I am speculating strictly upon my own experience in state government and information technology.
I’m both thrilled and very concerned to see that IBM is locating a major application development center here in Baton Rouge. After much reflection, I’m seeing only more reason to be concerned.
First, the good news — the state is going to invest an extra $14 million in education to support this center. The state is going to grant IBM $28 million and the city/parish is going to kick in $1.5 million. The building will be funded by $14.8 million from the state, $3 million from the city-parish and $12.7 million in federal Community Development Block Grant money. That’s the good news? My math is rusty but it sounds like the taxpayers are kicking in around $74 million to help IBM run a business. Well, I guess we at least get a better education program for this money. Maybe.
Now, what concerns me? How can IBM possibly generate enough new work in the area to make this work? Someone needs to pretty much guarantee that they’ll have enough work. They say the area is underrepresented for Information Technology (IT) jobs and will need the 500 or so new programmers. If true, I’d think there’d be a lot more employment ads in the paper for this area than I’m seeing. It would also mean that the existing programmers would be demanding much higher salaries than they’re getting.
Then I start to wonder, how does the state guarantee enough work for IBM? Then I think, maybe we’ll just steer a lot of state contracts in that direction. Since the state probably doesn’t have a lot of extra money or programming work stacking up in all of its departments, I think you’d need to lay off a bunch of state employees to generate that level of work for the private sector. They say IBM pays an average of around $67,000 for programmers. That’s about what the state probably pays. Of course, IBM is a for-profit entity, and they usually charge around $200/hour for programming services. That works out to around $400,000/year per programmer in revenue!
I don’t make up these numbers. I spent 32 years working for the state and worked on a lot of IT contracts with folks (including IBM). After seeing the announcement about the development center and having time to think about it, something hit me. Some of the top staff in the Office of Information Technology, which oversee the state’s IT staff and plans, retired or resigned just before this announcement was made. I have to wonder why they did that. It sounds like they knew what was coming and were unilaterally opposed to what it meant for the taxpayers. What do you think?
retired IT deputy director
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