Houston is a Popular Home for Emerging Software Companies, New Houston Technology Center Study Finds

Strong Talent Pool, Excellent Infrastructure, Numerous Business Opportunities and Attractive Cost of Living Top List of Reasons to Start a Software Company Here

Houston is a great place to start and grow a software company, thanks to a highly talented employment pool, excellent infrastructure, numerous business opportunities and a low cost of living, according to a study released today by Houston Technology Center (HTC). The study, “Accelerating Software Enterprise Growth in Houston,” indicates that Houston benefits from a thriving community of more than 300 software development and programming companies that employ 50,000 and have estimated annual revenues of  $4.2 billion.

“Houston’s considerable assets in the software development arena have been eclipsed by its reputation as the world’s energy capital, ” said Paul Frison, HTC President and CEO. “One of our best-kept secrets is the strength and vitality of this software community.”

Conducted by EDS and A.T. Kearney for HTC, the study was designed to gain an understanding of the size and scope of Houston’s software development market; determine the benefits and challenges of starting or relocating a software company in Houston and to understand how to overcome potential barriers to successfully operate a software business in Houston.

Survey results are compiled from detailed information gathered from more than 60 Houston-area companies. Only companies that focus primarily on developing prepackaged software or offer computer programming services were included in the survey.

Key study findings include:

  • Houston is home to more than 300 software companies
  • The average salary for software engineers in Houston is highly competitive
  • Houston companies develop a diverse set of software products in a multitude of sectors
  • Slightly fewer than 50,000 full-time employees work in Houston’s software technology sector, and about 24,000 work at companies dedicated to software development
  • More than $4.2 billion in annual revenues originate from these companies
  • Houston’s vibrant entrepreneurial spirit is thriving despite the Internet bubble – one third of the total companies are at least four years old

“Houston’s highly affordable and supportive business environment make it a viable alternative to the traditional clusters such as Silicon Valley and Boston,” said Moe Nagpal, Senior Manager for Global Business Strategy and Planning with EDS and Project Leader for the study. “Combine that with access to a large concentration of Fortune 500 companies – which constitutes a large customer base – and you have many compelling reasons to locate here.”

The software companies play to their largest customer base – Fortune 500 companies involved with system integration and security problems, as well as energy, processes and health care applications. Many companies focus on general applications, such as enterprise resources planning systems or other system integration solutions.

Other common products include customer applications for data management and custom applications that help solve more specific problems such as computer security and transactions management.

“Our research and interviews with CEOs show that Houston already has many of the key success factors that drive vibrant software development communities, but the city faces challenges in driving greater investor participation and self-promotion,” said Alicia Lohman, a principal with A.T. Kearney.

Recommendations resulting from the study include:
• Develop a “venue” for leadership for the software community
• Increase research in computational sciences and engineering at area universities and at the world-renowned Texas Medical Center
• Enhance collaboration with the high tech community, the city and other organizations
• Promote Houston’s software community vitality

“Funding, focused leadership and collaboration will help us take these survey findings and convert them into reality to propel Houston to a leading city for software development firms,” Frison said.

Further findings in the study include discussion of funding sources, key challenges and the identification of major market drivers. Download the white paper at www.houstontech.org

About EDS
EDS, the world’s most experienced outsourcing services company, delivers superior returns to clients through its cost-effective, high-value services model. EDS’ core portfolio comprises information-technology and business process outsourcing services as well as information-technology transformation services.  EDS’ two complementary, subsidiary businesses are A.T. Kearney, one of the world’s leading high-value management consultancies, and UGS PLM Solutions, a leader in product data management, collaboration and product design software. With 2002 revenue of $21.5 billion, EDS is ranked 80th on the Fortune 500. The company’s stock is traded on the New York (NYSE: EDS) and London stock exchanges. (see www.eds.com)

About A.T. Kearney
A.T. Kearney is an innovative, corporate-focused management-consulting firm known for high quality, tangible results and its working-partner style. The firm was established in 1926 to provide management advice concerning issues on the CEO’s agenda. Today, we serve the largest global clients in all major industries. A.T. Kearney’s offices are located in 58 cities in more than 35 countries in Europe, Asia Pacific, the Americas and Africa. A.T. Kearney is the management-consulting subsidiary of EDS. (see www.atkearney.com)