Amid pandemic, Austin’s tech sector has quietly boomed – Austin American-Statesman

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Construction continues at the Tesla Gigafactory in southeastern Travis County last month. CEO Elon Musk announced in July 2020 that the company would build its newest $1.1 billion manufacturing facility here. It's one of a number of big pandemic-era wins for Austin's tech sector.
Software giant Oracle announced in December that it was relocating its headquarters to Austin. Austin's tech sector has quietly been able to cement its status as a technology hub amid the coronavirus pandemic. Tech companies and workers have poured into Austin since March 2020.

Even as many tech workers have been handling their jobs from home offices or kitchen tables, Austin’s tech sector has quietly been able to cement its status as a technology hub amid the coronavirus pandemic.

From electric automaker Tesla choosing the Austin area as the site of its new $1.2 billion manufacturing facility to software giant Oracle relocating its corporate headquarters to Austin, the local tech industry saw significant wins over the past 15 months.  

As other industries grappled with how to stay afloat, new tech companies and workers have poured into Austin since March 2020, and the existing tech scene has seen continuing growth and steady hiring. 

The tech industry now makes up 17.1% of all jobs in the Austin metro area, according to a June report from the Austin Chamber of Commerce. In 2020, jobs in Austin’s high-tech industry grew by 3.5%, even as the metro area’s total number of jobs fell by 2.9%, according to the report.

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Austin’s technology scene was well-positioned to not only endure the pandemic, but to thrive, industry experts say.

“Tech companies for the most part have weathered the pandemic very well,” said Amber Gunst, CEO of the Austin Technology Council, “because we need a lot of technology to get through it as a society.”  

Bracing for impact

Tech industry giants from Facebook to Google were among the first companies to start sending workers home in March 2020, as they braced for the impacts of economic uncertainty brought on by the pandemic. Within weeks, Austin’s South by Southwest festival had been canceled, many tech workers were working from home, and companies had paused or slowed hiring, or even laid off staff. 

A Facebook employee walks through the company's offices in Austin in 2019. The company has been continuing to boost its Austin offices amid the pandemic and now has more than 2,000 employees and more than 300 open positions.

Technology job postings in Texas saw a sharp decline in the early days of the pandemic, falling from 34,087 postings in March 2020 to 21,207 two months later, a 37% drop, according to CompTIA, a nonprofit association that serves the information technology industry.

But after that early decline, things began to steady, and by last December the job listings started to increase. Last month, Texas companies had 31,877 tech job postings. 

Gunst said there was a lot of uncertainty at the beginning of the pandemic, but, a few months into it, companies began to adjust to the new remote environment and evaluate the financial environment. And in doing so, it became apparent there were growth opportunities, Gunst said.

“When you look at how most tech companies are run, they do have the ability to be able to deploy employees to work from home, ” Gunst said. “After the first couple of weeks of navigating and negotiating how systems were going to work for an entire company working remotely, they were able to flow back into running the system.” 

Ed Latson, executive director of the Austin Regional Manufacturers Association, said that during the pandemic, local tech manufacturing has experienced some of the strongest demand he’s seen since he founded the association in 2013.  His organization works with about 1,700 companies with operations in Central Texas, including Samsung Austin Semiconductor, NXP Semiconductors and National Instruments.

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“In March, there was a little bit of uncertainty along with everybody else about what the opportunities would hold, but actually, as the year progressed, things just kept accelerating,” Latson said. “I would say manufacturers in Central Texas really thrived throughout the pandemic and continue to emerge in a very strong position.”

Amid the pandemic, Central Texas did see manufacturing jobs as a whole decrease slightly, according to a report by the Texas comptroller‘s office. Jobs dropped by about 1.4% between February 2020 and February 2021, which was a better rate than Texas as a whole, which fell by 6%. 

‘Silicon Valley 2.0’

Remote work options amid the pandemic also have benefited Austin, industry experts say, as some companies that had previously looked exclusively to California’s Silicon Valley began to reevaluate their needs and geographic locations.

“As tech firms have become incrementally stronger, geographically, I think many of them have started to leave the (Silicon) Valley, in droves,” said Dan Ives, a tech analyst with Wedbush Securities. “Probably no city has benefited more in the U.S. than Austin.”

