FYI: Many IT Companies in AZ Have Been Acquired & Delocalized by Out of State Groups

#TechTipTuesday

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. 

Why does it matter?

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. 

What happens to the Arizona-based company? 

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. 

Which Arizona-based IT companies have been delocalized?

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.

  • Florida-based iCoreConnect acquired Scottsdale-based Spectrum Technology Solutions in 2021. Winning state: Florida. (Reference)
  • Utah-based Executech acquired Tempe-based USPCNet in 2020. Winning state: Utah. (Reference)
  • Maryland-based Fullscope I.T. acquired Gilbert-based The IT Workshop in 2020. Winning state: Maryland. (Reference)
  • Georgia-based Medicus IT acquired Phoenix-based ISDesign in 2019. Winning state: Georgia. (Reference)
  • Washington-based BlackPoint acquired Phoenix-based Copper State Communications in 2019. Winning state: Washington. (Reference)
  • Nevada-based Intelligent Technical Solutions acquired Phoenix-based In house Techies in 2018. Winning state: Nevada. (Reference)
  • Colorado-based NexusTek acquired Phoenix-based CyberTrails in 2017. Winning state: Colorado. (Reference).
  • Georgia-based SnapTechIT merged with Phoenix-based Premier IT in 2016. Winning state: Georgia. (Reference)

What can you do about it?

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.

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