People are flocking less to notable tech hubs. The “biggest losers” include San Francisco, Seattle ... [+]
Many of the Big Tech firms and startups are located in the San Francisco Bay Area, particularly in Menlo Park and Palo Alto, which are considered the heart of Silicon Valley. However, the shifting tech landscape, particularly the relocation of talent during the pandemic, has presented both challenges and opportunities for founders and startups, according to venture capital firm SignalFire’s State of Talent Report 2024.
Tech Talent Migration
The tech industry is becoming more decentralized, with new hubs emerging across the United States. The geographical evolution of the tech talent pool is being driven by factors like remote work, cost of living and government initiatives to boost tech growth outside of traditional centers.
Austin has seen the most growth in headcount at Big Tech employers, up 44% since 2019. The city has attracted big names like Meta, Google, Oracle, Tesla, Snap, Apple and others, which have relocated or expanded in recent years.
For venture capitalist-backed startups, Texas holds two out of the top three spots with Austin (+23%) and Dallas (+19%). Seattle falls in between at No. 2 with a 20% rise in tech talent. The growth can be attributed to the movement from larger tech companies to startups, with only 6% growth Big Tech headcount in Seattle.
Number of top VC-backed startups and percent change in headcount since 2019
Number of Big Tech employees and percent change in headcount since 2019
“While Austin saw the biggest growth in tech headcount as a percentage of its former size, the city came in second when it came to raw volume, with just under half of total relocators moving to NYC,” the report stated.
The Losers
People are flocking less to notable tech hubs. The “biggest losers” include San Francisco, Seattle and Boston. Although the high cost of living is seen as the primary factor, New York City is an anomaly, as it boasts astronomical rent prices yet attracts the largest share of relocators since 2019.
Net change of relocators
Additionally, Arizona, which was once considered a hub for tech sales, has contracted by 7% over the past five years.
Silicon Valley Leading In AI Talent
While tech workers have migrated from Silicon Valley, it still reigns supreme when it comes to the volume of talent specializing in artificial intelligence and machine learning, with the San Francisco Bay Area topping the list.
“San Francisco, by far and away, has the highest volume of tech talent in the country, as a percentage of its whole population. And so it remains not only the highest volume of technical talent, but also AI technical talent, which is critical in these times,” said Heather Doshay, a partner and head of people and talent at SignalFire. “Its dominance is really under no threat. It remains the largest population, in terms of density of tech talent.”
In October 2023, OpenAI, the parent company to ChatGPT, conducted one of the largest office leasings in San Francisco since 2018. The office space in Mission Bay encompasses nearly 500,000 square feet, the San Francisco Chronicle reported.
Unsuspectingly, Pittsburgh and Portland, Oregon are becoming burgeoning hubs for AI talent.
Implications For Founders
To remain competitive, founders should explore establishing roots in growing tech hubs, like Austin, New York City and Dallas, to capitalize on the influx of talent. Since Big Tech is no longer a safe move, as evidenced in the wave of layoffs since 2022, tech workers may be more apt to joining VC-backed startups. Founders should also consider hiring remote talent from secondary hubs or creating a hub-and-spoke model, with a central headquarters and accompanying satellite offices.
While employers hold the cards now in the current labor market, the high demand for AI talent makes this area of specialization the exception. To attract the top players, organizations will need to think creatively and offer flexible work styles, especially when competing with the prestige of Big Tech.
SignalFire advises that employers look to their existing workforce for potential talent needs. With upskilling and internal mobility opportunities, it gives employees the chance to advance their skills and enhance the scopes of their jobs. Workers can gain critical skills, and the company doesn’t have to look externally for talent. They also get to nurture the growth of their employees.
