Analytics software firm SAS is betting strapped state and local governments will devote more resources to curbing fraud and abuse with an initiative that includes hiring more than 100 workers over the next two years.
The Cary company announced Tuesday that it was creating a SAS Analytics Lab for State and Local Government. Its employees will develop products as well as work with government agencies on projects tailored to their needs.
The new SAS lab is starting with a staff of more than 200 culled from the company's existing work force and expects to expand by at least 50 percent over the next two years to handle its increasing business. Most of those new hires will be based in Cary, with a few scattered at government agencies across the country that undertake new projects with SAS software.
SAS, which has long provided analytics software for state and local governments, has seen its business in that area rise nearly 20 percent this year, said co-founder and CEO Jim Goodnight.
The expansion rests on the premise that governments will continue to spend millions of precious taxpayer dollars on analytics-driven projects despite a sour economy that has caused enormous budget problems across the nation. The sales pitch is that such efforts can save money in the end.
"A lot of the governments are looking for ways to cut fraud and put money back in the budgets," Goodnight said during the company's announcement event Tuesday at its Cary campus.
That includes North Carolina, which just hired SAS to prevent ineligible people from entering the state's $12.7 billion Medicaid program. Gov. Bev Perdue has identified the health program as a key area for cutting costs as the state wrestles with a projected $3.7 billion revenue shortfall next year. SAS's Medicaid Eligibility Analysis also is charged with ferreting out abuses such as obtaining multiple prescriptions for narcotics from different doctors.
"I look forward to using your technology to save money for the state of North Carolina," said Perdue, who participated in the announcement Tuesday. She said that she was open to the state hiring SAS for other projects if it identifies new opportunities for curbing costs.
The state's new Medicaid contract with SAS is a one-year, $2 million licensing agreement with an option for two additional years for about $300,000 per year, said Brad Deen, a spokesman for the state Department of Health and Human Services. Although there's no way of knowing how much SAS can end up saving the state, Deen said the company recently did a test run involving a small slice of the Medicaid pie and identified $25 million in "suspicious activities" that warrant further investigation.
'Proud of our state'
Perdue, an advocate of government incentives for companies that locate or expand in North Carolina, also applauded SAS for not seeking incentives in conjunction with its expansion.
"They didn't get a flat dime for these 100 jobs," she said. "They have done this because they love North Carolina. ...They are as proud of our state as we are of SAS."
About 30 percent of the lab's staff is made up of N.C. State University and UNC-Chapel Hill graduates, including 22 with master's degrees from the Institute of Advanced Analytics at N.C. State, which was co-founded by SAS. Roughly the same percentage of the new hires is expected to come from those universities.
"SAS is fortunate to have excellent universities in our backyard," said John Brocklebank, who heads the SAS Advanced Analytics Lab.
The privately owned company isn't disclosing the salaries it expects to pay its new hires.
SAS analytics software is used to fight government fraud, waste and abuse, as well as for public safety projects and in educational reform efforts. The company's customers include all 50 states and more than 115 local governments.
The opening of SAS' $70 million cloud-computing center last month enables government agencies to access the company's software over the Internet without investing in new computer equipment and personnel.
