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Software Publishing: Oregon Has an App for That
by Amy Vander Vliet
Published Apr-23-2013

 
The software publishing industry has been steadily carving out a niche in Oregon over the last few decades. Although the Bay Area and Seattle might garner more attention, Oregon companies have been innovating and adding jobs since the early 1990s. By 2011, only two other states had a greater concentration of employment in this industry: Washington and Massachusetts.

Firms in this sector design, develop, and publish software that address a variety of consumer needs including financial management, social networking, mobile services, business intelligence, Internet security, and open source development. Their services are in high demand as most organizations today depend on software technology to run their business and operate more efficiently.

Oregon software publishers work on a vast array of products. You might not recognize their names, but chances are you've used one of their products. Symantec, initially known for Norton Antivirus, has become a leader in computer security software. In Portland, Janrain develops software that allows websites to accept logins from Facebook, LinkedIn, and Twitter. A few blocks away, Tripwire is working on data security and Jive is creating social networking software for businesses. The list, over 600 strong, goes on.

Recession? What Recession?
 
Oregon's software publishing industry saw explosive growth in the 1990s as the Internet became a way of life (Graph 1). Employment rose from 1,600 jobs in 1990 - a year before the World Wide Web became publicly available - to 8,500 jobs by 2000; a rate of growth fifteen times faster than the overall economy.

Employment peaked in 2001, and then the dot-com bubble burst. Nationally, business spending on software came to a screeching halt after five years of annual gains averaging 20 percent. Oregon's software industry lost over one-quarter of its job base over the next three years.

Job growth resumed in 2004, and by 2008 employment reached record highs - just in time for the second recession of the decade. But while many industries in Oregon suffered steep job losses during the Great Recession, software publishers remained relatively unscathed. After just a year of mild losses, the industry held steady in 2010 and 2011 before growth resumed in 2012. According to Alex Yoder, CEO of Portland-based Web analytics firm WebTrends, the industry remained strong because even in difficult times businesses still need technology to boost productivity and increase efficiency. He contrasts this with the recession of 2001 to 2003, when Web-based technology was less mature and not as integral to business operations and success.

Graph 1
Oregon software publishing monthly employmetn 1990-March 2013
Small Firms Clustered in Metro Areas
 
From Ashland to Scappoose, Florence to Ontario, more than 600 software publishing firms employ 9,400 people across Oregon. The vast majority are located west of the Cascades, clustered in urban centers along the I-5 corridor (Figure 1). The Portland metro area is home to two-thirds of all jobs, Eugene-Springfield has nearly two out of 10. East of the Cascades, the Bend metro area has a small, but growing, sector (300 jobs; 3.2% of statewide employment). Drilling down to the city level, nearly one-half of the state's software publishing jobs are located in just two cities: Portland (29.6% of jobs) and Beaverton, a distant second (15.4%).

With a few exceptions, Oregon software publishing firms are small. Three-quarters employ fewer than 10 workers, nearly identical to the pattern for all industries. The median firm size is two employees.

Figure 1
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College Degree (Usually) Required, Just Rewards
 
Innovating, designing, coding, and supporting such a wide array of dynamic and complex products requires a well-educated and highly skilled workforce. If you were to meet someone who works at one of these firms, there's a better than 50-50 chance they hold a bachelor's degree or higher: more than half of the nearly 100 occupations populating this industry require a college degree. These occupations, led by software engineers and computer programmers, account for 60 percent of industry-wide employment (Graph 2). To put this in perspective, just 20 percent of jobs nationwide and 19 percent of all Oregon jobs call for a bachelor's degree or more. Conversely, short-term training isn't a very viable option for most jobs in software publishing.

High earnings go hand in hand with the emphasis on high-level technical skills and education. The average wage topped $92,900 in 2012. It's not just a handful of well-compensated CEOs bringing up the average - almost half of all workers earn $40 an hour or more, and nearly one-third earn $50 hourly (Graph 3). Overall, the median wage in software publishing is $37.02 an hour; more than double that for all industries ($17.28).

Graph 2
Empl.oyment by educational requirements Oregon 2010
Graph 3
Share of employment by hourly wage 2012
Young Men
 
The stereotypical image of a software worker might be that of a young man wearing glasses. While we don't have statistics on eyewear, age and gender data show that the rest of this image is largely accurate. The vast majority of workers in software publishing are male; 71 percent compared with 51 percent across all industries. And young. Nearly two-thirds of the sector's workforce is under 45 years old; a much greater concentration than the 44 percent across all industries (Graph 4).

Software publishing's younger workforce reflects the industry's relative newcomer status along with its rapid growth. Twenty years ago software was just beginning to come onto the scene. Yet half of today's workers were already in the workforce back then, learning skills and heading down career paths that likely had little to do with this very small, largely unknown, and highly technical sector. It's the recent graduates who are more apt to possess the education and latest skills required for many software occupations, and therefore better prepared to fill the thousands of jobs that have been created over the past decade.

Graph 4
Software publishing employment by age Oregon 2011
The Future Looks Bright
 
Technological innovation and increasing demand will fuel strong growth in software publishing over the coming years. Cloud computing will open up a new market in mobile computing (e.g., cell phones, tablets), and these devices will rely on software to become more powerful, efficient, and secure. In a sense, mobile computing might be picking up where personal computers leave off when it comes to software. Worldwide sales of prepackaged software are forecasted to surge from $375 billion in 2012 to over $485 billion in 2016, according to market researcher International Data Corp.

In Oregon, software publishing job growth will outpace most industries. Between 2010 and 2020, the Oregon Employment Department projects software publishers will grow by nearly 50 percent, an increase of 4,400 jobs. In comparison, total statewide growth is projected to be 18 percent during this same time period. Our optimism is fueled not only by national trends in this industry, but by our growing reputation as a place for start-ups and innovation.

But Wait, There's More!
 
Packaged software, the focus of this analysis, is written for mass distribution. However, there's quite a bit of software development work outside the publishing industry. About 1,000 firms in Oregon are engaged in writing custom computer software, products developed with the specific needs of a particular customer in mind. They employ 3,200 people (2012) and are quite small (three employees, on average). With annual wages of $78,600, they pay better than the average for all industries ($44,273) yet less than their counterparts in software publishing ($92,900).

This industry, like software publishing, barely noticed the recession. Employment inched up in 2008 and 2009, before taking off in 2010. Over the next three years, it expanded by about 1,000 jobs. Growth was undoubtedly buoyed by private investment; companies in this industry attract much of the state's venture capital, including Urban Airship, Shop Igniter, and Act-On.