IBM Gets $4.5 Million Tax Break On Analytics Center

Columbus grants Big Blue incentive package as IBM pledges to create hundreds of new jobs in big data analytics.

Paul McDougall, Editor At Large, InformationWeek

December 19, 2012

3 Min Read

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The city of Columbus, Ohio has agreed to award IBM a package of tax breaks and other incentives worth about $4.5 million in exchange for Big Blue's commitment to open a state-of-the-art data center in the community and to retain existing high-tech jobs in the area.

IBM expects the previously announced center, which will specialize in technologies that drive big data analytics, to create about 500 new jobs. The company also made a commitment to keep more than 600 existing employees in the Buckeye State.

Under the deal with the city, IBM will get a credit for 65% of the income tax it will pay for new employees at the data center over the next six years, according to a published report.

The package is worth about $4.5 million to IBM, and Columbus will gain about $2.4 million in revenues. The state of Ohio is also contributing by offering IBM a 60% job-creation tax credit for over eight years, the Columbus Dispatch reported.

"When a company with a long-standing reputation like IBM steps forward and says they are going to create jobs, it's incumbent upon the city to help them reach that goal," Councilman Zach Klein said at a Columbus city council meeting Monday, according to the newspaper. "This is really good work of moving the ball down the field of what we are trying to accomplish in economic development."

[ Will PCs have sensory capabilities in five years? Read IBM: PCs By 2018 Will See, Hear, Touch. ]

IBM first announced plans for the center last month. The IBM Client Center for Advanced Analytics will operate in partnership with The Ohio State University, Jobs Ohio and Columbus 2020. IBM said the center will focus on commercializing the technologies behind its Watson supercomputer, which vanquished human opponents on "Jeopardy," as well as on Smarter Commerce and IBM Social Business initiatives.

"Data is a powerful natural resource that, if used wisely, can drive U.S. economic competitiveness and lead to rewarding careers in the future dedicated to building a smarter planet," said Mike Rhodin, senior VP for IBM Software Solutions, in a statement.

"This center will have a tremendous amount to offer world-class educational institutions, a highly educated workforce, industry-leading businesses and -- perhaps most important of all -- [it] will serve as the foundation of community of innovators that will transform industries around the world," said Rhodin.

Ohio State will contribute to the effort by developing courses that train students in big data analytics and related disciplines. "Our strong collaboration with IBM will help our students across a variety of majors gain the latest skills in this burgeoning big data discipline and set them on a path to secure the high-skilled jobs of the future," said Christine Poon, dean of Ohio State's Fisher College of Business, in a statement. IBM shares opened flat, at $195.73, in morning trading Wednesday.

Predictive analysis is getting faster, more accurate and more accessible. Combined with big data, it's driving a new age of experiments. Also in the new, all-digital Advanced Analytics issue of InformationWeek: Are project management offices a waste of money? (Free registration required.)

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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