Oracle, one of Silicon Valley’s oldest residents, has announced it will move its headquarters to Texas. Oracle left California because of high taxes and the cost of living. Oracle offices in Santa Monica, Seattle, Denver, Orlando, Florida and Burlington will continue to operate.
Oracle, one of the largest software makers in the United States, was founded 43 years ago in Silicon Valley. The company began moving resources out of California in 2018, opening an office and a large 10, 000-employee campus in Austin, allowing it to hire a younger, less expensive workforce. Last year, Oracle executives also announced that the company’s largest annual conference, OpenWorld, would be held in Las Vegas instead of San Francisco.
Like Bloomberg writes , Oracle has taken these steps in an effort to cut costs that have risen over the past two fiscal years.
The company had 135, 000 employees at the end of May. The coronavirus pandemic has prompted Oracle to move some employees to remote work. After the move, employees will be able to choose whether to work in the office or from home.
The company has already been welcomed by Texas Governor Greg Abbott. "Texas is truly a land of business, jobs and opportunity. We will continue to attract the best, " he stated on Twitter Oracle co-founder Larry Ellison has moved to his primary residence in Hawaii, becoming the latest top executive at a major technology company to leave Silicon Valley.
More and more companies in the U.S. are thinking about moving out of Silicon Valley because of California’s high tax rates and high costs. Hewlett Packard said Dec. 1 that it will move its headquarters to suburban Houston, where it is building a new campus. HP already has offices in Austin and the city of Plaino. Software developer Palantir Technologies moved to Denver this year from Palo Alto, Calif.
Tesla co-founder Elon Musk also stated about his intention to move to Texas to focus on major Tesla and Space Exploration Technologies projects. Musk said that California "takes tech companies for granted" and expressed confidence that Silicon Valley’s influence on the tech industry will diminish in the future.
Musk had previously moved his private foundation, which was based in California, to Austin. The reason was the soft tax policy of Texas: there is no personal income tax in the state, while California imposes the highest fees in the country on wealthy residents of the state.
"Wow. More and more companies are leaving the state right before our eyes. Oracle’s decision just shows how much tax and public policy can affect corporate decision-making, " Eric Hallgrimson, vice chairman of Silicon Valley brokerage Cushman Wakefield, told Bloomberg in a commentary.
According to Phil Mahoney, executive vice president of commercial real estate brokerage Newmark, who has worked in Silicon Valley for more than three decades, even though many companies are looking to leave California, the state "fosters innovative businesses." He said "the qualities that make California a good place to start and grow a business – from the presence of world-class universities to the great weather – have not changed."