Tech Industry Rivals the Federal Work Force
Washington Post Staff Writer
Monday, September 14, 1998; Page WB5 The Washington area's information technology industry has become so big, numbering more than 328,000 employees, that it rivals the size the region's massive federal work force, a new study concludes.
The $250,000 study, released today by the Potomac Knowledgeway in Herndon, portrays the greater Washington region as a global center of the information technology, telecommunications and Internet industries the "Infocomm Cluster," according to the study's authors.
The companies range from Internet access providers like UUNet, to World Wide Web content creators like the Smithsonian Institution and the National Geographic Society, to equipment manufacturers, satellite communications firms, software services companies and government computer systems contractors.
According to the study by a team from PriceWaterhouseCoopers, the region's 328,000 infocomm employees nearly equal the 340,000 local federal employees, long considered the region's economic cornerstone.
"We're trying to communicate to this region that there is a very significant industry here that hasn't been defined before or put in a context before," said Fred Bollerer, president of the Knowledgeway, a nonprofit group that funds research and support programs for information technology entrepreneurs.
But in trying to measure the fast-spreading, shifting expanse of information technology, the Knowledgeway and the PriceWaterhouseCoopers study team relied on arbitrary definitions of which companies and which employees should be counted, some technology analysts said.
On the other hand, the study undercounts the total technology work force in the region by omitting federal workers with infotech responsibilities or tech professionals at banks, manufacturers and other industries outside the information technology realm, Knowledgeway consultant Cathy Lange said.
Still, the 328,000 total is higher than other studies that have tried to estimate the size of the Washington region's infotech work force. The most detailed study thus far, a 1994-95 survey by George Mason University based on faxed questionnaires to several thousand companies, estimated a total local infotech work force of 262,000. The Knowledgeway study was based on data for 1996.
In producing the tally, Price WaterhouseCoopers said it did not query individual companies, but used published descriptions of company divisions to determine how many employees in each company worked in the infocomm sector. That means that in each division included in the study, every employee from a vice president to a security guard is counted as part of the technology work force.
Every tech study like this one has to set its own boundaries, Bollerer said, because standard government employment reports don't itemize the size and makeup of the technology work force. The Knowledgeway drew on the advice of industry executives in drawing its line, he added.
"This is as close as we can come to a definition that everyone can agree on," he said. "What we've tried to do, based on an awful lot of conversations with a lot of well informed people, is say, 'This is the information community cluster.' "
The study offers a glimpse at the size of the entrepreneurial network in the Washington region. "New content" providers such as America Online Inc. that prepare and distribute material for the Web and other electronic networks employ 33,000 people in the region. Internet service providers employ another 4,200.
But the study does not attempt to show how much of the region's technology industry still relies on federal contracts rather than competing in commercial markets. Future reports will cover that ground, Bollerer said.
Applying its workplace definitions to the national economy, the study concluded that the 328,000 employees represent 11 percent of the nation's total employment in these kinds of industries. That's much higher than the region's 2 percent share of nationwide employment.
Telecommunications and Internet companies based in the Washington region have $90 billion in annual sales, or more than 10 percent of nationwide revenue for the industries included in the study, the report said.
Numbers aside, it isn't news that the Washington area is a player in the Internet/communications world, says Michael Sullivan-Trainor at International Data Corp. in Framingham, Mass. "Northern California is the strongest," he said. "Next is New York," with Web-based financial services and advertising content. "I'd probably put Washington third," he added, citing the Beltway technology contractors, the strong technology research and development support and the presence of AOL, MCI and other communications firms in the region.
But the regions' strengths are so different that comparing them doesn't make much sense, he said.
"I've seen a lot of claims by different chambers of commerce" about leadership in information-age technologies, said Ross Rubin, group director for telecommunications and technology research at Jupiter Communications in New York. "The different cities dispute each other's claims. It strikes me as pretty arbitrary," he said.
Bollerer said that despite the national comparisons in the report, its basic point was to tell a local story locally. "The reason to do that," he said, "is to give a call to action to the region's leadership, that things need to be done that will solidify this industry and contribute to its growth. Our audience is this region."
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