(Editor’s Note: This story has been updated from an earlier version to include more details about the state’s incentive package.)
In order to attract Virginia-based DXC Technology to New Orleans, where it will open a Digital Transformation Center in the heart of the Central Business District, the state put together an incentive package worth more than $44 million in grants, workforce training and investments in higher education computer science and engineering programs.
Additionally, the state has agreed to rebate to the company annually an amount equal to 6% of the total salaries of “quality jobs” the company creates at the facility. Over the next 10 years, that amount could approach an estimated $57 million, provided DXC meets its full employment goals, according to Louisiana Economic Development officials. That would bring the grand total of the incentive package to more than $100 million over the next decade, not counting an additional $5 million-to-$8 million the city of New Orleans will reportedly kick in or an estimated $10 million in workforce training services provided through the LED Fast Start program.
In return, the publicly traded tech giant—which has revenues of some $25 billion and more than 6,000 private and public sector clients in 70 countries—has promised to create some 2,000 permanent jobs over the next seven years with an annual payroll exceeding $133 million by 2025.
“DXC’s selection of New Orleans represents the rarest and most promising economic development win that Louisiana or any state could hope for,” Gov. John Bel Edwards said at a 2 p.m. announcement outside the Mercedes-Benz Superdome, near where the new DXC facility will be located. “With this project, Louisiana gains a next-generation leader in global technology services, our college graduates will find unprecedented job opportunities at home, and New Orleans will welcome a landmark project to elevate its economy.”
While New Orleans is the big winner in the deal, the benefits will ripple throughout the state. According to a recent economic impact study by LSU, the company will generate $64.3 million in new state taxes, $868.4 million in new Louisiana earnings and have a total economic output of $3.2 billion from 2018 through 2025.
A significant part of the state’s deal with the DXC includes a $25 million investment in higher ed to increase the number of degrees awarded in computer science and other STEM-related fields on four campuses—LSU in Baton Rouge, the University of New Orleans, Southeastern Louisiana University in Hammond and Delgado Community College in New Orleans. The institutions will receive grant money directly over the next five years to be used for faculty, curriculum and other instructional resources.
In addition to the $25 million investment in higher ed, the state’s incentive package includes $18.7 million in performance-based grants payable to the the company over five years, including a $15 million flexible performance-based grant, a $2.2 million parking assistance grant, and a $1.5 million demolition grant. DXC will also receive workforce training assistance from the state’s LED FastStart program.
In return, new jobs will materialize almost immediately. DXC has already begun hiring and is expected to create 300 IT and business enterprise jobs in 2018, eventually ramping up to 2,000 jobs over five years.
Though the company chose New Orleans as the site for its new facility, Baton Rouge tech companies expect to benefit from the deal—particularly from the state’s investment in computer science education.
“Investing in higher ed will produce more tech graduates and more tech companies, which will create jobs and enable our graduates to stay in the state,” says Logan Leger, founder of New Aperio, a local software firm. “It’s a home run for the entire tech ecosystem statewide.”
DXC Technology is a publicly traded IT services company that was created in April through a merger, first announced in 2016, of two longstanding tech companies: Computer Sciences Corp. and the enterprise services segment of Hewlett Packard Enterprise.
In a recent earnings call with investors, DXC chairman president and CEO John Michael Lawrie suggested the company would be opening new facilities in U.S markets where labor costs are lower.
Lawrie told investors the company was “rethinking how you bring people in … and it’s about a whole different approach to where we set up our locations. I’ve said before we are looking at creating some lower-cost facilities in the United States and moving some of our workload there.”