Hartford Business Journal

14 Hartford Business Journal • January 25, 2016 www.HartfordBusiness.com "Connecticut will not be Boston. We will not have the scale or the critical mass," Carl- son wrote in a message to his membership last week. "But that doesn't mean we can't learn about what is important to companies like GE, and apply those lessons learned to our mid-sized companies." One way the council is trying to do its part is through a new initiative that aims to link computer programmers enrolled in Con- necticut universities with in-state companies in need of talent. By the end of the month, approximately 200 students from 10 schools will have taken the Connecticut Skills Challenge, which will cul- minate in a final event and jobs fair in April. An available workforce is the most impor- tant ingredient in keeping high-tech companies happy, Carlson said. He believes taxes are sec- ondary, though unpredictable or retroactive tax hikes hurt the state's competiveness, he said. While GE was vocally dissatisfied with Connecticut tax hikes in 2011 and 2015, the conglomerate cited other reasons for its decision to move its headquarters to Boston, including Beantown's diverse, technologi- cally fluent workforce. Metro Boston has few equals when it comes to a concentration of high-tech work- ers. It has triple the number of "advanced- industry" employees as the Hartford and Stamford metro areas combined, according to an analysis of 2013 data by the Brookings Institution, and a higher ratio compared to overall employment. The area also has pres- tigious research universities and hospitals, draws more venture capital investment, fea- tures an airport with numerous international flights, and offers slightly more favorable tax rates on corporate and personal income and capital gains. Boston's offerings also fit into GE's strategy to retool into a high-tech industrial company. "Boston is just an incredibly powerful magnet," said Fred Carstensen, a UConn professor and economist. Big-city attraction It's not that Connecticut doesn't have an educated workforce. The rate of advanced degrees here is comparable to Boston and among the highest in the country. But Connecticut companies have a hard time attracting and hanging onto certain types of in-demand employees, including dig- ital engineers and programmers, said Joseph McGee, vice president of policy and programs at the Business Council of Fairfield County. "Maybe they stay two years and go off to Bos- ton or New York or California because of the pay scale," McGee said. "We hear that repeatedly." One such company is Bridgeport's GoE- Cart, which provides a cloud-based ecom- merce platform and related services for online retailers. CEO Manish Chowdhary said his 20-employee firm, which has eight vacant positions, struggles to find software developers and engineers. Many talented workers including some of his own past employees have flocked to Sili- con Valley, Boston and New York City, he said. "It's a fertilization problem," Chowdhary said. "We have to go above and beyond to try to hold onto this talent." GoECart has a loan from the Department of Economic and Community Development (DECD), but Chowdhary said government aid will only go so far in building a tech ecosys- tem that attracts a larger talent pool. Has he thought about locating elsewhere? "The thought has crossed my mind sev- eral times," he said. "We stick around hoping things will get better." Chowdhary said the state's larger tech companies must step up by seeding or work- ing more with startups, like Google Ventures does in California and elsewhere. One thought he has: Requiring big compa- nies that receive state loans or grants to use part of the funds to collaborate with smaller Connecticut tech firms. McGee said he would like the state to cre- ate a new tax credit awarded to certain high- tech workers who agree to work in Connecti- cut for a minimum number of years. Connecticut's top economic official, DECD Commissioner Catherine Smith, said she and her team have been discussing ways to make the state more attractive to tech tal- ent and companies. The idea of a personal income tax credit for skilled workers is something DECD wants to analyze, she said. But there are also budget realities. As the legislature prepares to con- vene next month, lawmakers will continue to grapple with a combined projected deficit of $2 billion in the next two fiscal years. "Income tax in particular kind of keeps this place afloat," Smith said. "It's something we're a bit constrained about." In a statement following the GE decision, Gov. Dannel P. Malloy expressed disappoint- ment and issued a call to stabilize the state's pension debt and create a more predictable budgeting process. He was also quick to point out that his administration since 2011 has used low-interest loans, grants and tax credits to retain or create nearly 95,000 jobs in the state. Smith echoed that sentiment: "We've seen so few announcements like GE's, and so many about [companies] expanding here," she said. "On balance, we've seen more of that kind of positive activity." DECD is considering the creation of high- tech workforce programs at both the K-12 and college levels, she said. In recent years, the state has similarly sought to bolster its pipe- line of manufacturing talent. Workforce challenges, successes Another company searching for program- mers is New Oak Financial, which uses data analytics and other technology to advise banks and insurance companies. The New York company, which has offices in Atlanta and Dallas, established a Danbury office in 2013 with the help of a $3 million DECD loan. Managing Director Yuri Yoshizawa said New Oak hasn't been able to find an adequate volume of programming talent in Greater Danbury to meet its growth goals. So last year the company launched its own internal bootcamp program. Candidates with an interest in tech — not necessarily computer-science majors — take nine weeks of training, followed by 12 to 15 weeks at a programming school in Manhattan. There's also several