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This article examines the economic impact of a rural computer service center in Hays, Kansas. The center is owned by Sykes Enterprises, Inc, one of the leading third-party support providers for the computer and software industries.
During a time period of increasing demands for accountability and public questioning of the use of economic development incentives, it is crucial to examine actual economic benefits of the location or expansion of significant employers. One type of employer in the "new economy" about which little data has been gathered is the computer service firm. This article examines the actual economic impact of the Sykes Enterprises facility in Hays, Kansas on the community, county, and state.
Sykes Enterprises, Inc. (Sykes) is one of the leading third-party support providers for the computer and software industries. This company has undertaken a unique strategy of locating many of its call center support facilities in rural areas. The company's strategy has been hailed by policy makers, including former President Clinton.
In 1996, Sykes committed to locating a facility with 435 workstations in Hays, Kansas. This commitment was made in return for an incentive package worth $2,276,000. Kansas statutes, like those in a number of states, require an economic impact analysis before a community can grant tax abatements and certain other incentives. Such an analysis was performed by the Docking Institute of Public Affairs at Fort Hays State University (Docking Institute). After the facility opened and began operating with a full staff, Kansas Lt. Governor and Secretary of Commerce and Housing Gary Sherrer retained the Docking Institute to conduct a second study to examine the actual impact. This study was partially funded by Fort Hays State University and the Ellis County Coalition for Economic Development.
When the Sykes incentives package was offered, many of the key players had little experience with computer product service centers. The package included $280,000 from Ellis County, $622,000 from Hays, $1,375,000 in KEIOF and SKILL funds from the State of Kansas, and $370,000 in private funds from the Ellis County Economic Development Corporation. There was a general belief that service sector businesses, particularly in the high tech area, would have a positive economic impact on local communities and the state, but there was little solid evidence. A...