above-average
specializations in computer systems design and
related services. The highlighted regions are not the
only areas in Texas where
workers in this sector can be
found, but rather represent
areas with the greatest
concentrations relative to the
size of the local labor force.
This analysis compares the
portion of each Texas
region’s workforce
employed in the sector to the
portion of the entire U.S.
workforce employed in that
sector. The comparison
provides a ratio that
measures how intensively a
certain region is specialized
in this industry, and ranks it
as “moderate,” “above
average,” or “high.”
Dell Expands IT Services Footprint
10
Data: Texas Workforce Commission, Q4 2010
In September 2009, Round Rock, Texas-based Dell
Inc. purchased Plano, Texas-based Perot Systems
for $3.9 billion, a move that combined two iconic IT
brands. Perot Systems has since been
fully integrated into Dell’s services
division. In addition to being a global
leader in manufacturing computer
systems, such as data-storage hardware,
Dell provides software-as-aservice,
infrastructure consulting, and
other IT services.
Computer Systems
Design and Related
Services
Concentration
Moderate
Above Average
High
North Central Region
Computer Systems Design
Dallas County
Computer Facilities Mgmt.
Computer Systems Design
Before the acquisition, nearly half of IT consultant
Perot System’s revenue came from the healthcare
industry, where it served the electronic medical
record needs of more than 1,000 hospitals. Another
25% of its revenues came from the government
sector. As a result, Dell immediately
expanded its reach into both of these
markets.
Dell employs over 100,000 workers and
connects with over 5.4 million customers
daily. The company’s 2011 revenues
exceeded $61 billion, 29% of which were
derived from software and services.
Central Texas
Custom
Programming
Services
Gulf Region
Computer Systems Design
Capital Region
Custom Programming Services
Computer Systems Design

COMPUTER SYSTEMS DESIGN
Central Texas’
MILITARY INSTALLATIONS
Cyber Security Hub San Antonio has emerged in recent years as a cyber
security national center of excellence, with roots
reaching back several decades to security opera-
UNIVERSITY OF TEXAS AT
SAN ANTONIO (UTSA)
The Center for Infrastructure Assurance and
Security (CIAS) was established in 2001 as part of
the UTSA’s cyber security program launch. In 2002,
the NSA designated UTSA as a Center of Academic
Excellence in Information Assurance Education,
making it the first Texas
university to receive this
honor. The CIAS works to
improve the overall
security of state and community technology
infrastructures.
The Institute for Cyber Security (ICS) was created
at UTSA in 2007 with the assistance of a $3.5
million TETF grant. The center is run by Executive
Director Ravi Sandhu, a nationally recognized
leader in cyber security. ICS conducts basic and
applied research in cyber security and pursues
development of commercializable technologies
and services.
UNIVERSITY OF TEXAS AT
AUSTIN
The Center for Identity (CFI) at the University of
Texas at Austin was established in 2010 to research
and develop
innovations to protect
identities in cyber and
physical environments.
The CFI collaborates with government, corporate,
and other academic entities.
tions at local Air Force bases.
In 2009, the U.S. Air Force activated
the 24th Air Force, also known
as the Air Force Cyber Command,
at Lackland Air Force Base in San
Antonio. The city is also home to
the National Security Agency’s
(NSA) Texas Cryptology Center, an
NSA data center, as well as approximately
80 defense contractors, many of whom are
focused on information security. The City of San
Antonio estimates the local economic impact of IT
and cyber business was $10 billion in 2010, which
the city credits to its vibrant business community
and major military installations.
CyberPatriot, the national high school
cyber defense competition co-created by
UTSA’s CIAS
TEXAS A&M UNIVERSITY
Texas A&M University’s Texas Engineering Extension
Service (TEEX) offers web-based cyber security
courses to U.S. citizens through its Adaptive Cyber-
Security Training Online (ACT-Online) program.
The training is certified by the U.S. Department of
Homeland Security and Federal Emergency Management
Agency.
11

