Commercial Real Estate

CRE Opinion: Are Digital Services A Workforce Strength Or Potential Shortfall?

Occupational changes and increased demand for digital services are reflected in proposed additions to the IT occupations.

Like many of you, I’ve been following the news coverage on Amazon’s HQ2 site search.  I came across a New York Times article titled “Dear Amazon, We Picked Your New Headquarters for You.” The most interesting part of the article, to me, was the New York Times’ assessment of the metros with the highest number of workers in industries related to technology, science, or professional services. The types of jobs indicated in the Amazon HQ2 RFP included a significant number of jobs requiring digital services training, and more specifically engineering and software development engineers. (Amazon has since narrowed down its 238 applicants to 20 finalists.) DFW is among the 14 finalist metros with at least one in eight workers within these industries. Raleigh, San Francisco, San Jose, and Washington DC were even higher with one in five workers with a growing segment of software programmers and designers.

Linda Burns

The Bureau of Labor Statistics recently completed the 2018 update of the Standard Occupational Classification (SOC) System, a federal statistical standard used to provide consistency and comparability for occupational employment data across 11 federal statistical data sources. First implemented in 1977, the SOC was last updated in 2010. The SOC classifies workers based on the work performed, rather than where they work as in the North American Industry Classification Systems. The updated 2018 version reflects changes in the workforce over the last decade and retains flexibility for future changes. Occupational changes and increased demand for digital services are reflected in proposed additions to the IT occupations such as database integration architects, software quality assurance analysts and testers, and web and digital interface designers.

Digital service is defined by aggregates of four NAICS four-digit industries: 5112 software publishers; 5182 data processing, hosting & related services; 5415 computer systems design and related services; and 5191 other information services. Employment in these disciplines is growing throughout the U.S. with the greatest concentration in areas like San Francisco and San Jose, which accounted for 10 percent of the nation’s digital services employment. From the standpoint of Amazon’s due diligence, DFW is adding these high tech jobs, although at significantly lower numbers than California. The top five metros adding the most tech jobs were San Francisco, San Jose, New York, DFW, and Austin for a combined 28 percent of tech job growth in the U.S.

In a review of news coverage on those metro areas eliminated by Amazon, a recurring story line was the shortage of a qualified labor pool. Communities like Cincinnati and Sacramento, which were both eliminated, plan to restructure workforce programs to focus on the development of tech talent, including more apprenticeship opportunities. In addition to internet retailers (like Amazon), there is a growing need in technology, health and medical, insurance, financial services, professional services, media, and entertainment for digital services skills. The scale of hiring projected for Amazon HQ2 from the selected metro talent pool will be virtually unprecedented. Our incentives and site location company has corporate clients also undergoing expansion locally who require engineers in the digital services sector. The demand for qualified IT professionals in our region will continue as more companies move into the area and there is continued growth from already established companies.

Linda Burns, a national site consultant based out of Dallas, specializes in incentive negotiations and economic development location strategies. Contact her at [email protected].