Tesla and SpaceX CEO Elon Musk has expanded a number of his companies to have a Central Texas presence in the past 15 months beyond the Tesla gigafactory under construction in southeastern Travis County. In February, Musk predicted Austin would become America's "biggest boomtown."

Ives pointed to Tesla, which announced last July that it was building its $1.1 billion manufacturing facility in southeastern Travis County, and software giant Oracle, which announced in December that it was relocating its headquarters to South Austin.

Tesla and SpaceX CEO Elon Musk also relocated to Texas in 2020, and in February he predicted Austin would become America’s “biggest boomtown.” He also has expanded a number of his companies to have a Central Texas presence in the past 15 months. 

More:Elon Musk: Austin will become America’s ‘biggest boomtown’

Ives said Austin-based companies such as software maker Sailpoint, which thrived over the last year, and Big Commerce, which went public in August and saw its share price triple in the same day, also have helped elevate Austin.   

“These are all dynamics that have turned Austin into Silicon Valley 2.0,” Ives said. 

The number of companies moving to or setting up operations in Austin isn’t too far off from previous years, Gunst said, but the pandemic gave companies a chance to pause and reevaluate their needs and potential locations. 

“I think that the pandemic did make it easier for companies to evaluate where they were housed and what they were doing,” she said. “There were a lot of leases that were broken or that people were able to use force majeure to get out of.”

Austin also has remained high on potential relocation lists because it’s a desirable place to live, Gunst said.

“There’s something for everyone here, and when you’re looking to attract a wide variety of employee base, it’s great to be in a city where there’s a little bit of something for everybody to get involved in and take part in,” she said.

Those growth trends in Austin mirrored what was happening across the nation and around the globe. The technology sector was able to thrive because the pandemic increased demand for everything from business products needed to work from home to video chat and entertainment technologies, Ives said

“No vertical benefited more during the pandemic than technology,” Ives said. “Ultimately consumers and enterprises relied incrementally more on cloud, commerce and digital transformation technology over the last 15 months than ever before.” 

That played out in the success seen by a number of Austin’s homegrown tech companies. 

In February, Austin-based dating app maker Bumble went public with the biggest initial public offering of stock in Austin history, raising $2.5 billion with its entry into the stock market.

Bumble founder CEO and founder Whitney and other team members saw the Austin-grown company make a stunning debut on Wall Street in February, raising $2.5 billion with its initial public offering of stock.

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Meanwhile, Round Rock-based Dell Technologies reported record revenue of $94.2 billion in its recently completed fiscal year, as demand surged for products such as personal computers for virtual learning and working from home. The company said it expects demand to continue as people keep working in hybrid environments. 

Roger Kay, an analyst with Endpoint Technologies Associates, said Dell’s growth during the pandemic is a payoff for the company’s transition in recent years into a more end-to-end technology provider. 

Dell Technologies founder and CEO Michael Dell speaks during the Dell Technologies Summit in Austin. Amid the pandemic, Dell Technologies pulled in record revenue of $94.2 billion, as working from home fueled increased demand for the company's products.

“Dell’s positioning is finally justifying itself,” Kay said. “Dell is pretty well established. In this environment, it would be a tremendous beneficiary of digital transformation and the rush to remote from COVID.”

Tech jobs surge

Tech workers have moved into the Austin area en masse during the pandemic.  A report from LinkedIn ranked the Austin metro area No. 1 in the nation for the highest net migration of tech company workers between May 2020 and April 2021. The data included anyone who works for a tech company, from software engineers to salespeople.   

The report found that for every 10,000 existing tech workers Austin already had, the region had a net gain of 217 tech workers over the course of that year.  

Last year, Austin gained more than 600 new technology firms, and jobs in Austin’s high-tech industries grew by 3.5%, while the metro area’s total jobs fell by 2.9% according to the Austin Chamber of Commerce.  Over the past five years, employment in Austin’s high-tech industries has grown by 24.4%, compared with 11.6% for all industries in Austin over the last five years. 

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Austin-based Indeed.com, which operates an online hiring channel, has found similar increases. According to company data, demand for tech workers in the Austin metro area has continued to grow, increasing by 17.7% since May 2018, said Scott Bonneau, Indeed’s vice president of global talent attraction.  Software engineers, product managers and development operations engineers are among the most sought-after positions right now, according to Indeed.

