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Tech Boom in the Beltway - information technology industry in Washington, DC, area

Black Enterprise, June, 1999 by Tariq K. Muhammad

This long stretch across Maryland, northern Virginia and Washington, D.C., has rapidly become the new hot spot for burgeoning tech companies

SILICON VALLEY IS WIDELY RECOGNIZED AS ground zero of the information technology (IT) boom. Centered around the San Francisco Bay area, the region boasts a pantheon of innovative technology companies, including such industry leaders as Intel, Sun Microsystems and Cisco Systems. On the East Coast, however, the technology boom has created a new constellation of thriving IT enterprises. And while Silicon Valley may still be the center of the IT universe, the Washington, D.C., metropolitan area, which includes neighboring counties in northern Virginia and Maryland (known as the D.C. Metroplex), has developed a gravitational pull that at least one former denizen of the Valley found irresistible.

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"Northern Virginia reminds me of a young Silicon Valley because it has a good resource base of think tanks and support programs for IT entrepreneurs," says Myra Peterson, president of Omniverse Digital Solutions, which creates and distributes multimedia content via video, CD-ROM and the Internet. Peterson spent more than a decade in various corporate and entrepreneurial positions in Silicon Valley before heading east to start her latest venture. "This is where innovation is happening. There are large and small computer hardware, software and Internet companies all mixed together and fostering creativity."

With the past decade's IT explosion, it's not surprising that IT firms account for just over 13% of BE INDUSTRIAL/SERVICE 100s companies. But these companies have more in common than their chosen industry. About 77% of the more than 13 IT firms on our list are located in the D.C. Metroplex. A concerted effort on the behalf of federal, state and local governments, universities, venture capital firms and support organizations has transformed our nation's political center into one of the country's foremost IT hubs.

A recent study by the Potomac Knowledge Way, a Herndon, Virginia-based nonprofit technology consortium, reports that the D.C. Metroplex supports approximately 330,000 IT employees and generates $90 billion in sales by companies headquartered in the area. For people not familiar with the area, it may come as a surprise that one in every seven employees works in IT. Only the federal government has a greater "mindshare."

"This region is second only to Silicon Valley in the number and scope of IT companies," says Weldon Latham, a senior partner at the D.C.-based law firm of Shaw, Pittman, Potts & Trowbridge. Latham represents several BE 100S IT firms in the area. "The federal government has been the catalyst for the area's growth because of its enormous need for IT services," he says. It's estimated that the government spends $30 billion per year on IT, making it the industry's favorite uncle.

The Clinton administration has been very proactive in enforcing minority sub-contracting guidelines, says Latham, who serves as general counsel of the National Coalition of Minority Businesses (NCMB). The D.C.-based organization focuses primarily on preserving opportunities for minority-owned companies -- such as federal set-asides and the Small Business Administration's 8(a) program, which have recently come under fire -- to do business with the federal government.

"As the courts have slowed federal 8(a) programs, the use of minority subcontracting has increased in the private sector," says Latham. Large government contractors such as Oracle, MCI Worldcom and Mobil have been increasingly receptive to using African American-owned firms as subcontractors. Besides satisfying federal guidelines, it allows larger firms to outsource portions of contracts that they may not have the manpower or expertise to fulfill.

Although the potential for doing business with Uncle Sam is a major factor in drawing IT companies to the Beltway, it's not the only one. Despite the nationwide shortage of IT workers, the region boasts a plentiful talent pool. The success of Internet access and content providers such as America Online, PSINet and UUNET (a subsidiary of MCI Worldcom), all headquartered in the Metroplex, has helped attract related businesses and contributed to the industry's emergence. In addition to eager graduates of the area's concentration of universities, employers can turn to the abundance of highly trained ex-government employees and, in a pinch, hire workers from an IT firm in the vicinity. Though companies may find themselves in bidding wars for talent, it certainly beats a blank.

A CHANGE FOR THE BETTER

Launched in 1997 in Petersburg, Virginia, Omniverse relocated to the Metroplex, setting up shop in Springfield, Virginia, last August. "We needed to be in an area where we could have more technical resources, like high-speed Internet access and satellite connections, available to us," explains Peterson, whose company is now located in Fairfax County -- home to more technology companies than any other county in the state.

Tech Boom in the Beltway - information technology industry in Washington, DC, area

Black Enterprise, June, 1999 by Tariq K. Muhammad

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