Tech jobs rise, but ‘silicon’ vision a stretch

Technology Square in Midtown has drawn both start-ups and 'innovation centers' for big names such as Home Depot.

Technology Square in Midtown has drawn both start-ups and 'innovation centers' for big names such as Home Depot.

Silicon Valley South. Silicon Valley East. The Silicon Peach.

Take your pick. Such phrases often come up these days when talk turns to metro Atlanta’s tech industry. A string of jobs announcements and a growing cluster of tech businesses in Midtown have spawned talk that the sector will soon justify such a memorable moniker, if it doesn’t already.

In reality, metro Atlanta’s relationship with the tech sector is, well, complicated.

Georgia boasts about 280,000 tech jobs, according to Technology Association of Georgia president and chief executive officer Tino Mantella — the great majority of them in metro Atlanta. But information technology jobs only make up about 3.5 percent of the area’s labor market, down from a peak of 4.7 percent in the 1990s, federal Bureau of Labor data shows.

And California, home to the real Silicon Valley, dominates venture capital investing — the lifeblood of tech startups — with 56 percent of spending compared to the 1 percent in Georgia, Mantella said.

“Atlanta is not a tech hub on the scale of Silicon Valley, but we do have a leadership position in the South, and technology is a rapidly growing sector,” said Dax Cross, president of consulting firm Revenue Analytics.

Complicating the effort to assess the sector’s size or growth rate is that the definition of a tech job can vary depending on who’s counting.

There’s wide agreement that tech job growth has been a bright spot in metro Atlanta’s choppy recovery from the recession. The sector has added 25,000 positions since 2010, Mantella said. Salaries are higher than the Atlanta median: around $87,000 a year compared to $57,000.

Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, still says growth in the information sector has been “disappointing” in recent years.

One reason, he said, is that a large chunk of the jobs in metro Atlanta have been tied to telecom, where consolidation, cost pressures and the death of the landline business have held down job growth.

“Tech is not a part of every major city because you need large amounts of reliable bandwidth and a guaranteed power supply,” Dhwan said. “We should care about our tech sector because we’ve done the infrastructure investment already – we should get the gain for it.”

Whether or not it ever lives up to a ‘silicon’ nickname, the sector could eventually help diversify a regional economy that’s still heavily dependent on housing, construction and related services.

Big names

Metro Atlanta is the home of AT&T Mobility, one of the nation’s biggest wireless carriers. Internet Security Systems or ISS, a monster IT security firm born here, was gobbled up by IBM for $1.3 billion.

NCR Corp., best known for ATMs but diversifying into software and tech services, has proposed building a Midtown tech campus in the next few years that the company hopes will be a catalyst for bringing other big-name tech firms to the metro area.

NCR plans to move from Gwinnett County into the city as it shifts toward the more lucrative and in-demand software business, although persistent talk of possible buyout bids from equity firms clouds the picture.

Two international IT firms announced earlier this month intentions to expand Atlanta operations. Brazilian IT firm Stefanini and U.K.-based Sage Software said they plan to soon add 400 jobs each to their existing complements here.

Georgia Tech’s Tech Square in Midtown increasingly is becoming the heart of metro Atlanta’s tech world, coaxing both start ups and corporations such as Coca-Cola, Home Depot and Panasonic to open innovation centers. Businesses are lured by the prospect of working with Tech students and grooming them for jobs when they graduate.

Keeping more grads in the metro area is goal in part because a tech job paycheck tends to be heftier than most – especially compared to the kinds of retail, leisure and hospitality jobs the Atlanta economy has churned out in droves.

Pay can go as high as six figures for a mobile applications developer, network manager, data architect or many other technology workers. That’s good for the employee, of course, but also good for the economy since it gives him or her more money to spend on everything from a fine meal to the monthly mortgage or Hawks tickets.

Some jobs also punch above their weight by improving productivity for other workers.

Research by economist Enrico Moretti of the University of California at Berkeley concludes that STEM jobs – that is, jobs in science, technology, engineering or math-related fields – accelerate the local economies.

It starts with pay, but tech jobs also draw similar enterprises, said Harry Holzer, professor of public policy at Georgetown University and a fellow at the Brookings Institution.

“They can be very stimulative to the economy,” he said. “It is bigger than just the typical multiple effect. When you have these jobs, it creates more growth. And it draws in other similar, talented people.”

Struggling with capital

While the job surge has been strong, metro Atlanta has struggled to attract the deep pocketed venture capital to truly thrust it among the big boys.

Venture capital funds and other investors across the nation will back solid business deals generated in Atlanta, industry experts said. But young companies are often compelled to move closer to investors if they take off.

The trick is attracting funding from investors who want to help a company start — and stay — in Georgia.

Keith Anderson, managing director of Virginia-based Digital Intelligence Systems, which has an office in Atlanta, said the cheaper cost of living compared to places such as San Francisco, access to anywhere from Hartsfield-Jackson International Airport and a culture that encourages start ups can level the playing field.

“It’s definitely a candidate-driven market and hyper competitive,” he said. But more and more graduates are looking for companies that invest in them and offer challenges than money. “And believe me, I used to live in San Francisco. I can appreciate the change in living costs (in Atlanta).

The Georgia Research Alliance and other groups have experimented with ways to bolster the ranks by recruiting entrepreneurs who would start companies from scratch here, but they have gained little traction.

Neil Pruitt, who chairs Georgia’s Board of Regents, has high hopes for Georgia’s version of the Research Triangle - the area connecting the University of Georgia, Georgia State University and Georgia Tech in Atlanta, and Georgia Regents University in Augusta. More than $1 billion in research grants are “creating massive amounts of new intellectual property” for the state.

Chris Carr, who heads Georgia’s economic development department, said the booming biotech research hotbed in North Carolina or the tech ecosystem in California may not be Georgia’s best model.

“You don’t know what time is going to bring, but we’re starting the lay the foundation and build up the infrastructure,” said Carr. “Will we be a Silicon Valley, a Research Triangle? I argue that we can be something different.”