“The rise in the demand for tech workers in the metro is not surprising given that Austin has long been a vibrant and competitive environment for tech. The metro area provides a lower cost of living and provides tech workers with a very healthy mix of jobs at large, established companies, early-stage startups, and everything in between,” Bonneau said. 

JJ Davis, Dell Technologies senior vice president of corporate affairs, said in a statement that the increasingly digital world means companies of all kinds are looking for tech workers, which the pandemic has only accelerated. He said Austin has been able to attract many talented people. 

“We’re always looking for the best and brightest to join our team,” he said. “The influx of tech workers to Austin means more opportunities for continued innovation.”

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Companies with an existing Austin presence also continued hiring hundreds of workers in recent months. Facebook, which now has more than 2,000 employees, has continued hiring amid the pandemic, and it has more than 300 open roles listed. 

In April, the head of Facebook’s Austin office, Katherine Shappley, said the location is “busier than we’ve ever been” since it opened in 2010.

As the office continues to grow, it’s also taking notes from the pandemic era and providing more flexible working options, something Facebook Austin’s director of product and service operations, Jeanine Henry, said will help the company stand out post-pandemic, in addition to in-office perks. 

“Recruiting and retaining employees has always been competitive. This week we announced our new remote work policy, where we’ve expanded remote work across all career levels, even those just entering the workforce. Furthermore, Facebook’s office will be more flexible for those expected to return — guidance is to be in the office at least half the time,” Henry said. 

David Dettmer, Rev.com's senior vice president of engineering, and Crystal Farris, its learning and development manager, are pictured in Rev's Austin office. The company, which makes transcription software, and is co-headquartered in Austin and San Francisco, says it plans to hire more than 100 employees in the next year, doubling its workforce.

Transcription software maker Rev.com, which has dual headquarters in Austin and San Francisco, expanded its footprint and hired 60 Austin-based employees in recent months, with plans to add an additional 130, doubling its area workforce in the next year.

Rev CEO Jason Chicola said the company has been able to grow and attract employees during the pandemic in part because it has always embraced remote work. He said it’s no shock that Austin has solidified its standing amid the pandemic. 

"It's a no-brainer that the combination of a great business climate paired with a region full of really smart, really hardworking people resulted in Austin weathering the pandemic better than other cities," says Jason Chicola, CEO of Rev.com.

“It’s a no-brainer that the combination of a great business climate paired with a region full of really smart, really hardworking people resulted in Austin weathering the pandemic better than other cities,” Chicola said. “This combination is why Rev created a second headquarters here in the first place. As more and more tech companies relocate to our region, Austin is further solidifying itself as a leader in the tech space.”

Gunst said the pandemic has, in the short-term, eased the Austin area’s long existing tech talent shortage. But she said that, in the longer term, bringing enough tech workers into the area remains a challenge.

“A lot of our companies in Austin were able to find talent that lived outside of the Austin market, and some of that talent chose to move into the Austin area, but it’s still definitely a problem,” Gunst said. “The pandemic made it easier because of the work from home and the remote work aspects, but that can’t be a solution for every hire that needs to come in.” 

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‘Austin’s star is pretty bright’

Gunst said 2020’s and 2021’s big wins have added to the successes that will help draw additional talent and companies to the region. She said Austin has started to become a model for what other tech hubs could become. 

“We really stand apart. We stand alone in the aspect of how we have built our community and the very collaborative nature that our companies have with each other and the supportive nature that our companies have for each other in seeing success happen,” Gunst said.  

Latson said he expects local tech manufacturers to continue to grow, especially with the addition of Tesla and related suppliers. He also said he expects the local semiconductor industry to remain strong.

Ives predicted that Austin’s tech boom has “just started.” 

“I think you’re going to see more startups cementing themselves within Austin,” he predicted. “For the city of Austin, it’s great news. But it also comes with its drawbacks as well. Traffic drives up the cost of living; there’s more competition for talent. And I think that’s going to be a tight wire balancing act to maintain its identity while racing this surge of tech stars.”

Kay, the Endpoint Technologies analyst, agreed that the Austin tech industry’s growth is likely to continue even as the pandemic eases. 

“Austin has been a tech growth engine now for several decades. I feel like culturally it’s inclined to keep going in that direction,” Kay said. “Austin’s star is pretty bright.”