Do we need ‘tech hubs’ anymore?

Parts of the US could see the end of a 'developer drought' as businesses see less need for locations in expensive tech centers.
4 September 2020

Aerial view of San Francisco. Source: Shutterstock

  • The move to remote work may end a ‘developer drought’ in parts of the US
  • There could be a fundamental shift of businesses away from established tech hubs

Silicon Valley has for decades housed North America’s (and much of the world’s) tech talent. The San Francisco Bay Area is the physical home of tech giants like Apple, Facebook, Microsoft, and Alphabet.

Some 2,000 total tech companies are based in the region, making it the densest concentration in the world. Proximity to suppliers, customers, and cutting-edge research has given the Valley its competitive edge, and ‘spirit of cooperation’.

From this stretch of California have emerged world-leaders in software and social media, as well as innovative makers of lasers, robotics, and medical instruments.

But the physical magnetism of the region is dwindling. Already, we have seen that the impact of COVID-19 has caused San Francisco’s famously extortionate rents to dip to record low figures, as companies had to shift to remote work by the necessity of lockdowns, and as leading organizations like Google and Facebook continue to offer flexible working.

Bad news for landlords this might be, but it means tech talent is now being distributed to areas of ‘developer drought’. Companies need no longer set up within expensive tech hubs in order to access a competitive recruitment marketplace.

Low-code software specialist Mendix conducted an analysis of survey data of more than three million US households combined with geo-analysis of 2,000 job ads for software developers in July 2020, and uncovered new patterns spotlighting areas of highest demand, but with the least supply of developer talent.

On a state level, the gap between supply and demand is most significant in middle America, with some exceptions.

At a county level, the highest Developer Demand is in Cumberland County, NJ (outside Philadelphia), Minnehaha County, SD (Sioux Falls), and Pontotoc County, MS (Tupelo). Well-known tech hubs such as Fairfax, Virginia, and Silicon Valley, California, have a better balance – these areas have the highest demand, but also the highest supply of talent.

Mendix says the findings demonstrate an opportunity for companies to decentralize talent away from established tech hubs.

Organizations might no longer be restricted to high-rent urban centers, and instead can disband to outer locations with lower overheads. Not only can businesses stand out in areas with lower rent, but can attract a wide national, or even multinational talent pool by embracing the now accepted norms of virtual teams and cloud technology.

New Jersey’s Cumberland County was identified as having the highest developer demand but located in proximity to Philadelphia, Washington D.C., and New York, it represents an increasingly attractive location for businesses to operate from. Minnehaha County in South Dakota, meanwhile, is home to the emerging ‘Silicon Prairie’. Big players, including PayPal, are hiring in Sioux Falls while, suiting a flexible working style, the county’s average commute time is just 16 minutes.

The pandemic has given business executives another reason to review the status quo of operation, but the faltering reliance of tech hubs like Silicon Valley is not an entirely new trend.

A study released last year by CompTIA found that three out of four workers would be willing to relocate for a new job with a better cost of living.

With an average apartment rental price of US$1179 per month, according to RentCafe, Charlotte, North Carolina, was found to be the number one city for IT pros when it comes to job opportunities and cost of living – the figure is well less than half of what’s charged in San Francisco.

The benefits of a distributed development force don’t just come down to direct costs. A number of surveys this year have concluded that remote working enhances productivity, and reduces fragmentation among workers and sick days taken. A UK study of 300 developers by InterSystems found that 8 out of 10 feel they work in a pressured environment, yet more than half (57%) believed simply being offered remote working initiatives could lessen the stress of their job.

Remote workers have also been observed to have higher job satisfaction, leading to better retention.

A report by HackerRank showed that where many employers are keen to push a cool company ethos, fat salaries, and perks like free beer, Fussball tables, and break-out rooms, new graduates are more interested in work-life balance, decent holiday entitlements, and the wherewithal to learn more languages, new frameworks and develop their skills.

All of those latter points can be achieved perfectly well in remote or flexible working environments — we don’t necessarily need to be rubbing shoulders in the Valley.