We’re sharing our observations on an ongoing and disappointing pattern of the “delocalization” of IT companies in Arizona and the impact your business’s spend has on the local economy.
Disclosure: This is our opinion and we have a dog in this fight. However, we have a unique insight on the matter.
We sincerely care about Arizona’s economy and community — we’ve been a part of it for over 13 years as a business and longer as residents.
Let’s say you’re a business in Arizona, and your IT company, accountant, attorney, phone provider, office supply company, copier company, or similar vendor is not headquartered in Arizona, where most of their employees and tax revenues benefit the local economy. Alternatively, you’re working with a business that has been acquired or merged mid-contract term and their headquarters location is out of state.
In the above situation: your dollars are going out of state.
Local First Arizona has studied this and found that in-state spending has a massive impact on Arizona’s economy, primarily in the forms of direct jobs, indirect jobs, and lower carbon footprint. Read more here.
Our industry, small business-focused IT providers, has been experiencing rapid mergers and acquisitions from a wide variety of suitors — primarily venture capital-backed out-of-state mega firms.
Buyers are buying relationships, contracts, and top technical talent to have an instant presence in an attractive city.
Why would an out of state group need three help desks, network operation centers, and accounting departments? If you can centralize these departments in the buyers headquarters, typically, they’ll remove headcounts and reduce office space (two largest expenses of a business) in the seller’s state. In other words, out of state groups are reducing local tax revenues and jobs in Arizona in favor of that group’s headquarters state.
Here’s a list of IT companies in Arizona that we found online that have been acquired and their headquarters location that have been delocalized from Arizona.
If you’re given the option of supporting your local economy or another state’s economy, we hope you’ve done your due diligence and confirmed the specialized goods and services could not be sourced locally.
Here’s a list of MSPs headquartered in Arizona in addition to PK Tech, who are employing and paying the majority of their taxes right back to your community:
Please reach out if you have any questions.