D.C. Tech Outlook Promising

'Silicon Valley East' expected to get through tech slowdown in good shape, according to study

The Washington metropolitan area is experiencing its share of downsizing in the technology industry, but researchers say the outlook is good.

The suburban region south of the city has become well-known as Silicon Valley East, but even within the city limits, the technology industry grew 374 percent between 1994 and 1999, from 70 technology companies to 332, focusing primarily on IT software and services and telecommunications services. According to a study conducted at George Mason University, in Fairfax, Va., these companies will be shielded from any major tech sector shakeout that occurs nationally.

Although the nations capital is not exempt from the overall economic slowdown, it is not expected to experience anything close to a recession, the studys sponsors forecast last week at Verizon Corp.s Washington headquarters.

"Verizons been in this city for over 100 years. Were a stable force in this city," said Marie Johns, president of Verizons Washington office and board member of the organization that commissioned the study. "Our interest, as a major telecom provider, is that as the economy of the [District of Columbia] grows, its good for everyone. Theres a rising tide effect."

Not surprisingly, the federal government is the areas largest customer for technology goods and services, accounting for more than one-third of all local IT and telecom sales. In 1999, the government spent $13.5 billion in this market. It is not the strong federal customer base alone that accounts for the optimistic forecast, however. Instead, a web of interdependencies among the government and other core industries, including technology, international business and hospitality, offers a secure customer base.

The "one location in the U.S. that can offer this combination of [political] power, information and market capacity," the city itself should be more actively promoted as a technology center, the reports author, Stephen Fuller, concluded.

Calling the city a "natural home for the high-tech industry," Washington Mayor Anthony Williams said the report supports his goal of expanding and diversifying the citys economy. Commissioned by DC Agenda, a nonprofit civic organization, the study was funded by the city government; the World Bank; and the Morino Institute, of Reston, Va.

Local tech companies do not rely entirely on federal sales. Ninety-four percent serve private-sector clients, and almost half have international clients. Twenty-nine percent have clients in state and local governments. Like IT and telecom businesses located in other high-tech centers across the country, local companies face constraints in the availability of affordable office space and highly trained workers.