It depends on how you look at it.
No, there was not a vote by a national legislature somewhere preventing trade with Indiana.
No, the United Nations or any other international body or bank out there did not place economic sanctions on Indiana.
However, with the growing number of businesses, organizations, and event organizers that have announced second thoughts about doing business in the state of Indiana, that loss could be considered informal sanctions. And it is all in reaction to the passage and signing of the Religious Freedom Restoration Act (RFRA).
Informal, yes, but by no means, small. The impact could be considerable — with the potential for “negative growth” staggering.
Consider this: Salesforce.com CEO Marc Benioff announced Thursday he was suspending all business travel for his employees to Indianapolis as a result of RFRA. The cloud computing company that absorbed ExactTarget is responsible for 12,000 jobs and $4 billion worldwide. Those jobs and that investment could easily shift to any one of Saleforce’s 11 other sites in the U.S., the two offices in Canada or the two offices in Brazil and Mexico.
The mayor of San Francisco also issued an edict prohibiting travel to Indianapolis or Indiana on his city’s dime. That may not sound like a big deal, but there is certainty in the business connections between the Bay area and the Hoosier state. It was at the insistence of local and state economic development officials that United Airlines began offering direct flights between Indianapolis and San Francisco in January 2014. The move was to support the development of Indianapolis and the rest of the state as the emerging “Silicon Valley of the Midwest,” a moniker supported by a 2011 MediaPost.com article highlighting the rapid growth of IT companies in Indy and their common links to San Francisco.
The IT industry in Indiana is bigger than one might think. The movement began in the early 2000s under the support of the multitude of business incubators that were developed around the state through the efforts of several state universities and the Indiana Economic Development Corporation. Out of that evolution grew companies like ExactTarget, Delivra, Aprimo (which was bought out by Teradata), and Cloudone. These companies are either leaders in their fields or have been acquired by leaders in their field. Those companies have provided jobs, tax revenue, and economic investment in Indiana.
And now RFRA has them thinking about leaving.
Cloudone was named the fastest growing IT company in Indiana by Inc. Magazine and was the recipient of the 2105 IBM Beacon Award, the highest honor IBM bestows on a business partner. Cloudone CEO John McDonald also sent a letter to Gov. Pence asking him to reconsider signing RFRA because of the harm it could do to his business.
“The law has been represented as being helpful to business,” said McDonald. “But, I think it has the opposite effect. [For me,] it’s about recruitment of talent.”
McDonald said the IT industry is rapid growing and requires the best talent to stay ahead. Talent recruitment includes the promoting the community in which that employee will live and raise their families in addition to work.
“When you see the possibility of people feeling unwelcome to come work and live in Indiana based on any reason, that puts us at a disadvantage,” said McDonald. “It’s a very simple issue for me to understand. It does not help me, it hurts me in my ability to create good talent at Cloudone.”
McDonald added that if any of his current employees felt Indiana was no longer the place for them, he would be more than open to letting them relocate to another office around the country or the world. Cloudone is headquartered in Indianapolis, but manages locations and employees in Dallas, TX, Boston, MA, Chicago, IL, the United Kingdom, France, and Germany.
And the re-location of those jobs is an economic loss for Indiana. Hi-tech jobs are some of the few high-paying jobs Indiana has — and cannot afford to lose.
How many other companies are asking those questions and offering the same alternatives to their employees?
Or worse, are they thinking about leaving Indiana altogether?
McDonald says that is a hard question to answer for any company and isn’t one that is asked casually. However, if the business climate changes, it isn’t entirely out of the questions either.
“No one event would cause us to say ‘this is not for us.’ It would be the result of many things,” said McDonald. “But, this is a big thing and we have done it before.”