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IT jobs market booming in the Southwest

Lamont Wood | Feb. 10, 2015
We look at the prospects for both hiring managers and job seekers in the first in a series of reports examining IT labor markets across the country.

USAA has had a big appetite for developers, especially those with expertise in Java and mobile platforms, big data, business intelligence, and people who can use ETL (extract, transform and load) tools for data warehousing, says Jackie Head, the insurer's assistant vice president of application development.

More numbers to crunch

Of course, there would be no technology jobs without companies to create those jobs. And in Texas, one of the things that brings companies to town may be the low tax rate.

"As for what brings corporations here, the No. 1 reason is taxes," says Michele Skelding, a senior vice president at the Greater Austin Chamber of Commerce. She calculates that the per-capita tax burden is 16% lower than the national average.

There is no personal or corporate income tax in Texas. For non-utilities, a so-called franchise tax amounts to 1% of revenue for larger businesses, 0.575% for businesses with revenue of less than $10 million, and 0.5% for retailers and wholesalers. Franchise tax bills are waived if they're less than $1,000.

"It's a relatively minimal, insignificant factor," says the Denim Group's Chambers.

Texas raises the bulk of its state revenue through sales tax. And at 6.25%, "it's a relatively small tax," Chambers says, noting that local jurisdictions can levy their own sales taxes on top of that. "Products that are sold are taxed, including custom software and software delivered on a disk, while consulting and advice is not taxed," he explains.

In addition to the incremental sales tax, local governments raise revenue through property taxes.

"Rackspace has dealings with governments all over the U.S. and on three other continents, and I would say that the governments we deal with here in Texas are among the most collaborative that we've seen anywhere," says Rackspace CEO Graham Weston. "They're not giving away the store, but they understand how to encourage the creation of new jobs and new enterprises."

A storied tech legacy

The tech industry has played a role in the Southwest for quite some time.

Technology came to Austin in the 1960s in the form of an IBM facility, according to Scheberle. It got another boost in the 1980s when two research consortia, the Microelectronics and Computer Technology Corp. (MCC) and Sematech (Semiconductor Manufacturing Technology), set up shop in Austin to counter Japanese efforts to dominate the software and semiconductor equipment industries. Then in 1984, University of Texas freshman Michael Dell founded a PC company in his dorm room, part of a wave of startup activity that continues today, Scheberle says.

Another catalyst of the Austin-area tech sector was an effort to attract clean industries, part of a pro-environment stance adopted by Austin politicians, says Joshua Long, an assistant professor of environmental studies at Southwestern University in Georgetown, Texas, and author of Weird City: Sense of Place and Creative Resistance in Austin, Texas.


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