The tipping point is still some ways off, but the process of diversifying New Orleans’ economy after decades of dependence on oil and gas, shipping and tourism may have reached a turning point in 2017 with the announcement that DXC Technology, a $25 billion global IT services firm, is planting a flag the city.
The eye-popping detail of the deal was the number of direct jobs promised — 2,000 over the next six years — with the average salary starting at $63,000 and going up to $73,000 as hiring continues. In making the announcement in November, the company said it will make its first 300 hires by the end of 2018. Jobs include software developers and engineers, and white collar project management and administration positions.
DXC Technology was formed in April 2017 with the merger of HP Enterprises, previously part of Hewlett Packard, and CSC, once known as Computer Sciences Corp.
The company, which has 170,000 employees worldwide, says it will be creating a “digital transformation center” in New Orleans that “will focus on the development, delivery and ongoing support of next-generation digital services and solutions including applications, cloud computing, cybersecurity, data analytics, and intelligent automation that serve the company’s global clients.”
It’s the kind of operation, experts say, that will attract or spin off similar work, further enhancing the region’s tech sector.
Business and political leaders billed the DXC Technology decision as the single-biggest economic development announcement in the city’s history in terms of a total number of permanent jobs. When the center is fully staffed, it will mark a 12 percent increase in tech employment in the New Orleans metro area, which currently stands at about 16,550 workers.
In a fast-changing world, these are the kinds of jobs that would seem to have staying power.
DXC Technology said it chose New Orleans over 30 other U.S. cities competing for the transformation center, which will occupy 10 floors of the Freeport McMoRan Building on Poydras Street, the city thoroughfare most closely linked to its oil and gas exploration roots.
The company said selection criteria included: “Local economic strength, current and future talent availability, population diversity and livability, technology ecosystem, transportation and mass-transit infrastructure, real estate development availability, as well as commitment of the state, city and local educational community to developing a next-generation IT workforce.”
The state is putting up an estimated $120 million in economic incentives including about $25 million that is being targeted at the local higher education system to help produce the kinds of software developers and engineers the company will be looking to hire. The money will go toward grants over five years for faculty, curriculum and other instructional resources linked to DXC.
The state also offered the company $18.7 million in performance-based grants payable over five years, a $2.2 million parking assistance grant and a $1.5 million demolition grant.
Compared with the extravagant packages being thrown around by cities and states in an effort to land Amazon’s $5 billion second headquarters, the DXC Technology deal looks like a steal for New Orleans.
The DXC Technology victory was especially meaningful for Michael Hecht, president and CEO of Greater New Orleans Inc., the economic development group that led the charge to land the company but also a longer term effort to transform the state’s economy in alignment with the 21st century.
“It’s not only that the timeline on this deal goes back about a year and a half back to May 2016,” Hecht said, “but the reality is that it goes back about 12 years to before our time with GNO Inc. when we wrote the Digital Media Incentive. And the point is that long-term success is the result of long-term perseverance.”
The Digital Media Incentive, a state tax credit for digital interactive media and software development created in 2005, has gotten much less publicity than the state’s film tax credit program, but it may end up doing more to change Louisiana’s long-term business environment than any law passed in decades.
An initial breakthrough came in 2011, when video game developer Gameloft opened a software studio in New Orleans. The following year, General Electric announced it would bring at least 300 workers to New Orleans with a GE Capital technology office. At the same time, homegrown firms like Lucid, a global audience platform, and Geocent, an IT services company, have continued to grow.
Lucid, which began life as Federated Sample, took the local tech and entrepreneur sector to another level in April of last year when it announced it had closed a $60 million funding round led by Boston venture capital firm North Bridge Growth Equity. The company is using the money to expand and hire.
For years, we have been hearing the dreams of converting what Hecht likes to call New Orleans’ “low-cost, high-culture” offerings into a real tech haven like — well, if not exactly the Bay Area, at least like Austin, Texas.
And now it looks like it’s really happening. Not just dreams and wishes, but real jobs.
To read the full article click here.