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Software, defense may help SD lead high-tech sector

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Strengths in software services and defense have better positioned San Diego's high-tech sector than other regions in the state, an industry trade group leader said Tuesday.

"I would have rather been in San Diego than in any other place in California during the recession," said Kevin Carroll, the Southern California regional director for TechAmerica.

Carroll observed that software services saw only a 1 percent decline in jobs nationwide in 2009. The publication of regional data lags behind that for the state and the nation, but when it becomes available, "San Diego may have fared a little better," Carroll said.

The lack of major corporations in San Diego also helped the region avoid a bout of massive layoffs, he added.

The industry association's nonprofit arm, the TechAmerica Foundation, released its 13th annual Cyberstates report today, detailing national and state trends in high-tech employment, wages and other areas.

California was ranked as the top "cyberstate" in the nation, with the most workers, the most jobs added and the highest average wage in 2008, the earliest year for which state data is available.

California employed 993,300 high-tech workers in 2008, adding 15,800 jobs from the year before, led by research-and-development and testing labs. High-tech workers earned an average wage of $105,500, or 108 percent higher than California's average private sector wage.

The state also boasted the highest payroll in 2008 of $104.8 billion and 42,300 high-tech companies in the state, the most in the nation.

California also ranked first in employment in four subsectors: computer systems design, Internet and telecommunications services, R&D and testing labs, and engineering services.

Nationwide, the high-tech sector did shed jobs in 2009 -- 245,600 -- as companies started to feel the effects of the recession, but Carroll senses the high-tech labor market is already starting to turn.

Even when the industry was shedding jobs, the unemployment in many high-tech sectors remained below 5 percent, he pointed out, citing the Cyberstates report. Carroll foresees moderate but steady growth in the sector to come.

"It's not going to be explosive" like it was a year after the Internet bubble burst, Carroll said. "I'm not seeing that same exuberance."

The industry will also be faced with a number of challenges. Venture capital and bank lending both remain somewhat constrained.

Also, high-tech companies are anxiously watching the fiscal wrangling in Sacramento whether state budget issues will be sorted out and whether legislators will move for a friendlier business environment. Carroll noted that a lot of other states are aggressively courting companies and trying to lure them away from the state.

"Companies don't expand in California that often," he said. "Tech companies are rightfully very concerned about what's going on in Sacramento."

Furthermore, despite a high unemployment rate, technology companies still find it challenging to find the highly educated employees they need.

"There's going to be a dichotomy" in high-tech as the economy recovers, Carroll said. "There are going to be a lot of people not working and a lot of companies looking for skilled workers."

Carroll does see one opportunity for high-tech companies: A rise in "in-shoring" -- essentially the opposite of off-shoring, in which businesses outsource certain functions in another country -- is creating a situation in which it would benefit domestic companies to build up their contract services in manufacturing, engineering and other areas.

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