COMPUTER SYSTEMS DESIGN
Major Companies
Top Computer Systems Design Companies with Operations in Texas
By Global Revenue
12
Company Name
Primary
Location(s)
Hewlett-Packard Plano
IBM
Microsoft
Austin, Dallas,
Houston
Austin, Irving,
San Antonio
Sector/Subsidiary
Computer systems design services
(HP Enterprise Services)
Sales
(Millions)
$127,245
Computer systems design services $106,916
Computer systems design services $69,943
Dell Inc. Round Rock, Plano Computer facilities management services $61,494
NEC Irving
Accenture
Austin, Houston,
San Antonio, Dallas
Raytheon Garland
Xerox Dallas
Computer systems design services
(NEC of America)
$38,655
Computer systems consulting $27,353
Computer systems design services
(Raytheon Intelligence and Info. Systems)
Computer systems design services
(Affiliated Computer Services)
Computer Sciences Corp. Austin, Dallas, Houston Custom computer programming services
L-3 Communications Rockwall
Custom computer programming services
(L-3 Communications ComCept)
$24,857
$22,626
$16,042
$15,170
Capgemini S.A. Dallas, Houston Computer systems design services $11,530
SAIC Inc. San Antonio, etc. Network mgmt., custom programming, etc. $11,120
Cognizant Irving Custom computer programming services $6,120
Infosys Technologies Ltd. Houston, Plano
Custom computer programming services
(Infosys Consulting)
$6,041
Avaya Inc. Coppell Computer systems design services $5,550
BMC Software Houston, Austin Computer systems design services $2,065
CompuCom Systems Dallas Computer systems design services $1,400
INX Inc. Houston Computer systems design services $312
PFSweb Inc. Allen Other computer related services $275
Solarwinds Austin Computer systems design services $198
Representative sample only. Sources: D&B, LexisNexis, company websites
Top 5:

Data Processing & Hosting
Overview
T
exas is home to more than 700 data processing
and hosting firms employing over 26,700
workers with an average annual salary exceeding
$85,000. The sector, which accounts for 17% of
the state’s IT services employment, includes companies
offering data processing and hosting services, as
well as Internet service providers (ISPs) and web
search portals.
In 2010, one out of approximately every 10 U.S. Data
Processing & Hosting (DPH) workers was employed
in Texas and one out of approximately every 13 U.S.
DPH firms was located in Texas, according to federal
data. Additionally, Texas ranked No. 1 nationally for
DPH sector employment.
Texas is one of the nation’s top locations
for data centers
Some of the world’s largest hosting and data center
companies call Texas home (see list on page 15).
Companies on the list share considerable overlap with
the closely related Computer Systems Design sector
(see page 12).
Texas Hosting Firm Grows Globally
Founded in San Antonio, Texas, in 1998,
Rackspace Hosting has become one of the
largest hosting and cloud computing companies
in the country, with over 4,000 employees,
172,000 customers, and eight data centers in
the U.S., U.K., and China.
In August 2007, the State of Texas announced a
$22 million TEF investment in Rackspace, as
part of state and local efforts to secure the
company’s expansion to a new facility in the
San Antonio suburb of Windcrest. The investment
is
projected
to generate
more
than $100
million in capital investment and approximately
4,000 new jobs by 2015.
In December 2011, Rackspace signed a longterm
lease for over 58,000 sq. ft. in Richardson,
Texas, where the company is planning a new
data center.
Texas is one of the nation’s top locations for data
centers because the state has plentiful resources to
accommodate the unique operating requirements of
these facilities. Hewlett Packard, for example, chose
to locate data centers in Austin and Houston in recent
years because these cities offered “availability and
affordability of space, power and network bandwidth,
as well as a lower probability of impact from natural
disasters,” according to the company. These factors
allow data centers in Texas to operate efficiently and
reliably, ensuring that customers won’t experience
service outages.
13

DATA PROCESSING & HOSTING
Workforce Concentrations
The map at right identifies the state’s Workforce
Development regions with above-average
specializations in data
processing, hosting, and related
services. The highlighted
regions are not the only areas in
Texas where workers in this
sector can be found, but rather
represent areas with the greatest
concentrations relative to the
size of the local labor force.
This analysis compares the
portion of each Texas region’s
workforce employed in the
sector to the portion of the
entire U.S. workforce employed
in that sector. The comparison
provides a ratio that measures
how intensively a certain region
is specialized in this industry,
and ranks it as “moderate,”
“above average,” or “high.”
In April 2011, California-based Cisco Systems
opened its new data center in Allen, Texas,
featuring energy efficient technologies to support
the company’s cloud and IT-as-a-service platforms.
For data security purposes, the Allen facility mirrors
Cisco’s Richardson, Texas, facility located 15 miles
away. Cisco is a global leader in networking
technology.
14
Data Processing, Hosting,
and Related
Services
Alamo Region
Hosting
Data: Texas Workforce Commission, Q4 2010
New Data Centers Plug into Texas
In January 2012,
Houston-based
CyrusOne, a wholly
-owned subsidiary
of Ohio-based
Cincinnati Bell,
Concentration
Moderate
Above Average
High
Dallas/Fort Worth
Data Management
Capital Region
Data Management
announced plans to
build the state’s
largest data center,
which will be
located in the
Dallas area. When
completed, the
700,000 sq. ft. facility will also be one of the largest
data centers in the nation. CyrusOne also recently
finished major data center expansions in Houston
and Austin, adding over 102,000 sq. ft. in 2011 and
2012. Cincinnati Bell is a major U.S. telecom and
wireless services company.

