IT companies dominated the 2012 Inc. 500 list, making up 14% of honorees. But that number could have even been higher. Here's why.
At least one clear trend emerged from the 2012 Inc. 5000 list: IT companies are hot. Some 697 companies made the list from the IT Services industry, some 14% of the list, making it one of the most dynamic and clearly fastest-growing industries around.
But the data also revealed that this number could have been even larger. Here’s why: when companies fill out their application for the list, they self-assign themselves to an industry. Then, the editors at Inc. may place a company into another industry to make the list as consistent as possible to previous years.
What’s interesting is that an additional 117 applicants categorized themselves as IT companies who, after further editorial review, were transferred to other industries. That means that some 814 companies, or 16% of the total Inc. 5000 list, see themselves as being in the IT business.
And that number doesn't even include the 318 companies flagged as being in the software business, which could also be considered an IT service, or even the 46 hardware companies on the list, many of which sell services and software that support or run off their hardware.
After all is said and done, combining 'edit approved' and 'applicant selected' industries for IT, Computer Hardware and Software totals 1,219 honorees, or 24.3% of the Inc. 5,000!
This discrepancy in how companies view themselves versus how we view them seems to beg the question, then, about what really makes an IT company an IT company?
For help in answering this, we turn to the U.S. Commerce Dept., which estimates there are some 100,000 software and information technology (IT) services companies in the United States, 99 percent of which are categorized as small and medium-sized firms, which collectively employ more than two million workers.
This total includes software publishers, suppliers of custom computer programming services, computer systems design firms, cloud-computing service providers and facilities management companies.
It’s easy to see, therefore, that technology continues to have a broad impact across a spectrum of industries beyond Silicon Valley. "IT companies should have a focus area instead of doing tech for tech’s sake," says Gil Delgado, the founder and CEO of Emergint Technologies (No. 3,625) in Louisville, Ky., which provides IT services to healthcare organizations like the Center for Disease Control. "If you can develop strong capabilities in an industry like we have with healthcare you gain an advantage over competitors who might not have that same domain expertise."
So who are some other examples of the 117 Inc. 5000 companies who have clearly found ways to make an impact through their IT expertise?
Of the additional companies, 52, or almost half of the additional companies, were later moved to the Government Services category—which is an interesting trend in itself since the U.S. government is expected to invest about $518 billion in upgrading its IT infrastructure over the next five years, according to a report released by Market Research Media.
One of the companies seizing that opportunity, MicroTech (No. 490), made the list for the fifth straight year—earning them a coveted place in the Inc. 500 Hall of Fame.
The company’s founder, Tony Jimenez, who started his company after retiring from a career in the military, says that 70% of his revenues come from government contracts—all of which have to do with using technology to improve how the government operates. "Our focus for the past eight years has been on helping the government consolidate its IT resources," says Jimenez, whose Vienna, Va.-based company has 422 employees and $342 million in sales. "We primarily bid on contracts that deal with managing large networks, data and information. But we also do a number of things like managing day-to-day email and applications that are running in the Cloud."
Health was another industry where IT is clearly having an impact, since 17 companies from that category originally labeled themselves as IT companies. BenefitsConnect (No. 3,523), a company based in Rancho Cordova, Calif., develops and licenses a variety of Internet-based software services to firms in the health insurance and benefits industry. The company’s founder and CEO, Troy Underwood, says that his business has evolved over the years from doing 100% custom software and application development to now selling and servicing more of an IT platform that will help streamline the process people go through to enroll in health insurance programs. "The definition of what an IT company is evolving into a gray area because most companies are using IT in some capacity within their business," says Underwood.
Given the number of tech-fueled tools job seekers can use these days like Monster.com or even LinkedIn, perhaps it’s not surprising to see nine companies who saw themselves more as a fit in the IT category than in Human Resources. One of these companies is Arrow Strategies (No. 2,427) in Bingham, Mich., which provides contract, contract-to-hire, and permanent placement of professionals in IT, engineering, accounting and finance, and professional services. Arrow’s president and CEO Jeff Styers says that he sees his company as more of an IT firm than a staffing company not only because some 85% of their work comes from IT placements, but also because the firm itself relies heavily on its own internal technology that helps keep his 298 employees connected to clients and to each other. "I spent $186,000 a year on our own IT infrastructure because it is the fabric holding our company together," says Sayers. "As time goes on we’ve become more of a technology company than a staffing business."
Given the results of this year's Inc. 5000 combined with the obvious demand and impact that IT continues have on the world around us, it seems to beg the question of whether just about any company out there could classify itself as being in the IT business in some way?
Check back next year to see what the 2013 Inc. 5000 list reveals about this rapidly expanding industry.
DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.