Gov. John Bel Edwards wasn’t exaggerating when he recently described global tech giant DXC Technology’s plans to open a major processing facility in New Orleans as “one of the most significant economic development deals in the state’s history,” says Business Report Editor Stephanie Riegel.
“The DXC deal is huge,” she writes in her latest column, “bringing a nearly $25 billion company with 6,000 clients in 70 companies to the heart of the Crescent City, where it promises to create 2,000 IT jobs over the next seven years.”
And even if the deal never lives up to all its hype, Riegel says landing DXC is a win for New Orleans and Louisiana.
The company will add clout to the state’s tech sector, which economic development officials have been strategically cultivating over the past decade, Riegel says. The deal also will bring $25 million in state investment to computer science and STEM-related programs at LSU, UNO, Southeastern and Delgado.
The institutions will use the dollars to hire more faculty, expand curricula and increase the number of graduates, who will not only fill jobs at DXC in New Orleans but at other area tech firms, Riegel says.
“That Louisiana, which so often loses out on big deals, landed this one can be chalked up to several factors,” she writes, “the most important of which is the area’s low cost of doing business.”
Earlier this year DXC CEO Michael Lawrie said his company planned to streamline operations during its first year to save some $100 million. Part of that effort, he said, would “most likely” include adding an “in-country, low-cost” delivery center.
“That center, as it has turned out, is the one now planned for New Orleans, which, along with Baton Rouge, is among the least expensive midsized markets in the U.S,” Riegel notes. “That doesn’t diminish the importance of the deal. But it does help explain why DXC was looking to Louisiana rather than to the usual tech hubs like Austin or Silicon Valley.”
A generous incentive package totaling as much as $118 million also played a major role in landing the deal, Riegel notes.
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