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Print Edition StoriesMonday, December 7, 2009
Study: Software leads tech growth in Mass.
By Rodney H. Brown and Galen Moore
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Technology company CEOs, industry group to officials and academia gathered at Communispace Corp. in Watertown this morning to listen to the findings from a UMass study on Massachusetts’ tech economy and to hear Gov. Deval Patrick’s keynote address on the state of the IT sector in the commonwealth.
At the meeting, findings were released from the University of Massachusetts’ Donahue Institute’s study, “The IT Industry: Hub of the Massachusetts Technology Economy.” Aside from Gov. Patrick, speakers included John Halamka of Beth Israel Deaconess, Jeffrey Nick of EMC Corp., Colin Angle of iRobot Corp., Rich Miner of Google Ventures, Dave Balter of BzzAgent, Diane Hessan of host Communispace, Michael Goodman of UMass Donahue Institute, Donna Cupelo of Verizon Corp. and Emily Green of Yankee Group, along state and local officials.
Hessan opened the event, noting that, as a sign of the strength of the tech sector in Massachusetts, Communispace hired 40 new employees in 2009 and is now at 250 employees. Joining the above speakers at the event were Secretary Gregory Bialecki, Pat Larkin from the John Adams Innovation Institute, and leaders from technology industries and associations including the Massachusetts Technology Leadership Council, the Massachusetts Network Communications Council (now a part of MassTLC), the Massachusetts Information and Technology Exchange, TechAmerica New England and the Massachusetts High Technology Council.
At times, the aim of the event seemed to be to boost the IT industry’s profile as much as it was to present results of industry research. IT, which once ruled Route 128, may now seem to be playing second fiddle, Hessan implicitly acknowledged. “It’s not just greentech and biotech,” she said. “We’re really cranking in our part of the world also.”
Verizon’s Cupelo noted that studies show that for every one percent of broadband access growth in a state, the economy can grow by 2 percent to 3 percent.
In the spring, Gov. Patrick and Sec. Bialecki established the “IT Collaborative” to help bring all of the disparate players in Massachusetts. The Collaborative is run by the existing John Adams Innovation Institute, according to UMass president Wilson. Wilson also called out the state’s commitment to the technology sector in the effort to establish a green, high-performance, data center at UMass Amherst.
Gov. Patrick noted that the tech sector was responsible for $65 billion in economic activity in Massachusetts in 2008, with 10,000 tech businesses in the Bay State. “It’s clear we are pushing the boundaries of just what is IT,” Patrick said, “reaching into areas such as robotics and digital gaming.”
Goodman from the Donahue Institute presented the findings of the study, after explaining the missions of the study. “One of the things we really needed to get a handle on was what the IT sector in Massachusetts looked like,” Goodman said. “What were its moving parts?”
There are four sectors of IT the study identified: hardware, IT services, software and network communications. Goodman noted there was a great deal of overlap among companies in multiple sectors. According to the study, as of 2008, Massachusetts’ IT sector had not yet recovered employment numbers it posted 10 years before, in 1998. The sector employs 178,000 – short of the 205,000 workers it boasted in 1998.
IT is behind only health care as the largest employment sector in Massachusetts. Hardware is the largest single subsector, employing more than 64,000 jobs — though it has also been the hardest hit, according to the study, losing 40 percent of its year-2000 employment peak at 94,000. Since the IT sector hit bottom in 2004, IT services and software have made up the bulk of the growth, becoming the only two sectors to better their 1998 numbers.
According to the study, Massachusetts is not feeling much heat from emerging U.S. tech hubs like Research Triangle Park in Durham, N.C. Researchers polled IT businesses, asking what regions of the world presented the best opportunities for growth — 53.4 percent listed California, while 51.5 percent listed Massachusetts. The runners-up were India, China, Israel, Eastern Europe and Russia. North Carolina and the Washington DC area were a distant seventh and eighth.
“We’re talking about California and we’re talking about the rest of the world, before we’re talking about some of the lower-cost areas of the U.S.,” Goodman said.
“Software is now employing more people than it did at the peak,” Goodman said.
One way the study looked at how the sector has had an impact is to see how much capital it has brought in. Massachusetts and California lead the nation in bringing in venture money, Goodman noted, but Massachusetts stands clearly in the lead in bringing in federal funds for basic research per capita.
View the report from University of Massachusetts’ Donahue Institute’s study.
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