DC's Tech Industry and COVID: Where Do Small Businesses Stand?
Technology makes up a significant portion of the D.C. job market—according to the Census Bureau's classifications, the tech sector comprises 31,000 jobs. This figure does not include tech jobs found in other industries, such as life sciences, education, and consulting.
Many small businesses consistently find opportunities within the District and its suburbs. One reason the DMV is appealing is because a portion of federal contracts are reserved for small businesses or stipulate large businesses must subcontract with small businesses to qualify for contracts. IT companies are particularly well-positioned since they don't need to make substantial capital investments to compete for contracts, and they offer highly desired services sought by the government.
Let's take a look at how small IT companies in the D.C. area have performed before, during, and what they will likely look like after the pandemic.
Technology job opportunities in the DMV before the pandemic were generally very strong. D.C. is a tech-friendly city with many resources available to small businesses. In 2014, investment capital investments in D.C.-area startups reached a record $48 billion. D.C. was also ranked in the top 10 cities in the U.S. where startups could receive venture funding. Pre-pandemic the area was considered to be one of the most vibrant areas for startups, and many found it to be a solid location to put down roots.
During the pandemic
The COVID-19 pandemic dramatically impacted small businesses across the U.S. Many were not able to sustain the impact, and it is clear a number of industries have a difficult road to recovery. In D.C., aside from essential services, the city was shut down for anything requiring in-person contact, crushing many small businesses.
For the tech sector, it was generally easier to temporarily shift to remote operations than it was for other sectors, employing similar strategies larger companies utilized. Government contractors, previously unable to work from home, were suddenly granted permission to do so; these employees work for both small and larger businesses. Most of these workers will continue to work remotely while social distancing policies and advisories remain in effect.
Interestingly, numerous D.C.-area tech startups were able to secure funding even during the height of the pandemic. According to Washington Business Journal, numerous small, local, technology businesses individually raised tens of millions of dollars, collectively totaling hundreds of millions in venture capital funds. Small businesses actively raising capital include Airside Mobile (24 employees), Interos Inc. (55 employees), IonQ (53 employees), Aquicore (65 employees), Inky (11 employees), and Affirm Logic Corp (19 employees), to name a few.
Looking toward the future
Going forward, it's hard to predict what will happen, but signs indicate technology will be better positioned than other industry sectors. Some theorize the next Silicon Valley could be "nowhere" meaning everyone is virtual. Renting space in D.C. is expensive, and with the rise of coworking spaces and work-from-home structures, small businesses have an opportunity to reduce overhead while expanding a presence in the DMV.
It's also probable businesses in various industry sectors will look to technology companies to provide them with solutions they'll need moving forward. Continuity strategies will change to be able to withstand future potential interruptions or shutdowns of business, and business models will need to revamp to support adding technology strategies. As a result of this demand, small tech may find new opportunities to grow (and hire additional employees).
Jobs in the tech sector
Depending on various market requirements, tech worker skillsets may need to evolve or diversify to meet market demands for technology solutions. For some companies, it could take time to reimagine themselves to fit a "new normal," but for the most part, the industry seems to be able to weather the economic devastation caused by the pandemic.
BLS projects the technology sector will grow 11 percent through 2029. Information security is even stronger at 31 percent. D.C. is one of the country's cybersecurity and cloud epicenters and going forward it's likely job seekers will continue to find opportunities as startups find themselves in the DMV.