July 2011: Overseas Firms Hiring in Silicon Valley

IT Hiring Market Report – July 2011

The Dice IT Hiring Market Report is a roundup of news related to technology hiring, compiled from various sources by the Dice Editorial Staff.


.It’s not just American companies on the talent hunt in Silicon Valley. Foreign firms are increasingly turning to American engineers to help with their R&D, in great part because the new wave of communication tools and apps is a specialty that was born and bred there. Ericsson has 1,200 R&D employees in San Jose, and Huawei Technologies recently opened a Santa Clara R&D center with 430 engineers. Other overseas firms in the area include SAP AG, Nokia, Alcatel-Lucent and Fujitsu.

IT Spending Seen Rising This Year: Spending on information technology by U.S. businesses and governments will grow 5.6 percent during 2011, according to a survey by International Data Corp. That’s about double the estimated increase for the U.S. gross domestic product. Top spending categories include security initiatives, business analytics, and smart monitoring technologies to help run more efficient organizations. The 5.6 percent figure is about the same as last year’s.

Companies Spend on Equipment But Not Workers: How much of that spending will be on employees? Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people. The economy is producing as much as it was before the downturn, but with 7 million fewer jobs. With equipment prices dropping, and tax incentives in place to subsidize capital investments, these trends seem likely to continue. At the same time, companies are hoarding cash, in part because of concerns over future healthcare costs. Tractors and computers, executives point out, don’t get sick.

Amazon Offers to Trade Jobs for Sales Tax Exemption: Desperation to attract new jobs is leading some states to cut dramatic deals with potentially big employers. Amazon is floating an offer to Texas to create 5,000 new jobs there if the state will let it avoid collecting sales taxes from its local customers for four and a half years. Amazon also promises to spend $300 million on new distribution centers where those employees would work. The state comptroller’s office estimates that Amazon owes $269 million in uncollected sales taxes from 2004 to 2009, plus penalties. The idea is not unprecedented. South Carolina recently accepted a similar offer from Amazon.

Seattle VCs Put Less Money into Local Companies: Despite the region’s sizable technology sector, venture funding in Seattle is declining as area VCs invest outside of Washington state. Last quarter, VCs put $132 million into Seattle companies, a 37 percent drop from the same period in 2010.

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