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How the Technical Talent Factor is Making States Competitive

Massachusetts has been trying to tell everyone something. For eight of the last nine years, it has finished No. 1 in the Beacon Hill Institute’s State Competitiveness Index despite being ranked only No. 25 in the Tax Foundation’s 2016 State Business Tax Climate Index and an abysmal No. 45 in Chief Executive’s 2016 Best & Worst States for Business.

Indeed, Greater Boston is luring companies these days almost solely on the strength of its human capital. CEO Jeffrey Immelt’s stunning decision to move GE’s headquarters from high-tax
Connecticut to high-tax Massachusetts because of this factor ratified the growing notion that having access to a high-tech workforce has become the most important factor in corporate siting decisions in the digital era.

“Due to a lack of digital talent in Philly, Gupta has opened offices in Seattle and New York, where you’ve got pools of [tech] talent looking to leave boring corporate jobs in search of something far more meaningful.”

“Everybody is becoming a ‘software company,’” says Apu Gupta, CEO of Curalate, an e-commerce software outfit based in Philadelphia. “Everyone will be fighting over talent.” In fact, because of a relative paucity of digital talent in his city, Gupta has also opened offices in Seattle and New York, “where you’ve got pools of [tech] talent looking to leave boring corporate jobs in search of something far more meaningful.”

Andrew Rose chose Richmond, Virginia as a base for his online insurance-shopping startup, Compare.com, over a handful of major cities, including Chicago, Dallas and Los Angeles, because of the city’s ideal geographic location, its strong base of colleges and universities, and its overall lifestyle appeal—which, in turn, has nurtured an ample base of digital cognoscenti. “Plus, we didn’t have to go to a really expensive marketplace like Silicon Valley or [Washington] DC,” explains Rose, over the background din of some employees playing Nerf darts outside a conference room. “In Richmond, we can get great talent at a cheaper cost and give them an exceptionally good work-life balance.”

SWINGS IN SUPPLY
However, trying to land good tech talent at a reasonable price can be challenging these days as geographic disparities in both the cost and availability of in-demand millennials even out. San Jose, California-based Xactly, for example, a sales-management software company, opened a second office three years ago in Denver and now employs about 120 of its total 450 staffers there. But in Xactly’s last few hires, reports CEO Christopher Cabrera, “our pendulum seems to be swinging back toward Silicon Valley because costs in Denver are exploding. Where we used to get someone there for $60,000 a year, it’s now $80,000. And you can hire people for that at our headquarters.”

This factor raises alarms even in Boston, where the presence of dozens of colleges and universities including tech icon MIT isn’t enough to erase concerns about supply of the coveted techie. “There are simply not enough digitally experienced employees in Boston for all of the companies who want to hire them,” says David Hayes, president of HireMinds, a Cambridge, Massachusetts-based recruiter. “Therefore some companies are winning the war on talent and others are losing.”

Review the entire 2016 Best & Worst States for Business results, including individual state rankings, CEO comments, methodology and more at http://chiefexecutive.net/2016-best-and-worst-states-for-business

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About Dale Buss

Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.