DATA PROCESSING & HOSTING
Major Companies
Top Data Processing & Hosting Companies with Operations in Texas
By Global Revenue
Company Name Primary Location(s) Sector/Subsidiary or Division
Hewlett-Packard Plano
Hosting & data centers
(HP Enterprise Services)
Sales
(Millions)
$127,245
AT&T Dallas, Austin Hosting and cloud services $126,720
NTT Group Dallas, Austin Web hosting (Verio Inc.) $124,350
Verizon Communications Irving Data centers (Terremark Worldwide) $106,916
IBM Austin, Dallas, Houston Hosting & data processing $99,870
Microsoft San Antonio Enterprise data center $69,943
Dell Round Rock Hosting & data centers $61,494
Fujitsu Dallas Data centers $54,640
Amazon.com Dallas/Fort Worth Enterprise data center $48,080
Cisco Systems Allen, Richardson Data centers $43,220
Xerox Dallas
Hosting
(Affiliated Computer Services)
$22,626
ADP El Paso, Dallas, etc. Data processing $9,880
Sungard
Houston, Austin,
Richardson
Data centers $4,990
Cincinnati Bell Houston, Dallas, Austin Hosting & data centers (CyrusOne) $1,460
Digital Realty Houston, Dallas, Austin Data centers $1,060
Rackspace Hosting San Antonio, Dallas Hosting & data centers $1,025
Internap Dallas, Houston Hosting & data centers $245
Softlayer Technologies Dallas, Houston Hosting & data centers $37
Hostgator Houston, Austin Web Hosting $14
Data Foundry Houston, Austin Data centers $12
Linode Dallas Hosting & data centers N/A
Alpheus Communications DFW, Austin, Houston Hosting & data centers N/A
Representative sample only. Sources: D&B, LexisNexis, company websites
Top 5:
15

Software
Overview
T
exas is home more than 660 software publishing
firms employing over 16,400. The sector
account for 11% of the state’s IT services
employment. It includes software design, development
and publication; computer and video game publishing;
and providing support services to software purchasers.
Computer and video gaming has become a major part
of the state’s software publishing segment and entertainment
industry. In fact, the latest data from the
Entertainment Software Association (ESA), a national
industry group, indicates that Texas ranks No. 2
nationally for computer and video game employment,
with over 13,600 individuals directly and indirectly
employed by the industry. The ESA further reports
16
Texas ranks No. 4 nationally for software
publishing employment.
-TechAmerica, 2011
that entertainment software is one of the nation’s
fastest growing industry segments, valued at $4.9
billion in 2009, according to the latest data available.
U.S. consumers spent $25.1 billion on video games,
hardware, and accessories in 2010 alone.
Texas in the Software Game
As home to 159 video game software companies
that employ 4,500 professionals, Texas has
earned a reputation as a center of video game
development. Austin is the leading location in
Texas for this industry, with 72% of the state’s
video game jobs found there. Dallas is home to
23% of those jobs, followed by Houston with
4%.
Video game companies spend over $234 million
per year in Texas, which represents an approximately
150% increase in spending since 2006,
according to the Texas Film Commission. See
pages 4-5 for details on State of Texas video
game industry incentives.
In 2010, one out of approximately every 16 U.S.
software publishing workers was employed in Texas,
and one out of approximately every 14 U.S. software
publishing firms was located in Texas, according to
U.S. government data.
The Texas software industry has attracted strong
venture capital (VC) support. In 2010 alone, VC firms
invested over $142 million in 37 Texas software
companies, according to PricewaterhouseCoopers.
From 2005 through 2010, VC firms invested over
$1.1 billion in 224 Texas software firms. To date, the
state’s Texas Emerging Technology Fund has invested
approximately $32.6 million in software-related
projects. See page 25 for more details.

