Oracle to move headquarters from Bay Area to Texas, in echo of HPE
Unclear how many software giant’s workers will leave under more flexible worksite rules
In an announcement certain to fuel predictions of Silicon Valley’s decline, Bay Area technology icon Oracle said Friday it plans to move its headquarters from Redwood City to Austin, Texas.
The decision follows an announcement less than two weeks ago that Hewlett Packard Enterprise would shift its corporate headquarters from Silicon Valley to Houston.
“It’s time for everyone to wake up and understand that we’re in a crisis of confidence when it comes to business in our state,” said Jim Wunderman, CEO of the Bay Area Council, which represents large companies. “Major companies and institutions are either leaving or planning to leave or talking
about leaving, and that’s exactly the opposite of what any region or any state would want.
“The implications for the future of jobs and the people of the Bay Area is profoundly challenging now.”
Oracle said Friday it is implementing a “more flexible employee work location policy” while changing its headquarters to Austin, where it already has a presence, including a lab for computer architecture and performance analysis.
“Depending on their role , t his mea ns that many of our employees can choose their of fice location as well as continue to work from home part time or all the time,” the software giant with 135,000 employees worldwide said in an emailed st at ement . “By imple - menting a more modern approach to work, we expect to further improve our employees’ quality of life and quality of output.”
Wunderman said state and regional taxes and regulation, along with coronavirus-related restrictions and high housing costs here have left companies looking for “greener pastures.”
Texas has no state income tax, while California collects 13.3% from people making $1 million or more, he noted. “This is becoming an increasingly unfriendly place to do business,” Wunderman said. “There’s pressure within almost every organization to have an exit strategy. This is very disturbing and concerning.”
Russell Hancock, CEO of the think tank Joint Venture Silicon Valley, took a different view on the moves by Oracle and HPE.
“A lot of times it really doesn’t matter where the headquarters is,” Hancock said. “Nobody is saying, ‘ We’re moving the headquarters and taking all our employees with us.’ “HPE, he noted, is shifting its headquarters from San Jose but is expanding a massive campus at the same site.
Oracle did not answer a question from this news organization about how many employees it will have in the Bay Area after the headquarters move. The company, founded in Santa Clara in 1977 as Software Development Labs, said it would continue to maintain “major hubs” in Redwood City, Santa Monica, Seattle, Denver, Orlando and Burlington, Massachusetts.
Hancock believes the headquarters shifts by Oracle and HPE are part of a trend toward “distributed” operations that’s been accelerated by the pandemic. Firms are making worksite and headquarters decisions based on the regional cost of living, employee preferences, proximity to markets and localized incentives, he said.
“W hen we distribute more broadly, it takes pressure off of the Bay Area, and maybe we can drive around without traffic again, or maybe the housing becomes more affordable,” Hancock said.