This NYT article discovers the effects of growing productivity. It seems the Silicon Valley as one of the regions with the highest labor costs is affected strongly:

"You have multiple effects going on: automation, outsourcing and business strategy all playing a role," said Ronil Hira, an assistant professor of public policy at the Rochester Institute of Technology. In the 90's boom years, companies scrambled to invest in new technology and hire technology experts, eager to tap the new markets of the Internet and fearful that dot-com start-ups might put them out of business.

Despite exaggerated claims for the Internet, most companies still operate on the premise that Internet-era technologies can deliver large benefits to their businesses, enabling improved communications with suppliers and customers, better competitive intelligence and quicker responses to shifts in the marketplace. But in a big switch from the past, most companies are now intent on using the technology investments they made in the boom years more efficiently, which means employing fewer technology workers.

Data centers are high-technology engine rooms of modern commerce, used in handling everything from banking transactions to manufacturing operations to buying supplies to tracking customers. In the 1990's, companies built up their data centers rapidly, adding computers, software and lots of people. The traditional rule of thumb, Mr. Andreessen said, is that a data center needs one human handler, or system administrator, for every 20 machines. With Opsware's software, that ratio can be sharply reduced, to one person for 50 to 150 computers.

Doug Henton, president of Collaborative Economics, a consulting firm in Mountain View, Calif., said that the average technology company in Silicon Valley generated about $200,000 in goods and services for each employee last year, up 9 percent from 2002. That is double the roughly $100,000 produced per employee by technology companies nationwide, and the $87,000 generated by the typical American company."