BMC Expands In Central Texas
Houston-based BMC Software, a Fortune 1000
company, provides business management software
across distributed, mainframe, virtual and cloud
environments to more than 15,000 worldwide
customers. Approximately 96% of the Forbes Global
100 companies and 81% of the Fortune 500 rely on
BMC Software.
In 2010 and 2011, BMC purchased two Austinbased
software companies, Phurnace and Stream-
Step, bringing its employment in that city to over
200 people. BMC employs approximately 6,000
Workforce Concentrations
The map at right identifies the state’s Workforce
Development regions with above-average
specializations in software design and publishing. The
highlighted regions are not
the only areas in Texas
where workers in this sector
can be found, but rather
represent areas with the
greatest concentrations
relative to the size of the
local labor force.
This analysis compares the
portion of each Texas
region’s workforce
employed in the sector to the
portion of the entire U.S.
workforce employed in that
sector. The comparison
provides a ratio that
measures how intensively a
certain region is specialized
in this industry, and ranks it
as “moderate,” “above
average,” or “high.”
Data: Texas Workforce Commission, Q4 2010
South Plains
Software
Design and
Publishing
Concentration
Moderate
Above Average
High
North Central Region
Dallas County
Capital Region
SOFTWARE
people worldwide and reported 2011 revenues of
$2.2 billion, making it one of the 20 largest
software companies in the world by revenues.
BMC was founded in Houston in 1980 and grew
rapidly over the next two decades. By 1998, the
company had already been added to the S&P 500,
one of the most watched U.S. stock indices.
17

SOFTWARE
The challenge of digitizing patient records and
hospital communications has led to an IT boom.
According to U.S. government projections, employment
of health information technicians is expected
to increase by 20% through 2018--much faster
than most other occupations. Below is a sample of
health care software firms based in Texas.
18
Software Growth Sector:
HEALTH CARE INFO TECHNOLOGY
COMPANY
DESCRIPTION
Mobile medical records
Austin
Medical records, practice mgmt.
Dallas
Medical records, practice mgmt.
Carrollton
Medical data integration
Frisco
Medical records
Round Rock / Plano
Medical records
Bedford
Practice mgmt.
Austin
Home health practice mgmt.
Austin
Medical payment mgmt.
Austin
Medical records
Dallas
Hospital mgmt.
Austin
Practice mgmt.
Dallas
SXSW Interactive Showcases
Texas’ High Tech and IT Industries
Since 1993, Austin, Texas, has hosted the annual South
by Southwest (SXSW) Interactive Festival, which
showcases emerging multimedia technologies. The
emergence of SXSW as a seminal industry event
parallels the growing prominence of the Texas software,
social media, and gaming industries.
SXSW Interactive has become one of the foremost
national events for previewing the unfolding world of
technology. Leading companies like Dell and Facebook
have rolled out new products at SXSW, and blockbuster
social media platforms like Twitter and Foursquare
have made their debuts at the Festival.
Washington, D.C., Software Firm
Expands in Austin
In January 2012, the State of Texas announced a
$500,000 TEF investment in The Advisory Board,
a Washington D.C.-based global research,
consulting, and technology firm partnering with
125,000 leaders in 3,200 organizations across
health care and higher education. The firm will
invest $8.1
million to expand
software development
and
technical support
services infrastructure
as well as create over 200 jobs at its
Austin, Texas-based Crimson division. The
Crimson division currently supports more than
500 individual hospitals and 300,000 physicians.

