Silicon Valley is losing another tech giant to Texas. Hewlett Packard Enterprise, currently headquartered in the America Center in northern San Jose, is transitioning its headquarters to Houston, Texas. The company has already started construction on its new campus in Houston, the fourth most populated city in the US, and says it will maintain offices in San Jose.
The company announced the move in conjunction with its quarterly earnings report. "HPE has made the decision to relocate its headquarters from San Jose to Houston," the statement said.
HPE is the cloud and enterprise computing company that was spun off from HP Inc., which continues to make computers and printers for the consumer market.
During the earnings call, Antonio Neri, HPE's CEO, cited Houston as "HPE's largest US employment hub." The Fortune 500 company will give current employees in San Jose the option to relocate.
"There will be no layoff associated with this move and consolidation. We are committed to both markets as critical parts of our talent and real estate strategy in a post-pandemic world. As we have been transforming how we work, we have also recognized that we have an enormous opportunity for customers to transform and digitize their business to adapt and operate in a new world," Neri said in the earnings call.
"Relocation is voluntary," HPE's director of issues management and policy communications, Adam Bauer, told Silicon Valley Business Journal.
Being able to move headquarters while retaining employees during the pandemic is an impressive feat. Many South Bay companies are letting go of employees to cut costs due to the economic impacts of COVID. The San Jose Spotlight reports that South Bay companies might cut over 8,000 jobs in total before the end of the year.
The actual job numbers for HPE in San Jose will depend on how many employees at HPE's headquarters decide to relocate to Houston. "You can opt to remain in the Bay Area, but we're offering relocation assistance to the team members in those roles that we've identified as being eligible to move to Houston," Bauer said.
Contrary to Mark Zuckerberg's location-based salary policies at Facebook, employees who relocate to Texas won't lose their Silicon Valley salaries. This could drastically increase employees' quality of life due to Texas' generous tax policies and lower cost of living.
According to KPIX, the median home price in San Jose of $1.4 million dwarfs Houston, which is $271,600.
While HPE is looking to save money long term with their move, Bauer stated the company's decision was not a result of tax breaks or specialized incentives from the state of Texas; the company remains incorporated in Delaware.
According to Neri, the company's move is to focus on the diverse tech talent coming out of the growing metropolis. "Houston is also an attractive market for us to recruit and retain talent, and a great place to do business," he said.
Despite the departure from San Jose, HPE will be adding jobs in the Silicon Valley. The Mercury News says the company will move at least three HPE offices from Santa Clara and Milpitas to the soon-to-vacated HPE campus. The space will be home to HPE's innovation hub.
"Once we consolidate, the San Jose site will become a very vibrant space, and a technology hub," Neri told the Mercury News. The campus, which Neris calls "state of the art," will be adding jobs to the South Bay.
Over 1,100 people currently work at the San Jose location with the potential to add "between 600 and 1,200," according to Bauer.
The office will receive some changes to accommodate the merging of offices. "The way we are going to work will be different. There will be more open space. Yet at the same time, it will be more collaborative than ever before. I'm super bullish and excited about what we are doing," Neri said.
The addition of jobs doesn't cover up the damage the transition does to Silicon Valley's image as the epicenter for tech innovation. San Jose Mayor Sam Liccardo said HPE's departure was a "wake-up call" in comments to the Mercury News.
"The move of HPE's headquarters demonstrates how our region's high costs — including housing, taxes, and regulatory burdens — make it increasingly difficult for employers to justify hiring any but the most technologically advanced talent here," he said.