Since the submission of the RFP responses for Amazon’s HQ2 in October, there has been much speculation as to the best locales to accommodate this higher-than-normal human resources project. Per the RFP, the project could hire as many as 50,000 jobs with an average salary of $100,000 over then next 10 to 15 years. The jobs include executive/management, engineering with a preference for software development engineers, legal, accounting and administrative.
In advance of drafting this piece, I visited with my work colleague and principal of Wadley Donovan Gutshaw Consulting, Dennis Donovan, who has been advising corporate clients on office and industrial facilities location for over 40 years. To sum up Dennis’ observations: Any finalist metro area will need to conclusively demonstrate
- Size of talent base in pertinent occupational categories (e.g., technology, logistics, finance)
- Talent pool from colleges/universities aligned by pertinent occupational categories
- Mass transit for tapping regional labor resources
- Housing to accommodate new jobs that will be brought to the area
- Demographic trends, especially growth in Millennial, Gen Z, and those soon to enter the labor market
Given the immense scale, he thought it likely that a tier one metro region (3 million or more population such as DFW) will be given the most serious look for this project. It is also likely that a notable proportion of headcount would be recruited from outside the selected area. Although not specifically indicated in the RFP, transfers from the Seattle HQ and other sites could lower the scale of locally recruited talent. Notwithstanding these provisos, the scale of hiring from a metro talent pool will be virtually unprecedented.
Although the RFP did not break out the number of jobs by job type, based on the nature of the business, speculation is most will fall within the category of software development engineers.
Which brings me to the real focus of this writing—high tech talent availability and the development of technology talent to accommodate Amazon without detrimentally impacting existing employers and future corporate recruitment. It’s not just internet retailers and technology companies that need these skill sets. There is also a growing need for them in healthcare, insurance, financial services, professional services, media and entertainment. Add to this that just about every industry benefits from enterprise or consumer mobile software development, which has led to an increasing number of App companies.
Countries like China are graduating nine times the number of STEM graduates, with China at 4.7 million, India 2.6 million, U.S. with 568,000, and Russia 561,000. According to the 2016 World Economic Forum, the industry that stands to create the most jobs globally is information and communication technology. The forum report indicated there was also a gender implication to the future of employment, based on the fact that men represent a larger share of the overall job market than women. Their findings add to the urgency to address “the chronic problem of getting more women into STEM professions.”
According to the U.S. Department of Labor, the states with the highest employment of software applications developers were California (129,180) and Texas (60,550), followed by New York, Washington, and New Jersey. The employment of software applications developers is projected to grow 30 percent due to new applications on smart phones and tablets. States having the highest employment of software systems developers were California (90,290), Texas (30,850), Massachusetts, Virginia, and New York. Landing HQ2 would significantly increase Texas’ standing over time.
My conversations with clients, combined with what I’ve read, indicate a shortage of software engineering talent throughout the U.S. and globally, with some exceptions like in China and India. There are some who have experienced it as a lack of quality of employee and experienced engineers to recruit from. To supplement their academic degrees, institutions referred to as “coding bootcamps” have developed to provide post-graduation real world problem-solving experiences in software development. The Association for Competitive Technology, estimates there are 500,000 openings for software jobs but not enough job candidates to fill them, according to its website. A recent report by the market research firm Forrester predicts that “employers that lag behind in attracting critical digital talent will wind up paying up to 20 percent above market salary rates for new hires with particularly in-demand skills—a group that includes data scientists, high-end software developers, and information security analysts—in 2018.”
What steps must be taken to assure existing companies are not hurt in the event Amazon selects DFW for HQ2? This same questions should be asked of any of the contenders for HQ2. Granted, those 50,000 jobs will be spread over several years and not all are IT type positions. But even looking at 3,000 to 5,000 jobs annually—that’s what site location consultants, like WDG Consulting, consider a major project scope. Add those jobs openings to the 500,000 unfilled computing jobs, plus the hiring needs of other companies nationwide and the numbers are somewhat overwhelming.
Over the past years, initiatives at the school and college level have been implemented to support more STEM education—but more are required. Significant funding is needed at the local, state, and federal level to support better technical training. Coding camps should be expanded in community college systems. Colleges need to reassess curricula to better address these needs in the areas of high tech technician certifications and engineering degrees.
Although unemployment rates are declining, there are still underemployed workers who could be retrained. Training is also viewed as a valuable employee retention tool. Public organizations, like the Texas Workforce Commission, could increase efforts to work with existing corporations. Such resources could be provided to smaller and medium sized companies at a lesser cost due to state and federal subsidies. With the reported talent shortage, prospective job candidates are more likely to jump ship to pursue employment with a company like Amazon for higher wages, other employment perks, or a different corporate culture. I am hopeful this writing will stimulate some feedback from existing employers as to their experiences locally with recruitment and retention of employees in field like software engineering and from educational/training providers working to fill this void.
There’s no doubt that being selected for Amazon HQ2 would be a huge win for Texas and DFW. The addition of $5 billion in capital investment is especially appealing to area cities and counties. I just hope public and private leadership take the necessary steps to support the existing employers in recruitment and retention, and provide additional funding for vocational and community colleges and schools. DFW is very fortunate to be home to significant high tech corporations like Nokia, AT&T, Texas Instruments, Verizon, and Raytheon. We have a strong history of entrepreneurship responsible for major technological developments.
Let’s just not lose sight of who is already here and their operational and growth needs.
Linda Burns, a national site consultant based in Dallas, specializes in incentive negotiations and economic development location strategies. Contact her at [email protected].