In many ways 2012 was an exciting year for tech startups in NH and for companies in hot fields, such as mobile services and web applications. It was also a year that underscored the need for NH to grow its own talent. Recent reports highlight the drastic reduction in the in-migration of skilled workers to the state, and employers say there are not enough workers with certain skill sets to meet current demand.
From the perspective of the NH High Tech Council (NHHTC), 2012 was a banner year. The NHHTC saw membership grow to a 10-year high of 230 companies. The Council launched a new series of events specifically for software professionals, and is working with members of the NH Bio/Medical Council to build a series of highly focused networking and information/partnership events.
The venture capital community is also collaborating to help fund start-up companies in a variety of ways. Most notably, the TechOut NH Startup Competition, a partnership between the Council and the abi Innovation Hub, resulted in 20 angel investors coming together to make a $100,000 commitment each year over five years to support start-up companies. Three NH startups received funding. The second event will take place in September.
The Year of Startups
In 2013, the Council expects to see a continued focus on encouraging innovation and start-up activity, and also on developing the ecosystem to support these efforts. There are indicators the public sector will play a role in these efforts. In her inaugural speech Gov. Maggie Hassan used the word innovate or innovation 18 times. Expect to hear the conversation about workforce needs to change from We need more STEM workers to We need more software developers with database skills.
There are many new and maturing efforts to grow and support startups. These include the NH Innovation and Commercialization Center (NH-ICC), the abi Innovation Hub, Nashua Tech Park, and the Dartmouth Entrepreneurial Network, to name a few, as well as efforts in Keene, Plymouth and Conway. According to Mark Galvin, an entrepreneur who helped launch the NH-ICC, start-up firms are the top source of new jobs. Most of their hiring occurs during the first year. Galvin points out that job growth remained stable at startups during the recession, while most other sectors saw substantial declines.
The Rise of SaaS
George Epstein, chairman of the Echo Group in Conway, believes that software as a service (SaaS) will see significant growth in 2013. He sees this growth coming at the expense of traditional software and expects that his company will go from 10 percent of sales coming from SaaS a year ago to 50 percent or more in 2013.
Cloud computing enables small tech companies [to have] the same redundancy, backup, and recovery, plus seamless performance, that only enterprise companies previously enjoyed, says John Schwope, founder and CEO of Simplified Clinical Data Systems in Portsmouth. Since NH's business sector is dominated by small and medium-sized businesses, Schwope sees this as a game-changer in the state.
Broadband Demand
Broadband remains a double-edged sword in NH. Overall, the state ranks 12th nationally for broadband access, according to TechNet. However, several regions in the state still struggle with high-speed access and employers note this directly affects business operations and hiring. Look for more efforts to fill these gaps in 2013.
Jeffrey Nevins from FairPoint Communications says demand for broadband has increased 60 percent per year on average and is expected to triple by 2015. Services like video on demand, telemedicine, online apps, games, cloud computing, and distance learning are all driving the demand for more bandwidth, he says. Nevins says the continuing move toward wireless, with 30 percent of all homes having no landlines, also contributes to that demand.
The Challenges
For all the opportunity that exists, though, there are significant challenges to the growth of NH's tech sector in 2013. The medical device industry faces new taxes levied by the Food and Drug Administration that are causing consternation for contract manufacturing, says Polly Chandler, head of the NH Bio/Medical Council.
Several prominent companies relocated to NH in 2012 and plan to grow in the state, but they remain wary of certain challenges. Pat Clark, CEO of BurstPoint Networks, an end-to-end video content management and distribution firm, brought the company and its employees across the Massachusetts border to Merrimack in mid-2012. While his employees who live in NH are enjoying not paying Massachusetts's income tax, the cost of their health insurance premiums rose 60 percent.
Albany International's growth in NH grabbed headlines in 2012, and company CEO Joe Morone says that the move to Rochester was a direct result of seeing a state-level commitment to helping Albany develop the talent it needs to grow. Former Gov. John Lynch and former state Economic Development Commissioner George Bald helped the company partner with the community college system and the University of NH to train workers. But Morone says more is needed.
I love all of the buzz about the revival of U.S. manufacturing, but unless we get serious over the long haul about a commitment to education, it's hard to see that as sustainable, he says.
Workforce concerns have been repeatedly raised as a major barrier to growth across the tech sector. Some have estimated that companies in NH need to hire upwards of 1,000 software engineers, yet the state's colleges and universities only produce 100 graduates per year. The drastic reduction of in-migration is a parallel concern, as many of those who move to NH tend to be highly skilled and often become job creators. There are, though, some early signs of a possible upswing in in-migration.
The High Tech Council plans to do more research into the tech workforce needs in 2013, to get a true sense of specific skills gaps that exist today and projected skills gaps in the future, and it will share the results.
The 2013 outlook for the tech sector has much promise. Focusing on efforts that encourage entrepreneurism and business creation, and paying attention to infrastructure-such as expanding broadband, developing a tech-savvy workforce, and making state government as business friendly as possible-will be essential.
Matt Cookson is executive director of the NH High Technology Council, a member-driven organization focused on advancing innovation throughout NH and expanding the state's tech sector. For more information, call 603-935-8951, email info@NHHTC.org or visit www.nhhtc.org.
Current Issue - May 2024