Major Companies
Top Software Companies with Operations in Texas
By Global Revenue
Company Name Primary Locations Sector
Sales
(Millions)
Hewlett-Packard Austin End-to-end software solutions $127,245
IBM Austin, Dallas, Houston End-to-end software solutions $106,916
Siemens Plano Product lifecycle mgt. solutions $98,958
Microsoft
Austin, Irving,
San Antonio, Houston
Utilities software $69,943
Oracle Corporation Austin, Dallas, Houston Database & file mgmt. software $35,622
SAP AG Houston, Irving
Computer Sciences Corp.
(CSC)
Austin, Dallas,
San Antonio
Enterprise resource planning
software
Enterprise, security, etc.
software
$19,222
$16,040
eBay Austin eCommerce software $11,652
Symantec Dallas, Houston Security software $6,190
BMC Software Houston, Austin Business services software $2,065
Top Video Game Companies with Operations in Texas
By Global Revenue
Company Name Primary Locations Texas Subsidiaries
Sales
(Million)
Sony Austin Sony Online Entertainment $86,660
Microsoft Austin
Microsoft Studios & Twisted
Pixel Games
$69,943
Nintendo Austin Retro Studios $12,240
Activision Blizzard Austin, Dallas NA $4,755
Electronic Arts Austin Bioware, EA Sports $3,589
THQ Inc. Austin NA $665
Zynga Inc. Austin, Dallas, McKinney Zynga With Friends (McKinney) $597
NCsoft Corp Austin NA $573
Multimedia Games Austin NA $128
Aspyr Media Austin NA $16
Representative samples only. Sources: Dun & Bradstreet, LexisNexis, company websites
SOFTWARE
Top 5:
Top 5:
19

Online Content Providers
Overview
T
exas is home to more than 400 online content
providers employing over 3,200 with an
average annual salary of nearly $70,000. This
sector accounts for approximately 2% of the state’s IT
services employment. Online content providers
enjoyed consistent employment increases from 2007
to 2010, growing almost 45%.
20
Facebook “Likes” Austin
In February 2010, the State of Texas announced a
$1.4 million TEF investment in California-based
Facebook to create a sales and operations office in
Austin. Along with $200,000 in City of Austin incen-
tives, this investment will assist the creation of 200
jobs in the city.
Facebook opened its Austin office in May 2010 and
doubled its Austin office space in October 2011.
The Austin office represents Facebook’s first major
U.S. expansion outside of California and is its se-
cond largest operation center in the world.
In February 2012, Facebook announced plans for
an initial public offering (IPO) the following May.
The online content providers sector includes Internet
publishing and broadcasting companies and web
search portal operators. Major companies doing
business in Texas in this sector (see list on page 22)
include some of the world’s largest news and publishing
companies, as well as a number of major Internet
firms.
Texas ranks No. 2 nationally for
Internet services employment.
-TechAmerica, 2011
In 2010, one out of approximately every 32 U.S.
Internet publishing workers was employed in Texas
and one out of approximately every 20 U.S. Internet
publishing firms was located in Texas, according to
federal data.
Facebook offices in downtown Austin

In April 2010, SocialMedia.org (formerly
Social Media Business Council) an-
nounced plans to move from Chicago,
Illinois to Austin, Texas. The national
organization, formed in 2007, moved to
Austin because the city has become a
hub of social media activity and has a
vibrant entrepreneurial environment.
SocialMedia.org serves as a virtual
community for social media leaders to
network and share best practices. Its
members include major companies such
as Dell, Microsoft, Yahoo!, AT&T,
Walmart, Johnson & Johnson, Shell, and
Toyota.
SocialMedia.org Moves
HQ to Texas
ONLINE CONTENT PROVIDERS
eBay Locates 1,000-Employee
Expansion in Austin
In April 2011, the State of Texas announced a $2.8
million TEF investment in eBay Inc. for the expansion of
its Austin facility.
The company’s
expansion will
create more than
1,000 high-paying
jobs and generate
an estimated $5.1 million in capital investment. The
project will facilitate the expansion of various eBay Inc.
business units, including PayPal units located in Austin.
eBay Inc. connects millions of buyers and sellers
globally through eBay.com, the world’s largest online
marketplace, and PayPal, which enables individuals and
businesses to make and receive online payments.
Major Web Services Companies Headquartered in Texas
Online Retail / Plano
Online Retail / Irving
Dating Services / Dallas
E-Commerce / Austin
Online Directories / Dallas
Financial Information / Austin
Information Services / Austin
Travel Services / Southlake
Vacation Rentals / Austin
Travel Services / Dallas
Representative Sample Only
21