months of mentoring at the Danbury office. A handful of people have completed the program so far, Yoshizawa said. New Oak also provides mentoring and internships to students participating in the state-backed Early College Opportunity (ECO) program, which seeks to create a stronger pipeline of STEM skills. So far, several community colleges and companies, including IBM and Electric Boat, are participating. Yoshizawa thinks ECO is a good program for the state. "I would like the state to commit to fund- ing it long-term," she said. How are other high-tech companies in the state faring with talent acquisition? Drugmaker Alexion, which is in the midst of moving its headquarters from suburban Cheshire to downtown New Haven with the help of as much as $51 million in state assis- tance, hires from both within and outside of Connecticut. Asked about the company's commitment to staying and growing in Connecticut, CEO David Hallal said New Haven, home to Yale, offers "a knowledge-based economy, easy access to Amtrak and other mass-transit systems, and a vibrant community for Alexion employees." "In addition, creating a new global head- quarters in Connecticut has allowed our cur- rent employees to remain with the company without having to relocate their families to another state," he said. At Branford's Core Informatics, a soft- ware maker for scientists and researchers that has grown its staff from 16 to 90 employ- ees in the past two years with the help of $3 million in DECD aid, CEO Josh Geballe said he is happy staying put. "I think certainly when it comes to biosci- ence and biotech investing, Boston is the cen- ter of the universe right now," Geballe said. "But we are actually very bullish on Connecticut." Geballe gives Connecticut credit over- all for being "supportive and aggressive" in attracting tech companies. He said his team enjoys a lower cost of living and less traffic than many workers in Cambridge, Mass., where Core opened an office several years ago. He has hired employ- ees from Southern Connecticut State Univer- sity, UConn and the University of Bridgeport, among other area schools. "Quality of life is important," he said. "A lot of us at Core value living on the shoreline and being close to New Haven." At Norwalk disaster backup and recovery provider Datto, Michael Mueller, senior director of talent acquisition, said some, but not all high- tech workers would prefer to live in a major city like Boston. Datto, which is a sponsor of the tech council's skills challenge, has hired employees who had offers from big-city companies, he said. "It's always tough finding great talent," Mueller said. The company provides competitive pay and benefits, he said, but also seeks to dif- ferentiate itself with perks like free-lunch Fri- days, office arcade machines and company trips to play paintball. The company recently rented out an entire movie theater for employ- ees to watch the new Star Wars. While Core Informatics and Datto both say they've been able to find and attract high- tech talent, both have also used highway bill- boards and other advertising as a part of their recruitment strategies. Assessing the state's efforts UConn's Carstensen said Malloy has been smart to try to build the state's bioscience industry through its deal to bring Jackson Laboratory to Farmington, and to keep Pratt & Whitney's headquarters in the state with the help of a $400 million tax-credit deal in 2014. "We've done some good things, but it has never been integrated into a broad narrative about how we're becoming a cutting-edge economy," Carstensen said. He thinks the state should broker UTC- like deals with other companies, allowing firms to cash in unused tax credits for infra- structure and other growth investments that keep businesses tethered to the state. Smith countered that few companies have the amount of unused tax credits that UTC does. Carstensen said the state should better leverage its multi-million-dollar investment in a high-speed Internet backbone by allowing private companies to tap into it. Such a strat- egy could be a key piece of a broader narrative about the state's economic aspirations, he said. And he thinks UConn should follow through on past pledges to boost research and programs at its regional campuses, including Stamford, where GE had an innovation collab- oration called edgelab that shut down in 2011. Stanislav Kurkovsky, chair of Central Connecticut State University's computer sci- ence department in New Britain, said he sees no simple solution to competing with major tech hubs. "I don't know if there's a strategy," he said. "If there is, I don't feel it." His own students, some of which took the tech council's skills challenge, have ended up at area insurers and other companies, while others have landed jobs out of state at Twit- ter, Netflix, Amazon and other big tech firms. "I'd like to think that as a computer-sci- ence program, we're doing everything we can to produce quality graduates," he said. It's a message he and his colleagues try to trumpet to industry, but it's not always enough to convince companies to locate or remain here. "The exit of GE is a good example," he said. n from page 1 CT tech firms get creative to woo talent Boston vs. Connecticut Tech-Talent Fight Boston-Cambridge- Bridgeport-Stamford- Hartford-West Hartford- High-Tech Workforces Newton Norwalk East Hartford "Advanced-industry" employment, 2013* 338,900 47,340 65,150 As share of total employment, 2013 13.3% 10.9% 10.2% Avg. annual earnings of advanced workers, 2013 $117,330 $124,580 $93,940 * " A D V A N C E D I N D U S T R I E S " I S A S E T O F I N D U S T R I E S E M P L O Y I N G S P E C I A L I Z E D L A B O R , W H O D R A W O N S C I E N T I F I C A N D T E C H N I C A L K N O W L E D G E , A N D D E P L O Y T H A T K N O W L E D G E T O R E S E A R C H A N D D E V E L O P N E W P R O D U C T S A N D P R O C E S S E S . S O U R C E : B R O O K I N G S A N A L Y S I S O F M O O D Y ' S A N A L Y T I C S D A T A

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