By Deb Perelman  |  Posted 2007-08-24 Print this article Print

A closer look at what has transformed the IT sector can shed light on the regional shifts in IT employment in the same period. While the industry was once associated with developing faster processors and PC production, it has evolved into a software and SAAS (software as a service) environment. "Vendors in the enterprise are shifting more and more to software-based offerings, basically using the PC as the server or the storage device to sell value-added services and software. This trend has crossed the entire industry," said Charles King, an analyst with Pund-IT.
IT manufacturing also has become commoditized and globalized, shifting overseas to Asia and other locations where labor is inexpensive. This development has been reflected in the rising share of IT service jobs in the United States. Nearly three-quarters of Bay area IT jobs —and almost half nationwide —were in manufacturing in 1995.
In 2006, the Bay area was nearly balanced in its split of IT manufacturing and service jobs, while in the rest of the United States, IT has swung entirely in favor of services. Areas that were more manufacturing-oriented, such as Los Angeles and Boston, saw their shares of the nations IT jobs slip, while those more services-oriented areas, such as Washington and Seattle, enjoyed sustained growth. This shift benefited the Bay area as well. The regions growth in jobs providing Internet-related services such as Web portals and data processing gives it an edge over the rest of the country. However, capitalizing on the manufacturing-to-services shift is not all that has kept Silicon Valley on top. The adaptability of technology also has played a role. Historically, other industries that became commoditized and then shifted offshore, such as automobiles in Detroit or manufacturing in Pittsburgh, did not come back from their downturns. "IT is a product set that is much more adaptable to change than steel and automobiles," Pund-ITs King said. "You can only do so much with old-world steel stock. Computer and ancillary devices can be adapted to change as the demand does." Also keeping the Bay area on top is its trifecta of a nearby urban area that is a magnet for young professionals, excellent universities spilling bright minds into the work force and the attention of venture capitalists. "You need a combination of two things: money and talent. [You need] the money coming from the VC community—which is able to fund projects and see the vision of where these projects are going —and you need a ready supply base of labor. Most of these places have both," said Kazmierczak. "If you have an inadequate supply of one, you need more than enough of the other," he said. "Some places have done a great job. Seattle has specialized in software and software as services, and they continue to grow from that. Austin [Texas] has a concentration of universities. Los Angeles has large amounts of labor, and its a huge city, but it doesnt have the concentration of people working together in the same field." California itself has remained a friendly place for business to develop, with its legal arms open to entrepreneurs and the free exchange of ideas. "You have to look at where the value has been generated," Kay said. "Californias legal environment is ideal for entrepreneurs; there are no noncompete laws. Plus, [there is] this idea of a central marketplace … Once a place is known as the center of development, all of the pros will want to be there," Kay said. Yet, like all world-class regions, the Bay area has kept itself relevant by never getting too stuck in one mind-set or model of success. "Silicon Valley has stayed vibrant by continually reinventing itself," Kay said. Check out eWEEK.coms Careers Center for the latest news, analysis and commentary on careers for IT professionals.


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