ONLINE CONTENT PROVIDERS
Major Companies
Top Online Content & Web Service Providers with Operations in Texas
By Global Revenue
22
Company Name
Primary
Location(s)
Sector/Subsidiary
Sales
(Millions)
Amazon.com Dallas/Fort Worth E-commerce $48,077
Google Austin
Thomson Reuters
Houston, Austin,
Carrollton
Web search portal & Internet
publisher
$37,905
Online publisher (WestLaw) $13,807
eBay Austin E-commerce (PayPal) $11,652
Reed Elsevier Group
Bloomberg L.P.
Yahoo!
Dallas, El Paso,
Houston
Dallas, Houston,
Fort Worth
Richardson,
Fort Worth
Online publisher (LexisNexis) $9,670
Online publisher $6,250
Web search portal & Internet
publisher
$4,984
Facebook Austin Online social network $3,710
IAC/InteractiveCorp Austin, Dallas
Dun & Bradstreet
Austin, Dallas,
Houston
SuperMedia Dallas
Web search portal & publisher
(match.com, citysearch.com)
$2,059
Online publisher (Hoover’s) $1,760
Online publisher
(superpages.com)
$1,180
Associated Press Dallas, Houston Online publisher $630.5
HomeAway Austin E-commerce $168
Bazaarvoice Austin E-commerce software $64
PR Newswire
Dallas, Houston,
San Antonio
Online publisher $48
Travelocity Southlake E-commerce N/A
Representative samples only. Sources: Dun & Bradstreet, LexisNexis, company websites
Top 5:

IT Services Across Industries
hile information technology workers are
W concentrated in traditional sectors such as
software and computer system design, these skilled
professionals are also employed across a range of
industries, from financial services to energy to health
care.
FINANCE & INSURANCE MANUFACTURING WHOLESALE
Financial services encompass
many aspects of money
management, including
banking, insurance, credit, and
investments. Texas is has one of
the largest financial workforces
in the country, particularly
specialized in consumer lending
and property insurance. A large
percentage of the workers in
this technology-dependent
industry are in IT occupations.
Estimated IT Workers in Texas
24,950
Sample Employers
Financial Transactions / Austin
Banking / Dallas (HQ)
Investments / Westlake
Insurance & Investments /
San Antonio (HQ)
Advanced manufacturing
operations require information
technology to improve
efficiency, flexibility, and
customer responsiveness. Most
IT professionals in the Texas
manufacturing sector are
employed by makers of
computer, electronic,
automotive, aerospace, and
chemical products.
Estimated IT Workers in Texas
17,050
Sample Employers
Semiconductor Mfg. / Dallas (HQ)
Aerospace Product Mfg. / Fort Worth
The boxes below present the estimated number of IT
workers in the state in a given industry. 2011
employment numbers have been projected by Texas
Office of the Governor staff, based on data from the
Texas Workforce Commission. These estimates are
not official government data.
Automotive Mfg. /
San Antonio
Chemical Mfg. / Houston
The wholesale process is an
intermediate step in the
distribution of merchandise.
This sector comprises two main
types of businesses: merchant
wholesalers that sell goods on
their own account and business
to business electronic brokers
that arrange sales for others. IT
services for tracking inventories
and managing logistics are key
to this industry.
Estimated IT Workers in Texas
15,025
Sample Employers
Automotive Wholesale /
Houston (HQ)
Food Wholesale /
Houston (HQ)
Food Wholesale /
Houston (HQ)
Petroleum Wholesale /
San Antonio (HQ)
21

IT SERVICES ACROSS INDUSTRIES
ENERGY &
ENGINEERING
This sector includes companies
that operate or develop oil and
gas field properties, provide oil
field support services, generate
and distribute electricity, and
provide architectural and
engineering services. Houston,
which is considered the energy
capital of the nation, is home to
more than 3,700 energy-related
companies, including 16 of the
nation's top 20 oil pipelines.
BUSINESS & TECHNICAL
SERVICES
Businesses in this sector are
engaged in processes where
human capital is the major
input. These companies make
available the knowledge and
skills of their employees, selling
expertise rather than goods. In
Texas, an estimated 35,000 IT
professionals work for firms
that provide legal, accounting,
management consulting, R&D,
advertising, design, and business
support services.
Sample Employers Sample Employers
MEDICAL
Medical facilities, such as
doctor’s offices, hospitals, and
residential care centers, employ
thousands in Texas for the
comprehensive management of
health information, such as
electronic medical records. This
does not include software and
other IT companies that provide
services to the medical sector.
Estimated IT Workers in Texas Estimated IT Workers in Texas Estimated IT Workers in Texas
3,650 Oil & Gas
6,850 Engineering &
Architecture
1,700 Utilities
11,700 Business Support
8,300 Company Mgmt.
7,650 Consulting Services
3,050 Scientific R&D
2,300 Accounting Services
Oil & Gas / Irving (HQ) Business Outsourcing / Dallas (HQ)
Oil & Gas / Houston (HQ)
Electric Utility /
Dallas (HQ)
Engineering / Houston (HQ)
Engineering / Irving (HQ)
24
Mgmt. Consulting / Houston, etc.
Business Services / Dallas (HQ)
Staffing Services / Kingwood (HQ)
Accounting Services / El Paso, etc.
6,850
Sample Employers
Specialized Hospital / Houston
Medical Complex / Houston
Medical Complex / Dallas

