San Antonio’s tech industry grew at an accelerated pace during the first part of the pandemic, a new report from the Brookings Institution found. The spate of new jobs, spurred by startups and legacy institutions alike, came as overall growth in the local sector remained comparatively low, and as downtown slips in its status as its epicenter.

The development followed a nationwide trend in which tech jobs, usually concentrated in a handful of tech-heavy cities, spilled out into metropolitan areas not normally known for having robust tech sectors.

San Antonio’s number of tech sector jobs grew 1.2% in 2020, adding 207 jobs and marking a faster rate from the average 0.5% growth experienced in the three years prior to 2020, according to the report.

By comparison, Austin’s tech sector followed many other tech hubs in experiencing a slowed growth in that same period, dropping from an average jobs growth rate of 5.5% to 3.4% in 2020.

Mark Muro, a senior fellow and policy director at Brookings and one of the study’s lead authors, said the dynamic is primarily a product of the tech sector’s massive growth nationwide under the pandemic.

“As many markets roll into online payment systems and platform-based delivery, it took tech people to set all of that up. So even at the regional level, there was a momentum for tech that drove growth,” he said.

Remote work may have played a role in facilitating this growth in smaller markets, Muro said, but felt its importance may be overemphasized in comparison to the sector’s overall growth.

He said it remains to be seen whether this recent trend — in which tech growth is more broadly spread across the country instead of concentrated in a few cities — will continue. “The big question here is whether this is a one-off disruption during an extraordinary period, or is this an initial inflection point at the beginning of a genuine decentralization of tech?”

The Brookings Institute report dovetails with the findings of other recent reports that indicate a pandemic-era uptick in San Antonio’s tech sector.

  • An analysis by Axios of LinkedIn data shows that San Antonio, roughly from 2020 to 2021, experienced a 23.6% increase in net migration of tech workers — the third largest increase for a metro area in the country.
  • A 2021 report from commercial real estate firm CBRE found San Antonio’s tech workforce grew 9.4% in the preceding three years. It also found that the workforce was the least ethnically diverse out of the nation’s top 50 cities for tech.
  • A 2020 analysis from Zillow suggested that San Antonio is among the top 10 markets “ripe for future tech growth,” citing housing affordability and available tech talent.

New jobs and new centers

The Brookings Institute report showed a total of nearly 18,000 tech jobs in the San Antonio-New Braunfels metropolitan area at the end of 2020. The report considers tech jobs to include those in IT services as well as software development, data processing and electronics manufacturing, among other categories.

The growth in these jobs comes from legacy institutions like USAA and Frost Bank, which have recently gone on hiring sprees for many jobs including tech jobs, but also from expanding tech-focused startups like Jungle Disk, a cybersecurity firm, and Plus One Robotics.

Geekdom, a tech-oriented coworking space and startup incubator downtown, recently reported its members had created 510 jobs in 2021, and projects they will create 764 jobs in 2022.

There are some indications that future growth in the tech sector may be less concentrated in the city’s downtown — where a nascent tech district roughly following Houston Street contains Geekdom, Scaleworks and other tech enterprises — and instead move toward other parts of the city, such as Port San Antonio, Brooks, and the Pearl, which recently launched its own coworking space.

Jungle Disk, whose growth is on a trajectory to continue, recently embarked on a plan to open a new office south of downtown.

Geekdom, located in the heart of that tech district, has yet to recover in membership numbers from the drop it experienced at the start of the pandemic, falling from 1,800 pre-pandemic to 1,300 currently.

Luis Martinez, the director of Trinity University’s Center for Innovation and Entrepreneurship, also pointed to efforts to bring tech companies to San Antonio, such as the recently revived DeLorean car company, which seeks to hire engineers to help design new electric vehicles at Port San Antonio.

“What we’re seeing is an emphasis on making San Antonio a destination place,” Martinez said. “There’s been an acceleration of this energy.”

San Antonio’s economic development foundation, which recently renamed itself greater:SATX, has made bringing tech companies to the city a priority. A spokeswoman for the organization said the number of IT and cyber companies it is in conversation with to expand or relocate to San Antonio has grown in recent years. Approximately 1 in 5 companies it is in conversation with are tech companies, compared to April last year, when it was less than 1 in 6.

Having the type of workforce that will attract tech companies to San Antonio has long been a challenge, one that local high schools, universities and even the City of San Antonio’s new comprehensive workforce development program are trying to address.

A major partner in that workforce program, Accenture Federal Services, which provides technology support to the federal government, has already hired roughly 400 San Antonio residents in recent years for entry-level jobs that teach coding skills, according to Accenture Federal Services managing director and San Antonio advanced technology center lead Jennifer Lange.

A long way to go

At present, however, Accenture Federal Service is one of relatively few options for entry-level tech talent. And tech companies in the city struggle to find a workforce that has experience in addition to education.

“That has been our biggest struggle to date,” said greater:SATX’s chief workforce officer, Romanita Matta-Barrera, earlier this year, adding that many companies are looking for five to 10 years of experience. A recent report from the organization cautioned that San Antonio risked creating an oversupply of entry-level tech talent.

David Heard, the CEO of Tech Bloc, an advocacy group for the city’s tech sector, has said that there is still much to be done in developing the tech sector, which has anemic growth compared to many cities of similar size.

“We have things to celebrate,” he said in January, “but sometimes [there is] the false impression that we’re keeping up with the big tier one and tier two cities that are investing more into their tech sectors.”

Notwithstanding recent growth spurts, the relatively slow pace of expansion in San Antonio’s tech sector needs to be taken seriously, he said. “In a world that is so driven by tech, we run the risk of a local economy that’s relegated to second class status, if we don’t have these high-paying innovative tech jobs at all levels in our community.”

The Brookings Institute report did not include San Antonio among its “rising stars” for the tech sector, instead listing cities like Dallas, Atlanta, and Miami.

Waylon Cunningham

Waylon Cunningham writes about business and technology. Contact him at waylon@sareport.org.