Kansas City’s technology scene is the heartbeat of the greater region’s technology ecosystem and a significant component of the city’s overall vitality. As one of the 35 largest metros in the country, anchored by a strong technology labor force, large technology company presence, and increasing investment, Kansas City and its tech industry remain poised for growth.

As the Kansas City technology sector works to expand that growing ecosystem for the future, it will be critical for companies to embrace the technologies shaping the way we work, communicate, educate, care, and entertain. Investment trends show the tech ecosystem is already drawing attention; the region’s businesses in this space continue to be a target for substantial venture capital and private equity investment. Technology, media, and telecommunications (TMT) investment in privately held organizations in Kansas and Missouri has been impressive over the past three and a half years, totaling $19 billion. That exceeds the same figure for the preceding seven years by almost $6 billion, according to PitchBook Data.

Total TMT investment—including public companies—for the region over the past three and a half years surpassed $100 billion, which exceeds the same figure for the preceding seven years (2013-2019) by almost 10%, based on PitchBook Data. TMT deal activity in the region for the first six months of 2023 has been muffled, with $1.5 billion invested across 105 deals according to PitchBook Data. This is consistent with national trends, considering current macroeconomic uncertainty. The message through the noise is that investment in the region’s private tech companies is on the rise.

Small and large businesses alike will likely take advantage of the recent investment boon to increase discretionary spending. However, it would be wise for companies to earmark spending in a way that sufficiently funds technology needs—whether implementations or upgrades—to meet the demands of an evolving industry. Plenty of businesses—not just in the tech sector—are upping their expenditures; 46% of respondents to the 2023 second-quarter RSM US Middle Market Business Index survey said in April that they had increased capital expenditures, and 60% expected to do so during the next six months. Those figures are up from 42% and 51%, respectively, from the same period last year. Companies should set aside talent and resources to evaluate how to leverage advancements in artificial intelligence to enhance customer-facing solutions or streamline back-office operations.

Technology companies are still working to find equilibrium with the labor market, given the workforce disruptions caused by the pandemic. At the national level there continue to be many more unfilled technology positions then there are unemployed technology workers, despite the narrative of tech layoffs reflected in many news outlets. More specifically, the national technology unemployment rate in May 2023 was 2.5% or 77,000 unemployed tech workers, up from the 10-year-low of 1.4% or 43,300 reported in April 2023, according to the Bureau of Labor Statistics (these figures refer to jobs in the information sector, the BLS category that most closely reflects technology). These unemployment levels are well below the reported 174,000-185,000 technology job openings for February – April 2023.

So, what does that mean for Kansas City? As you will see in the following report and based on the most recent data, 1 in 5 Kansas City workers were working from home in 2021, and therefore already demonstrate the skillset and resourcefulness to pursue remote positions. A Kansas City-based tech worker with the will to work will likely always have a job and as a result, Kansas City’s technology ecosystem should continue to be a significant contributor to the growth of the region.

Given this labor landscape, investment in talent will continue to be critical for tech companies. The competition for—and cost of—highly skilled technology talent climbed significantly in recent years, and although wage pressure has fallen from its recent peaks, wage levels remain elevated in 2023 and are expected to continue rising. In the same RSM survey mentioned above, 58% of executives reported increasing compensation in the last three months and 72% reported expecting to boost wages in the next six months. The tech industry job market has experienced more competition than most other sectors as technology companies move to make some or all positions remote. That means the competition for top tech talent finds employers not only competing with regional rivals, but also at a national level. On one hand, this will likely benefit Kansas City as the talent pool expands and more top-tier candidates become available than in the past.

The drawback, however, is that top tech talent will continue to require more competitive compensation packages as have been historically offered by coastal tech employers, including for workers residing locally. As of this release, the median pay for tech occupations in Kansas City increased to $89,500 in 2023 from $81,500 in 2022, which for both years fall below the national median pay of $99,200 and $92,700, by $9,700 and $11,200, respectively. One encouraging sign is that the gap between the median pay for tech occupations in Kansas City compared to the nation is shrinking. The comparison of median tech salaries to median area salaries also paints Kansas City in a less competitive light. Nationally, the median tech salary is 115% higher than the median for all jobs. The same measure for Kansas City is 93.3%, which for a government job-heavy metro leaves plenty of opportunities for improvement.

The pace of technology adoption will continue as technology finds its way into every corner of our economy. Companies that suspend technology investments risk disrupting their business model. Kansas City businesses are continually looking to enhance customer relationships, operational effectiveness, and their company’s culture. With labor and competitive challenges in Kansas City and across the United States on the rise, there has never been a better time to invest in technology.

RSM US LLP is proud to be a Cornerstone Sponsor of the KC Tech Council and grateful for the opportunity to be a part of this year’s KC Tech Specs report. RSM is the leading U.S. provider of audit, tax, and consulting services to the middle market. We understand the importance of communicating industry-specific trends to Kansas City and are grateful for the opportunity to promote the technology ecosystem in this great city.