Is Raleigh Poised to Become One of the East Coast’s Largest Tech Hubs?
Raleigh Becoming a Tech Hub
Over the last several years Raleigh has become the second fastest growing metropolitan area in the country with an average of 70 people moving to the greater Raleigh area each day. The exploding population growth and number of nationally ranked universities has helped the RTP foster a growing talent pool of educated and skilled tech workers. Many tech giants such as Lenovo, IBM, Cisco Systems, SAS Institute, and IQVA have already made the Raleigh area their home. Others are beginning to shift their attention towards the RTP as they realize the area is a goldmine of untapped talent.
Many of these young and educated tech entrepreneurs have decided to join the ever-growing pool of start-ups. Scot Wingo, the founder and former CEO of ChannelAdvisor, compiles and publishes the yearly Triangle Tweener List. In order to make his list, start-ups must meet a host of very specific criteria: they must be headquartered in the Triangle, they have to be a technology company, and they must have either $1,000,000 in sales or a minimum of ten employees. If companies earn too much in sales ($80 million) they ‘graduate’ from the list. The current list for 2021 sits at nearly 230 businesses.
That is a massive number of tech start-ups concentrated in a relatively small area, especially when you take into consideration the number of unlisted companies that work in other industries or have smaller teams. Nearly one third of all entries on the 2021 Triangle Tweener List are new additions, showing just how much the area is supporting continued growth for start-up businesses even during the midst of a pandemic.
It’s not like there’s a shortage of tech workers and software programmers in New York City or Silicon Valley; so why are there so many companies seeking to relocate to (or operate in) the Raleigh area? The answer to that question is nuanced and multifaceted, but it generally boils down to a few key components: the RTP area is overflowing with affordable tech-talent, it has lower operational costs for businesses than other tech hubs, and the Raleigh area has a rich history and culture of research and innovation.
Software developers are the beating heart of any tech-related company. The quality of your developers is directly related to the quality of product your company puts out. That’s why software developers are in such high demand; there are lots of tech companies out there competing for a very limited pool of candidates.
A company based out of Washington, DC seeking to hire a mid-level specialized developer will be competing with hundreds of other companies over a pool of less than 1,400 candidates, according to a recent talent analysis by Hatch IT. That company would expect to pay roughly $114,000 per year, per developer. According to that same report, there are roughly 1,000 similarly qualified developers in the Raleigh area. But because of lower costs of living and less competition, those developers have an average salary of approximately $98,000 (a yearly savings of $16,000 per developer). Scale that savings up for an entire development team and the difference can easily be hundreds of thousands in savings for the company every year.
Low Operational Costs?
When deciding where to open an office for your business, there are many important factors to take into consideration. Cost of living, leasing space, and commute times are all incredibly important and can affect the company’s bottom line. When comparing the cost of living and real estate space, places like San Jose are a staggering 109% more expensive than Raleigh.
One doesn’t even need to compare Raleigh to some of the most expensive cities in the country to see the financial benefits for your company. According to a December 2019 report from Moody’s Analytics, operational costs for businesses in Raleigh are 15% below the U.S. national average. High technology jobs account for more than 10% of all jobs in Raleigh, ranking the city seventh-highest among the 65 metro areas across the U.S. There isn’t any sign of Raleigh’s growth slowing, either.
A Thriving Business Environment
Moody’s Analytics best described the city’s trajectory in a rather telling statement: “Raleigh will remain a top performer, easily outpacing the state and U.S. in the near term. Job growth will moderate but consumer driven and knowledge-based industries will thrive thanks to in-migration and investment in high tech. Longer term, stellar demographics, a deep talent pool, and low business costs will spur investment and keep RAL a top-performing large economy in the South.”
With such a large pool of talent and relatively low costs, it’s not hard to see why there’s been a mass exodus of businesses fleeing the Silicon Valley and other tech hubs for greener pastures. Companies such as Apple, Microsoft, Advance Auto Parts, Egnyte, and PolicyGenius have announced they are either relocating their headquarters or opening satellite offices in the Raleigh area. They will be joining other billion-dollar industry titans who are already headquartered in the RTP such as Red Hat and Epic Games.
A History of Innovation and Technological Research
The RTP area is home to some of the nation’s leading research universities such as Duke, UNC Chapel Hill, NC State, and NC Central. Founded in 1959, the RTP is the largest research park in the entire country, boasting hundreds of companies and organizations such as the National Institutes of Health (NIH), GlaxoSmithKline, IBM, and Cisco Systems. Due primarily to the RTP, North Carolina ranks among the top three states in the country for bioscience employment and has become a global leader in vaccine research and manufacturing. The RTP has fostered an agricultural biotech industry worth in excess of $86 billion dollars per year.
All of these factors come together to make the Raleigh area one of the fastest growing and highly desirable tech hubs in America. The RTP is bursting at the seams with potential and possibility. With companies scrambling to get a foothold in the region, North Carolina is poised to experience its own tech gold rush in the near future. With the growth of this burgeoning tech scene, Lithios is excited to share its software design and development support to companies of all sizes as they consider the Triangle region.
At Lithios we value outside opinions. This blog was written by one of our guest bloggers, Jonathan Baker, with feedback from the Lithios team.