What is the state of the tech industry in Pittsburgh? Check the TEQ

The Pittsburgh Technology Council’s TEQ Magazine published its State of the Industry report on Thursday, and if it were any other year, we’d simply be reading about how Pittsburgh has shown its usual growth in technology and perhaps looking into the fine print of individual technology economic sectors.  

But this is not just any year. In 2023, we’re still pondering the remnants of the pandemic, and the looming specter of artificial intelligence is everywhere. The tech industry is particularly cognizant that AI might upend the whole sector.  

That led Jonathan Kersting, vice president of communications and media at the Council, to feature AI in the launch event for this year’s report.

The TEQ report is all about facts, not conjecture. It traces what has happened in technology industry clusters over the previous three years (2020-2022), using data compiled by the Council and PwC from 13 counties in Western Pennsylvania.  

So far, AI hasn’t had a huge impact — or at least none beyond conjecture. However, there has been some shrinkage of technology staffs, much of it due to over-hiring during the pandemic to keep up with demand. Concern related to how AI will play out in the near future may also be factoring into the hiring and firing decisions over the past year, but likely to a lesser degree.

“There are some headwinds here, suggested by the data,” says Kersting. “Employment was down because people are doing more with less. It’s not all growth; that’s why we track the numbers.”

The Western PA advanced materials sector grew its total payroll by almost 17% after several years of lower growth, making it one of the high points from this year’s report. The average wage for people working in advanced materials jumped more than 21% over the past three years.

Life sciences was also a bright spot for the region with the second-highest growth rate over the three years. The average wages of the combined health services subcluster of life sciences measured in the report grew by 12.8% to $84,430 in 2022 from $74,812 in 2020.

Year over year between 2021 and 2022 was less rosy for the information technology sector in the region, where employment shrank from 30,312 to 28,008 and where average wages, although having grown a modest 1.5% since 2020, dropped to $113,399 in 2022 from $128,642 in 2021.

The 586 telecommunications firms that employ more than 8,900 people in the region felt a bigger shock. Their total payroll of $1.465 billion in 2021 shrank to $884 million in 2022, and average wages declined by $39,000 to $99,207 on average.

Larry Gioia, emerging technology R&D lead for the PwC Innovation Hub, believes that AI is actually creating net jobs locally. While there will be some shrinkage of traditional jobs, new jobs will be emerging in areas in which the Pittsburgh region is strong.

“There will continue to be a need for data scientists, prompt engineers — we have the expertise in these technical domains. They are the seedlings for what will be required for the new jobs in the future that will be built on the backs of AI,” he says.

As moderator of the TEQ Report panel, titled “Future Reality of AI,” Gioia notes that there are still a lot of questions related to how AI will emerge, including thinking about the technology beyond ChatGPT, demystifying what it will do to our jobs, and how to scale it in products and in organizations.

TEQ panelist Pam Kamath, who helps her clients realize the value of artificial intelligence as CEO and founder of Adaptive.AI, believes that AI will have a ripple effect, but is concerned that organizations have not yet embraced what it will take to get the value while minimizing the negative impacts.

“It comes down to leadership,” she says. “Companies are wondering whether to introduce ChapGPT and other AI tools into the mainstream. … Don’t fear it; implement appropriate use policies and practices.”

Kamath sees the current AI environment as a “patchwork of tools. They’re using AI like a playground, not taking into account governance, policy, security, safeguards.”

According to the website, There’s an AI for That, 8,100 AIs exist for 2,194 tasks and 4,847 job roles, and those numbers continue to grow.  

Kamath expects a few emerging AI products to become usage standards in our daily life, likely including Microsoft’s Copilot and Google’s Bard.

Beyond that, both Gioia and Kamath expect specialized products to bring the promise of AI to specific tasks, including the health care (such as patient safety and health clinical management) and legal sectors.  

So there is plenty of room for AI to grow the Pittsburgh region, both in terms of jobs that help implement AI and growth of companies that offer AI to revolutionize the way work is performed.

Now we just need to wait for the next few TEQ State of the Industry Reports to see how those expectations come true.