Idaho's tech hopes now center on software

Well-established firms and flurries of startups show strength and promise, experts say.

krodine@idahostatesman.comJune 4, 2013 

Ten years ago, hardware companies far outpaced software companies in Idaho. "Hardware rules," the Idaho Statesman reported in 2003. A decade makes a big difference. Micron Technology Inc. employs half as many people in Boise as it did then, having ended Boise memory-chip manufacturing in 2009. Layoffs and buyouts have shrunk Hewlett-Packard Co.'s workforce. MPC Computers in Nampa went bankrupt and closed. AMI Semiconductor in Pocatello was sold to Phoenix's On Semiconductor in 2007.

Today, makers of semiconductors, printers and other hardware are still major players and big Idaho employers. But the momentum has shifted.

"The biggest increase we're seeing in our tech sector is in software," says Jeff Sayer, director of the Idaho Department of Commerce.

According to the state Department of Labor, Idaho has more than 800 software companies, nearly half of which are in the Treasure Valley. The total payroll for Idaho software companies has increased at a rate almost four times that of the overall technology sector.

"I'm convinced Idaho will have a very prominent software sector in the next few years," Sayer says.

One factor, he says, is that software companies can move to Idaho or expand with much less capital investment than manufacturing operations can.

Another is that the need for software and information technology permeates virtually every industry.

Treasure Valley tech hardware companies also are major sources of software jobs, says Idaho Technology Council President Jay Larsen. He estimates HP has about 600 software jobs and Micron has nearly 200.

"The thing about software is, it's in everything," says Rich Stuppy, vice president of product strategy for Kount, a division of Boise-based Keynetics. "You can't have hardware without software. Many, many companies that you wouldn't consider tech have data centers that employ hundreds of people."

One is Stuppy's previous employer, Albertsons. He left Albertsons and joined Keynetics in 2006 to help develop Kount, which launched in 2008 to help companies that do business on the Internet protect themselves from identity fraud.

Keynetics' other division, Clickbank, is a secure online retail outlet.

Sayer and Larsen point to Keynetics as one of the successful, fast-growing companies that anchor Idaho's software industry. Security is one of the rising needs in software, Larsen says.

So is efficiency - helping individuals and companies manage their finances or resources more effectively. Treasure Valley companies Clearwater Analytics and White Cloud Analytics are local leaders in that niche, he says.

A third fast-growing software sector is distribution. Larsen cites online distributors BodyBuilder.com and MWI Veterinary Supply as examples.

HIGH PAY, FOR IDAHO

The salaries commanded by high-tech jobs in Idaho are lower than in most other states - the state ranks 39th, the Idaho Department of Labor reports. But within Idaho, tech is a compensation king. In 2011, the average Idaho high-tech worker earned $73,864 - nearly double state workers' overall average of $37,055.

Eastern Idaho led the state's regions in high-tech pay, with a starting wage of $35.67 an hour. Department of Labor Communications Manager Bob Fick says that trend likely can be attributed to the Idaho National Laboratory and associated businesses.

LAGGING TECH GROWTH

Since the Great Recession took hold, and even after it eased, Idaho fell behind most other states in the expansion of its high-tech employment. From 2007 to 2012, the state's high-tech growth rate dropped to 49th in the nation, down from 16th, according to the Department of Labor's "Idaho High Tech Business Scan" presented to legislators.

Deep cuts in the Treasure Valley's semiconductor industry, most notably Micron, contributed to that decline, experts say.

The department projects a comeback, with Idaho returning to the top half of states for tech job growth by 2020. Software jobs are expected to help lead the way.

HOT JOBS DEVELOPING

Economic Modeling Specialists Inc., a Moscow economic data-analysis firm, anticipates that software development jobs in Idaho will increase by nearly 30 percent in the next decade, increasing from 1,622 in 2012 to 2,107 in 2022. In the previous 10 years, software employment declined about 2 percent.

Developing software is one of Idaho's most lucrative and in-demand employment categories, coming in at No. 6 in the Idaho Department of Labor's "Hot Jobs for 2010-2020" list. The only other tech job in the top 10 is network and computer systems administrator.

"A software developer can make $40,000 to $60,000 straight out of college, and it's not unusual to get $100,000 a year right out of college," Sayer says.

CHALLENGES

Software engineers are used in virtually every part of the economy, making it one of the fastest growing job categories in the U.S.

Finding enough well-trained workers is the biggest challenge and impediment to Idaho's efforts to become an industry leader.

"It's really about improving the quality of the candidates and having it be known across the U.S. that software and technology is a vital part of the state," Stuppy says.

Boise State University has ramped up its computer science program. The university website says about 80 percent of its computer science graduates get jobs in the Boise area tech community after they receive their degrees. As of 2011, the department's job-placement rate was 95 percent.

The Idaho Technology Council is working with Commerce and businesses to reach talented software developers from other states with word about the "strength, vitality and depth of the software industry of the Boise Valley and of Idaho," Larsen says.

Getting software developers to relocate to Idaho also should attract more software firms, he says: "If we can get that talent, companies will want to follow that talent to Boise."

'A TREMENDOUS SOFTWARE ECOSYSTEM'

Just as software companies can easily move to Boise because of their relative portability, they could easily leave if the state doesn't meet their workforce or other needs, Sayer says.

He and Stuppy say the state has an array of committed businesses, technology groups and educators devoted to building Idaho's technology sector. "It's a tremendous software ecosystem," Stuppy says.

Sayer agrees. "What strikes me is the loyalty that exists inside that industry in Boise," he says. "We have a handful of really good, world-class companies that have made a commitment to be in and build in Idaho."

Boise's relatively low costs attract tech entrepreneurs, too. Brian Sevy, owner and CEO of Affinity Amp, says the lower cost of programmers here helped draw him to Boise last year from the Silicon Valley. Now Sevy is selling Affinity Amp to another Silicon Valley CEO, Thomas Brown, who is also moving part of his own company, Bescover, to Boise. "I'm surprised that small enterprises haven't explored Boise more aggressively," Brown told Business Insider in May.

Sayer says he's convinced Idaho will someday become a true software center such as Salt Lake City, Kansas City, Boulder, Colo., or Austin, Texas.

And in addition to bigger companies such as Clearwater Analytics - about 300 employees - and Keynetics - 200 - the Treasure Valley abounds with small, smart startups that have potential far greater than their current handfuls of employees, Larsen says.

"The sweet spot is really that startup area," Larsen says. "When Ward Parkinson started Micron, he had five employees. You never know what will be the next big thing."

Kristin Rodine: 377-6447

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