Close this search box.
Close this search box.

Mid-Market Tech Companies are Moving Operations to Lower-Cost Markets

As mid-market software and tech companies seek ways to reduce costs and scale to new heights, they're moving more of their operations to lower-cost areas of the country.

SMBs can more easily and cost-effectively expand their workforce, while entrepreneurs can get businesses off the ground with less capital.

And being a “big fish in a small market” also can offer competitive advantages in attracting labor and retaining a strong workforce.

Even beyond cities like Austin and Atlanta, tech companies are finding welcoming homes in places like Raleigh-Durham, Denver, Charlotte, Philadelphia and Houston.

According to commercial real estate services firm CBR, the cost for running a typical 500-person tech firm in and around Silicon Valley runs more than $56 million per year, compared to between $40 million and $42 million in many of these lower-cost cities.

Other markets can offer even more value. App development firm Metova recently invested $2 million in its operations in the rural town of Conway, Ark., doubling its staff to 160. Metova, which works with firms such as Yelp, Dropbox, Microsoft and eHarmony, credits hiring software engineers and developers in more cost-effective regions as a critical component of its growth. The company is headquartered in Franklin, Tenn., and also has offices in Augusta, Ga., Pensacola, Fla. and Seattle, Wash. “You don’t have to go to Austin, Boston, the Bay Area or Seattle to find the talent anymore. I think a CEO coming to Arkansas will find [that] the technology and workers are here. You get the talent you need with a different cost of living,” said Smith.

“To be able to scale a business like ours in the northeast is a difficult proposition from both the ability to find talent, and be able to make it cost effective for us and our clients.

Mark Carleo, president and CEO of Boston-headquartered Elyxor, Inc., says they’ve found “impressive” talent and state commitment in Arkansas. In August, the company announced they would hire 45 new employees in Little Rock’s Argenta District to support clients around the globe. Carleo said they hired their first engineer in Little Rock two years ago and have been growing ever since. “To be able to scale a business like ours in the northeast is a difficult proposition from both the ability to find talent, and be able to make it cost effective for us and our clients,” says Carleo.

According to a cost of living calculator at, a $67,000 salary in Little Rock can offer the same standard of living as a $100,000 salary in Boston. Those tremendous savings are spurring tech firms to look outside of major tech hubs.

Like many in the industry, Smith credits Arkansas’ growing IT sector to educational initiatives that include coding classes in high schools and an emphasis on tech in universities. The presence of Walmart, which has its global headquarters in Bentonville, Ark., has also played a role. Smith said that with its growing share in e-commerce, Walmart has moved beyond solely being a retailer and toward also being “a huge technology company.” Alongside the company’s 14,000 employees in Bentonville, a robust IT economy has emerged to support the growth.

Smith also credits Innovate Arkansas, a state-funded initiative that has spurred the launch of more than 100 startup companies, and raised more than $265 million in private investment, public investment and federal grants. “There’s a lot of activity not only in Little Rock, but in northwest Arkansas, from Fayetteville to Bentonville. Much of it is centered around the universities; there’s just a lot of talent here,” said Smith.

You might also like:

2016 Best & Worst States For Business
How the Technical Talent Factor is Making States Competitive
The 10 Best States for Workforce Quality
The Top 10 States with the Lowest Corporate Tax Rate
The Top 10 States for Manufacturing
The 10 Best States for High Tech


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events


    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)


    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.