Living in Alabama, you grow accustomed to seeing news reports, commentary, blogs, tweets and other communications about how the state is tops for automotive manufacturing, agriculture and a burgeoning aerospace industry.
Say “tech” and most think Silicon Valley, Austin or Boulder, not necessarily Alabama.
Alabama is working to change that. The Economic Development Partnership of Alabama is at the forefront for developing a non-manufacturing strategy to further diversify the state’s economy. The growth and investment in automotive, aerospace and other industries are critical to Alabama, but the assets within those industries and throughout the state present other opportunities. One of those opportunities is Information Technology, specifically focused on software publishers and computer systems design.
EDPA Vice President Greg Knighton said analysis shows growth in the IT sector is huge; wages are very good.
“The initial goal is to support our existing industries and create opportunities for them to grow,” Knighton said. “We want to make Alabama more known for our growing technology based industries just like we’re known for the growing automotive and aerospace industries on the manufacturing side.’’
Throughout Alabama are large and small, and both new and longtime IT companies offering an array of products and services.
Currently in Alabama, over 40,000 people are employed in key IT occupations. Corporate headquarters from BBVA Compass, Protective Life, Alabama Power, Regions Financial, Blue Cross and Blue Shield of Alabama to software development companies such as Daxko and Platypi are based in the state.
In Birmingham, the state’s largest metro area, some 12,000 people are employed in IT occupations. Those occupations grew by almost five percent over the last five years. That figure is projected to grow at a similar pace in the next five years and even more rapidly beyond that timeframe.
The average wage for the software publishing industry in Birmingham is more than $75,000 a year, while the average wage for people employed in computer system design is more than $90,000 a year. This group of occupations is projected to grow at 9 ½ percent over the next five years.
Alabama benefits for IT industry
Alabama offers distinct advantages over more established information technology hotbeds around the country, including a strong talent pool, a high quality of life, outstanding health care and an exceptional education system. But the main driver for the tech-minded may really be that for all of this the cost of living and doing business in Alabama is extremely low when compared to places like San Jose, Austin, Atlanta, Nashville and Raleigh.
“We have opportunity,” Knighton said. “It’s about creating awareness of the opportunity.”
Alabama offers several hubs for IT talent and industry, including metro areas of Auburn-Opelika, Birmingham, Huntsville, Mobile, Montgomery and Tuscaloosa. While EDPA’s fact-finding shows IT sector growth to occur statewide, it is expected to grow especially heavily in these areas.
Loss to win
It was an IT company’s decision not to locate in Alabama in 2011 that propelled EDPA and its Allies to embark on a strategy to turn that loss into a win by positioning Alabama as an emerging hub for the information technology industry. Armed with feedback from the company as to some of the state’s perceptions and realities, officials resolved to tackle the challenges.
In 2014, the Alabama Legislature passed a Jobs Tax Credit, focused on job numbers and salaries, which is important to tech-based companies.
And city centers across Alabama are redeveloping.
Birmingham continues its city center redevelopment momentum galvanized by Regions Field, the baseball stadium just south of Railroad Park, a new Westin Hotel and entertainment district in the city’s convention area. Birmingham’s growing abundance of trendy nightlife, upscale restaurants, art galleries and luxury shopping is making it a highly popular destination.
“You see the efforts to create really vibrant downtown areas, and you’re seeing so much redevelopment going on,” Knighton said. “That is important to a knowledge-based industry.”
In beginning to target the IT sector, EDPA and its Allies, including Alabama Power Co., spent countless hours fact-finding, working to document assets of the industry cluster already in the state.
Companies were identified, and EDPA staff and Allies talked to business leaders about what assets were in place. Keystone companies in the sector were documented as well as educational opportunities.
Knighton said it became apparent that Alabama has a great IT cluster. He said EDPA also began to understand more about the workforce needs for the state.
“We know certainly that Birmingham and Alabama may have some shortages in certain skills, but that’s not different than any other location in the U.S.”
Knighton said industry leaders have been accommodating.
“They’ve really been willing to talk with us, give time, give us sincere feedback on their opportunities and issues,” Knighton said. “They want to see growth and density in companies and workforce, just as much as we do.”
April Benetollo, senior Vice President of Marketing and Communications for Daxko, a leading provider of software solutions to member-based non-profits, said EDPA has the ability to work in conjunction with other entities such as TechBirmingham to help gather data needed and identify ways to solve current challenges like recruiting top technical talent as well as obviously recruiting new businesses to Birmingham and Alabama.
“I think we have a good opportunity to challenge the public perception that technology is not a viable sector in Alabama,” she said. “I truly do think it is a perception problem. When we look at companies that are in Huntsville, in Birmingham, in Montgomery, and in Mobile, that fall into the tech sector, there is not a strong, collective voice for them as an industry. If we can collectively work together on joint initiatives, we can give technology a voice in Alabama. We share common goals in seeing the tech sector thrive in our state.”
Benetollo was born in Huntsville and grew up in Birmingham. A University of Alabama graduate, Benetollo lived in Paris before returning to Alabama.
She said that she did not realize early on the rich IT sector in the state.
“I was truly unaware of the number of IT companies here,” she said. “If you think about it, with technology becoming more and more a part of our everyday lives, every company has a micro IT component within it. For example, even though companies like BBVA and Regions are financial institutions, they have huge IT departments and IT needs.”
Knighton said milestones have already been accomplished to support and grow the IT industry based on industry feedback.
Birmingham’s Innovation Depot partnered with startup company Platypi and launched Depot/U, a coding boot camp to teach aspiring programmers how to become developers.
“We are very supportive of it,” Knighton said. “And most importantly, industry is embracing it. We would love to see the concept replicated in other parts of the state.”
Knighton said Birmingham-area IT companies expressed a need to really punch up awareness that the region is a great place to live and do business. As a result, TechBirmingham and a group of area companies are working to do just that, Knighton said. And, EDPA has started to promote IT sector through social media with a Twitter account, highlighting Alabama companies.
Knighton said EDPA is working with industry leaders to form an alliance with education so that a pipeline of employees can be developed for the industry both for existing and new industry.
Knighton said an opportunity exists to make sure college graduates are aware of all the openings at Alabama companies.
“Certainly if we have a coalition of educational programs and institutions dedicated to providing an IT workforce, that’s a marketing angle for us to recruit more companies in to the state as well,” he said. Knighton pointed to the recent selection of Birmingham as a part of the White House TechHire Initiative. He applauded the partnership between the City, UAB, the Birmingham Business Alliance and others to make this happen.
Alabama IT achievements
There are countless IT success stories in the state.
Among those is Daxko, which develops software for member-based nonprofits, including 70 percent of the nation’s 2,700 YMCAs.
“It’s interesting to think that if you’re a member of the YMCA in tech-heavy cities like San Francisco, San Jose, or Austin, Texas, software used to process your membership and program registrations was developed right here in Birmingham,” Knighton said.
Another example is McLeod Software Corp., a fully integrated transportation management system.
“You see trucks coming down the road, and they often will have the McLeod sticker on the back of them, “ Knighton said. “Most people wouldn’t know McLeod does logistics software, and they’re one of the largest logistics software companies, and again, they are based in Alabama.”
Knighton said EDPA is committed to promoting Alabama as an ideal place for growing IT companies and building a population of talent.
“Our next step is to market to this industry just like we do to other key target sectors,” Knighton said. “The ultimate outcome is to be successful in recruiting a nameplate IT company. We want people to think about the fact that Alabama is a great place to do this type of business as well.”