Appendix 1: IT-Related Texas Emerging Technology Fund Awards
Company/Entity City Project Description
Funding
(Thousands)
2Cimple Plano Interactive online video system software $1,500
Analogix Development Austin 3D movement-based game controller technology $250
Ayata Austin Predictive Decision Management software $1,600
Bauhaus Software San Antonio Digital 2D animation software solution $500
Biometric Signature ID Dallas Biometric software for identity verification $550
Biscotti Allen Networking technology for high-definition video $1,000
Bynari Irving Messaging and email integration software $1,500
Codekko Plano Network optimization software solution $1,500
DeviceFidelity Richardson Hardware-software applications for mobile devices $3,000
Enthuze San Antonio Software-based consumer research and social networking $1,650
Image Trends Austin Improved digital imagery software $1,000
iLearning Gateway Dallas TeachingBOT tutoring software $1,000
Interoperate.biz Plano Rapid computer language translation software $1,000
Iridescent Networks Frisco Software for video delivery over the Internet $1,000
Merkatum Austin Biometric and biographic identity resolution software $1,000
Modria Irving Supply chain management software $1,000
Net Watch Solutions Richardson Software for infrastructure management $500
Net.Orange Dallas Clinical Pathways Management software for health care $1,900
Qcue Austin Dynamic pricing software solution $1,000
PrincipleSoft Plano Bandwidth enhancement software for network applications $750
SecureOrigins El Paso Logistics and supply chain software security system $2,000
Smart Imaging Tech. Houston Water borne pathogens analysis hardware/software system $1,000
SNRLabs Richardson Handset-laptop convergence software $750
Varaha Systems Dallas uMobility software fixed-mobile convergence solution $1,500
Veros Systems College Station Asset management software solutions $1,500
The University of Texas
at San Antonio (UTSA)
San Antonio Recruitment of Dr. Ravi Sandhu as founding director of UTSA’s
Institute for Cyber Security Research (ICSR)
TOTAL
$3,690
$33,640
25

Appendix 2: Selected Industry Resources
Entertainment Software Association (ESA) at http://www.theesa.com/
A national industry association for computer and video game publishing. The website offers industry facts, economic
data, and profiles of top states in the industry including Texas.
Federal Cyber Service: Scholarship for Service (SFS) at www.sfs.opm.gov/
SFS is a unique program designed to increase and strengthen the cadre of federal information assurance professionals
that protect the government's critical information infrastructure. This program provides scholarships that fully
fund the typical costs that students incur while attending an approved institution of higher learning. The scholarships
are funded through grants awarded by the National Science Foundation.
SocialMedia.org at www.socialmedia.org/
A national high technology-focused trade association for social media. The website offers some newsletters, a
blog, and information on virtual events.
TechAmerica Foundation at www.techamerica.org
This national tech industry trade association publishes the annual Cyberstates: The Definitive State-by State Analysis
of the U.S. High-Tech Industry report, which includes a Texas profile, and much more.
Texas Film Commission (TFC) at www.governor.state.tx.us/film/
TFC is a Texas Office of the Governor division that supports the state’s media industries. The website offers information
on TFC incentives, job hotlines, and more.
Texas Emerging Technology Fund (TETF) at www.emergingtechfund.com
The Texas Office of the Governor’s TETF program website area provides TETF awards information, program contacts,
news, and more.
Texas Game at texasgame.com/
This website offers fast facts and links to Texas video game industry resources.
Texas Industry Profiles website at www.texasindustryprofiles.com
This Texas Workforce Commission website contains the 2005 Texas industry cluster reports, including Information
and Computer Technology, Regional Location Quotients data, the Clusters GIS Mapping tool, and much
more.
26

Office of the Governor
Economic Development and Tourism
PO Box 12428, Austin, TX 78711
512-936-0101
www.TexasWideOpenForBusiness.com