Technology groups down but not out
Expanding companies can be one sign that an industry is growing in a region, and that's the case with technology in Central Pennsylvania, some executives said.
Whether it’s companies acquiring other firms and expanding to new regions, or even a healthy startup community to fuel tomorrow’s software and information technology firms, the midstate’s technology industry seems poised for growth.
But the most significant occurrence since 2008 has been the recession. At face value, it had as negative an effect on technology as other industries. But it also presented new opportunities, executives said.
“Now people are starting to realize they haven’t invested in tech in three to four years and things are starting to break, sometimes to the point that it’s hurting the business, so it’s time (for companies) to do those upgrades,” said Sam Coyle, president of Cumberland County-based IT and cloud services provider Netrepid Inc.
Coyle’s company is one of those firms that have been out in the market acquiring other companies to add staff, services and geographic areas to its core business.
In May, East Pennsboro Township-based Netrepid acquired York County-based IT services company Lion Technologies Inc. for an undisclosed amount. The acquisition gives Netrepid more than 500 new clients and a greater presence in the York area, Coyle said.
A year ago, Netrepid acquired Lancaster-based GameChanger Technologies for a similar expansion. And the company might not yet be done, Coyle said. A couple more acquisitions could be finalized within a year.
Many companies are getting more work and growing — signs of good days ahead, he said.
However, like most other industries, tech faced hard times in the past four years because of the recession, which more than anything slowed expansion, executives said. There were 118,375 computer and math employees across the top 20 industries statewide in 2008, which accounts for nearly all state tech employment, according to the Center for Workforce Information and Analysis. Total employment grew to 125,150 employees in May 2011, or a 5.7 percent gain, according to the U.S. Bureau of Labor Statistics.
That slow growth doesn’t tell the entire story, executives said.
“You can’t find IT people,” said Wayne Berkowitz, CEO of Mindteck Inc., the Cumberland County-based U.S. headquarters for Indian IT services company Mindteck (India) Ltd.
That’s because the unemployment rate in most tech fields is extremely low compared with national and state averages — only 2 percent in some fields, he said.
The May unemployment rate for computer and mathematical occupations — which encompasses most tech jobs, including IT workers, computer programmers and software developers — was just 3.5 percent nationally, according to the Bureau of Labor Statistics. That’s down about three-tenths of a percent from a year ago and less than half of the national unemployment rate of 7.9 percent.
In essence, technology is expanding fast enough that there’s a shortage of workers in some fields, such as programmers for Java coding, Berkowitz said. The Hampden Township company recently added a Boston office and could probably afford to hire 200 more people this year, he said.
The recession is key to understanding such a technology rebound, he said, because companies decided to invest in IT for greater productivity and efficiency.
Many companies are updating their equipment, improving their IT infrastructure and investing in services such as predictive analytics — the analysis of what customers choose and buy — and cloud services, he said.
“In the past, people used technology to reduce costs,” Berkowitz said. “Now, they’re using it to increase revenue.”
That shift generates work for large and small tech firms, executives said. With the economy recovering, and more companies investing, there are opportunities for established firms and startups, many of which were born in the fires of the recession.
Charlie Crystle, the Lancaster programmer and entrepreneur responsible for software companies Chilisoft and Mission Research, finds the tech environment to be improving even if some statistics don’t show it, especially in the startup arena.
A year ago, the self-styled “serial entrepreneur” organized Startup Lancaster, a group for startup founders to network and collaborate with one other. Today, it has 25 members and has spawned similar groups around the region. Crystle and other tech executives have always said the startup community is important for a region to have a healthy technology sector.
“We have, in short, a technology startup ecosystem,” Charlie wrote in a recent blog post. “A year ago, I wasn’t so sure, and started the group to find out what was out there. And I’m impressed.”
Technology employment by the numbers
Although there are signs that the tech industry is rebounding and some companies are growing, the recession slowed tech growth in Pennsylvania. However, some statistics illustrate it’s still a good time to work in technology since its unemployment rate is better than the national average. Here’s a look at the numbers:
2008 statewide computer and math* employment for the top 20 industries: 118,375
May 2011 statewide computer and math employment: 125,150
Harrisburg-Carlisle metro area computer and math employment, May 2011: 10,540
Lancaster metro computer and math employment, May 2011: 2,220
Lebanon metro computer and math employment, May 2011: 460
York-Hanover metro computer and math employment, May 2011: 1,980
May national tech unemployment rate**: 3.5 percent
Tech unemployment 2011: 3.8 percent
May national unemployment rate: 7.9 percent
National unemployment 2011: 8.7 percent
* Computer and math occupations include more than just traditional technology fields
**Unemployment rates not seasonally adjusted
Source: Pa. Center for Workforce Information and Analysis, U.S. Bureau of Labor Statistics