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More tech firms setting up offices in Washington area to get federal business

By Marjorie Censer
Capital Business Staff Writer
Monday, May 3, 2010

Composite Software, a data services company in San Mateo, Calif., had plenty of experience under its belt when it made its move to launch government sales.

The company had worked with major banks, pharmaceutical firms, and oil and gas companies, according to Jim Green, the chairman and chief executive. So, in its early pitches to the federal government, Composite provided examples of its prior work.

"Our government prospects would look across the table and say, 'We're not a bank. Why are you showing us this?' " Green said. "It didn't compute."

Those early struggles motivated the company to invest in a staff focused on government work, and in 2006, Composite opened a federal office in Reston. The company is not the only one that has found that doing business with the government means opening area locations. Google and Microsoft are among other West Coast companies that have expanded their local offices in recent years.

The moves are one reason why the region has proved more resilient in the downturn than other parts of the country.

"We started doing things very specifically for the federal government," Green said. "Then the government responded by engaging with us in a much more serious manner."

Composite is now expanding that Reston outpost, increasing the staff by about 20 percent and renting additional office space, according to Green. Though Green declined to say what percentage of Composite Software's business comes from the federal government, he said the company grew 50 percent in 2009 and its government business increased at a faster pace.

"It's very clear that we've just started," he said.

In general, high-tech jobs in the region have been multiplying at a disproportionately high rate. According to statistics from industry advocate TechAmerica, the high-tech industry in Washington, Maryland and Virginia has added close to 100,000 jobs over the past decade. The software services area particularly has flourished, growing from about 140,000 jobs to nearly 220,000.

Though the data include all of Maryland and Virginia, Josh James, director of research and industry analysis at TechAmerica's nonprofit educational foundation, said the vast majority of that growth was in the capital region.

Expansion in the Washington area has outpaced that of the rest of the country, James said. The number of software services jobs, for instance, has increased 55 percent in the District, Maryland and Virginia in the past 10 years, as compared with 36 percent nationally. In engineering and technology services, the region has experienced a 38 percent increase, while the nation saw 29 percent growth, according to James.

Olga Grkavac, executive vice president of TechAmerica's public sector group, said the federal government still prefers its contractors to have a physical presence in the region.

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