Despite Down Economy, Tech Companies Grow in Md.


CHEVY CHASE (Dec. 18, 2009) - On a rainy November night, the seventh floor of Microsoft's recently-opened offices in Chevy Chase are a flurry of celebration.

A small army of black-clad waiters dart through the crowd carrying delicious-looking hors d'oeuvres with names like "Haricot Vert and Asparagus with Sweet Peppers" and "Bruschetta Salsa Fresca."

An awkwardly large pair of scissors is propped against the wall. Despite the fact that they cannot actually cut things, these scissors will be used for a ribbon cutting ceremony celebrating 500 new jobs coming to Maryland.

While the largest economic downturn since the Great Depression has devastated many in Maryland, the information technology industry (known as "IT" or "tech") is weathering the storm well. In fact, from large government contractors fighting cybersecurity attacks to Web startups remaking how we use the Internet, this sector of the economy is growing in the state.

Yes, that's right. Growing.

According to statistics from the U.S. Department of Labor, this sector of the economy (technically called "Computer Systems Design and Related Services") added 4,000 jobs since Oct. 2008, an increase of 6.5 percent.

During this time—a period when the state as a whole lost more than 50,000 jobs—only the government and health care sectors added more jobs than tech.

When compared against states with more robust IT sectors like California and New York, Maryland is still ahead of the game. During the same period, the state added more jobs in this sector than every state except Virginia, which added 9,400. With more than 65,000 as of October 2009, Maryland has the fifth most tech jobs in the nation.

So why is Maryland's technology sector growing while the world around it is tumbling down? In a sentiment echoed by a bevy of industry insiders and public officials, Gov. Martin O'Malley said a key ingredient is people. Really smart people.

"We have one of the most highly-skilled workforces of any state in the country," O'Malley said, speaking after a ribbon cutting at Lockheed Martin's NexGen Cyber Innovation and Technology Center in Gaithersburg. "That is the asset."

According to a 2008 study by the Milken Institute, a non-partisan think tank that focuses on economic development, Maryland's workforce is the most prepared to fill high-tech jobs in the nation. On a per capita basis, the state ranks first in the number of adults with Ph.D.s and third for the percentage of graduate students studying science and engineering.

Overall, the study ranks Maryland second in its "Science and Technology Index," which measures how well positioned a state is to develop the high tech sector of its economy.

Yet the presence of smart people capable of working in technology—the human capital, so to speak—only partly explains why tech jobs are growing in this recession, particularly when IT sectors in other states are not.

Teresa Carlson, a vice president at Microsoft, also attributes the growth to the presence of the federal government.

"The federal government's IT budget is not shrinking," said Carlson, who helps lead the tech giant's federal government division and works out of the company's new Chevy Chase offices. "It's still growing."

Whether in an entity like the National Security Agency or in one of the throngs of contractors throughout the state, government work draws many skilled people to the area.

Steve Kozak, executive director of the Greater Baltimore Tech Council, said this concentration of federal labs and contractors—and the workers inside them—push growth and innovation.

"It seems logical that when you put a lot of smart people there in the region, those smart people create great technologies," Kozak said.

Kozak said many government workers eventually venture out on their own and create new companies. He tells the story of Steve Walker, who retired from government service with a great deal of experience and began experimenting with a then-nascent technology called "firewalls." He eventually sold that company for millions and has since started investing in other tech companies.

"I think that model in this region is really alive and well," Kozak said. "Federal agencies draw lots of smart people. Smart people have ideas. Smart people with smart ideas create companies. Not all make it, but a percentage of them do, and that creates the economic growth. That's the engine."

Kozak and a host of others agree that well-educated, tech-savvy people and a plethora of high-tech jobs supporting the federal government are the key ingredients for the "economic growth cake" we currently see. Beyond those, other important factors include available venture capital funding for tech startups and the presence of the numerous technology incubators in the state, which help companies grow and network with other companies large and small.

The consensus among experts and insiders is that the future will be marked by more job growth. They say that the federal government ramping up its IT efforts, expansion in the cybersecurity industry and the burgeoning start up community will all help to keep the arrow pointing up.

As jobs disappear and the recession drags on, O'Malley thinks IT can help bring the state out of the present morass.

"This is one of those competitive assets that we have as a state that bodes very well for Maryland's ability to create jobs," O'Malley said, "not just today but tomorrow and in the years and months after that."

Capital News Service contributed to this report.

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