IT seeks to create geographic clusters

July 23, 2014

Several areas of the United States are known for very successful IT clusters. These are areas where IT companies have set up shop and include the Route 128 belt in Massachusetts and Silicon Valley in California. An article in the Harvard Kennedy School's Shorenstein Center Journalist's Resource said more IT groups are looking to create such geographical centers in other areas of the country. This, however, is a concept that has some issues as policies initiated to promote and produce such sectors have really not been effective.

Factors hampering cluster development
An in-depth study conducted by three analysts for the Oxford Journal found that the actual technology cluster-growth concept didn't foster much growth. The study discovered that there wasn't a positive growth signature from the cluster areas but a negative growth rate for surrounding communities. Nonetheless, the study conceded that the success of high-tech clusters is not really understood at this point.

Picking the right community to work with
Because the information on success or failure of cluster development is not definitive, IT companies are still looking promising areas to set up shop. An online publication, Area Development, outlined what companies are looking for in a community and what those cities and towns can do to position themselves to become a host. One of the key considerations in an IT company's decision-making process on whether to locate in a certain area is the concentration of IT companies located in or around the region. Concentrations that are considerable make a larger mark on demands for office space when employment changes take place. That, in turn, is a visible marker of the status of real estate in the market due to the IT influence in the area, the study showed.

Not just on the east and west coasts anymore
​Since the inception of the IT boom, companies have trended towards concentrating on the east and west coasts, but that paradigm is changing rapidly, according to the Area Development article. One thing that companies are looking for is highly skilled talent. Venture capital funding has now opened more vistas for establishing IT sectors in Minneapolis, Atlanta, Indianapolis, Baltimore and Phoenix. These cities have a large number of millenials and Gen X-ers who grew-up with the technology being utilized today, and it makes good business sense for companies to locate in these regions.

IT also has an impact on the economy of local communities since it is seen as a big driver of financial growth. While cluster development for IT concerns is getting mixed reaction from experts and analysts, communities and companies are still working together to forge beneficial ties. That bodes well for future growth and economic gain on the local level and around the nation.