Headwinds and Tailwinds: Utah’s tech industry is thriving amidst constant change and a talent shortage
The U.S. economy had a good year in 2016. Utah had an even better one, according to Utah Economic Council’s 2017 Economic Report to the Governor. Total personal income went up 5.7 percent over the year, per Robert Spendlove of Zion’s Bank, and “Utah’s growth in per capita personal income has been significantly higher than that of the U.S. economy as a whole.” Utah enjoys a reasonably low cost of living. It has a young and educated workforce and a thriving technology sector. All of which promises to make 2017 another good year.
So, kudos to us. But before we wax too self-congratulatory, we’d do well to notice some small clouds on the horizon. Yes, Utah, even with its economic victories, faces a few challenges as well. We have a shortage of skilled knowledge workers. New technologies are transforming business and threaten to leave us behind if we don’t get out ahead of them.
If we can find the talent
A paucity of engineers and other tech knowledge workers represents the bottleneck through which the Utah economy must pass. According to Carrie Mayne of the Utah Department of Workforce Services, “labor shortages will naturally plague some employers of high-skilled, specialized work”—i.e., the entire tech sector—“but continued in-migration and a primed education pipeline should help to ease those pinches.”
Considering the explosive growth of many software firms, however, I remain doubtful that in-migration and education will significantly satiate the sector’s appetite anytime soon.
I recently saw Ryan Smith, CEO of Qualtrics, lament the talent scarcity while speaking on a panel. “I want to hire Utahns,” Smith said. “I’d have to hire every single software engineer that graduates from the University of Utah, BYU and UVU…” and here he paused for emphasis. “And they’d all have to be good.” Smith explained that he’s forced to set up offices in other locations—Seattle, for example—just to draw enough programmers to feed the company’s expansion. Consider that Qualtrics is but one software firm (OK, a large firm) in a vibrant tech ecosystem, and you get some sense of the issue’s scope.
Diversity a remedy?
Workplace diversity has long been touted as a social good, but it makes economic sense as well. Tech lacks skilled people. Tech is overwhelmingly white and male. Take the gender imbalance: assuming 50 percent of Utah’s population is female, and a similar bell-curve distribution of raw talent and intelligence among women as among men, we can assume that for every man in a high-skill tech role, an equally capable woman has made different career choices.
Obviously, if a particular woman chooses nursing over programming, who are we to judge? If another chooses to stay home and raise her children, more power to her. We respect the decision of the individual. On the macro level, however, if we see a statistically significant gender disparity in a given field, we’d be right to suspect some pattern or trend driving that disparity. Outdated ideas about proper female career paths? Misconceptions about the nature of technology work? Socioeconomic forces that keep women out of the workforce? All of the above? Whatever the initial drivers, female underrepresentation gains an inertia of its own. A non-virtuous cycle. Girls don’t see tech as a viable choice because girls and women aren’t there. If they can’t see themselves in the sector, they’re much more likely to write it off when considering their career options.
Drawing more female talent into tech would benefit women, to be sure—more of them could find higher-paying (than traditionally female-dominated) jobs. But tech companies themselves are the real beneficiaries. A larger talent pool allows them to scale faster and avoid bidding wars for top talent. “By expanding diversity—ethnic, gender, all types—we can continue to grow our tech sector more sustainably,” says Kim Jones, founder and CEO of Vérité. “Because, really, we need more talent available for all types of positions, from the C-suite to the programming work floor.”
“Silicon Valley has a well-known challenge with diversity,” Jones reflects. “Board-level and C-suite positions are incredibly difficult for women to break into.” She pauses. “We’d like to think we’re way ahead of the game here, but the truth is, we’ve got a lot of work to do.”
Jones has made that work a sort of life’s mission. In addition to heading Vérité, she founded the Women Tech Council.
“Even though we have a long way to go, though, Utah is making some great strides,” she says. Jones points to WTC initiatives such as SheTech, a “hands-on technology experience for girls,” underwritten by some of Utah’s biggest tech firms.
Female executives will be intimately familiar with the barriers keeping women and girls out of tech. After all, these are obstacles they will have struggled through themselves. All of which gives them a unique vantage point from which to craft policy and drive initiatives to attract female talent.
A wave of digital disruption is rocking Utah’s business ecosystem, and indeed global commerce as well. This will only intensify in 2017 and beyond. New and advanced digital technologies are transforming companies in every sector. “Every company is a tech company now,” says Gil Lee, chief product officer for Pluralsight. “Or at least it needs to be, if it doesn’t want to get left behind.” Obviously, this escalates the demand for tech talent. It also forces businesses to scramble to keep up.
As software innovation rethinks business, new niches are born. And new words. The “tech” suffix adorns many a portmanteau. For example, a marriage of stodgy, traditional finance with software has birthed the exploding fintech industry. Can we look for lawtech, transtech (transportation technology) and mantech (manufacturing technology) to each emerge as massive software sectors in their own right?
Lee says Pluralsight epitomizes the “alltech” dynamic. Pluralsight offers a subscription-based educational platform focused around software and data-type skillsets. As such, it takes education into the cloud. Edtech, if you will. This terrain has already been pioneered by the likes of Khan Academy, Udemy and other online platforms. Pluralsight, however, seems bent on becoming the edtech resource for serious professionals. The company curates top talent to teach its courses and caters to corporations more than to individuals. A firm can purchase a subscription and provide unlimited training to its employees. Good for the corporation, good for the employees who shore up their skillsets, and good for Pluralsight’s P&L reports.
If Lee is correct—every company must become a tech company—then it’s also true that software will impinge more fully on some businesses than others. Pluralsight, fintech firm MX and Canopy (a cloud-based tax assistant—taxtech?) each make software a core part of their business. Indeed, they are software firms. While also being, respectively, educational, financial and accounting companies. But then, education, finance and accounting are knowledge-based, so they lend themselves to being consumed by the software advance.
For those sectors still subject to the laws of physics (manufacturing, agriculture, transportation, etc.), software will never take them completely virtual. Still, it will revolutionize them in fundamental ways. It already has: robotics, supply-chain software and much more have profoundly altered the most industries’ operations. But bigger disruptions, foreseen and unforeseen, lurk on the horizon.
The big three
“No matter where you look, it’s all about machine learning, big data and artificial intelligence,” says Lee. Indeed, the technologies comprising this trifecta are expected to be the biggest disruptors of the twenty-first century. Lee predicts that, regardless of the industry, “the companies who adopt these technologies the earliest and the most comprehensively will have the decisive advantage” over their competitors.
Take General Electric. Under CEO Jeff Immelt, the manufacturer has been reinventing itself as a technology firm first and foremost. “Like most manufacturing companies, GE used to keep tech sequestered in its IT department,” Gil Lee says. “Now they’re embracing the disruption throughout.” Lee points to the following quote by Immelt:
Product managers have to be different; salespeople have to be different; on-site support has to be different. We’ve had to drill and change a lot about the company. And I just think it’s infecting everything we do. It’s infecting our own IT. It’s infecting our own manufacturing plants. It’s infected everything we’re doing, I think in a positive way.
On the plus side, Utah has a strong tech ecosystem and a legacy of technology dating to the ‘90s and beyond. “The gene pool is healthy and deep, and it’s evolving in a very positive way,” says Josh Coates, Instructure CEO. “Ten years ago there were very few tech firms,” he recalls, adding that “you can trace the roots” of today’s rich crop to “the success stories from the last decade.”
With the pace of change, we can only speculate what Utah’s tech sector will be like 10 years from now.