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Texas Technology: Resource-Rich State Drives Innovation

A wealth of research universities, highly skilled workers, innovation clusters and a supportive state government have converged to land major technology projects in Texas.

By Pamela Coyle on February 7, 2014

Texas is a tech magnet, attracting investment from big players, including Apple, eBay, Facebook and EA Arts, while fostering a culture that also supports startups and university spin-offs.
The climate of innovation spans the state and a range of technologies, from video game development to cyber security to data centers to software development and cloud computing. As the birthplace of the semiconductor and globally known brands like Dell, Texas now has nearly 28,000 high-tech industry establishments with an annual payroll approaching $40 billion. More than 156,500 workers in the state are employed in information technology services fields alone.
Major research universities, highly skilled workers, innovation clusters and a supportive state government have converged to make Texas a draw for major technology project investment from some of the world’s biggest companies.
“Texas has a done an amazing job of branding the state,” says Julie Huls, president of the Austin Technology Council. “We have some of the finest universities in the country. We have a pro-innovation and can-do attitude.”
A Tech Capital
In Austin, Visa U.S.A. Inc. will build a new global IT center and add nearly 800 jobs by the end of 2017. The jobs are expected to pay an average of $113,000 a year; Visa also will spend $27.2 million to retrofit and equip an office building for the new center.
The city of Austin has agreed to a $1.6 million incentive package over 10 years, matching $7.9 million in state incentives through the Texas Enterprise Fund.
The city’s “vibrant technology community and business-friendly climate” played into Visa’s decision, says Will Valentine, a Visa spokesman. “Visa is continually looking for opportunities to add world-class talent to our organization,” he said at the November 2012 announcement.
General Motors already is hiring software developers, project managers, database experts, business analysts and other information technology professionals for its new IT Innovation Center in Austin, the first of four planned in the United States. The availability of technology workers contributed to Austin’s selection, and GM expects to hire up to 500 people.
Facebook doubled its Austin presence less than 18 months after opening its sales and operations support center. And Apple Inc. has begun construction of a $304 million campus for its Austin operations center that will add 3,600 new jobs over the next decade. At more than 1 million square feet, the project will include seven buildings and three parking garages.
From Lab to Market
Six cities – Austin, Houston, Fort Worth, Dallas, El Paso and Lubbock – were among the top 20 performers on the 2012 Milken Institute’s Best-Performing Cities list, which heavily weights technology-oriented GDP growth and tech firms.
“I’m seeing more university spinouts, more early stage companies and people bootstrapping with their own resources,” says Bill Sproull, president and CEO of the Metroplex Technology Business Council, the largest technology trade organization in Texas. “I see a lot in mobile communication, cloud computing, cyber security, anything web 2.0, social media and gaming. We’ve got a global talent pool here.”
Sproull credits the state’s major research universities for helping create such technology depth. In all, Texas universities draw $2 billion in externally funded research each year, he says.
“Our universities are prolific in terms of patents, and the University of Texas system alone gets two patents a day and spins off a new company every four days,” he says.
The Dallas-Fort Worth Metroplex also scored big with one of four new U.S. Patent and Trademark offices. “We think that presence is a real sign of the R&D innovation and power of our innovation ecosystem,” Sproull says.
Embracing Entrepreneurs
As tech firms relocate and expand, industry groups work to meet their needs. The ATC, for example, is crafting a talent recruitment campaign and expects to directly draw from states including California. “We have a very high number of companies with very specific programming needs,” Huls says.
The Austin Technology Council serves executive-level leaders, more than doubling in size in three years, and sponsors programs to put entrepreneurs and investors together.
“With entrepreneurs especially, it is important for them to live and work in a place they’ll be comfortable to live in,” she says. “Austin is affordable, as is Texas generally. We don’t have a state income tax and we have amazing colleges and universities. I think we literally have it all.”

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