Remote Work, a Massive Tech Hub Exodus, and the Talent Tidal Wave Startups Never Saw Coming
2020 undoubtedly forced a realignment to many spaces, and the tech industry is certainly no exception. The shift which stands out as being most evident, and clearly advantageous to startups desperately in need of technical guidance and support— is the mass exodus of tech talent from major cities, and what they will do with their 6-8 month transition period.
In February, pre pandemic— only 8% of the U.S. workforce did their job entirely from home. [source] This number sky rocketed to 42% in June [source], as companies are not only making necessary pandemic accommodations, but recognizing the value in permanent work from home or hybrid options for their employees. And workers are 100% here for it! According to a Flex Jobs Survey, 65% of respondents reported wanting to be full-time remote employees post-pandemic, and 31% want a hybrid remote work environment - that’s 96% who desire some form of remote work.
What this means to tech...
As the Tech giants of the world like Microsoft, Facebook, Twitter, and Google announce their WFH policies with an option to relocate, surprisingly high numbers of workers are taking them up on their offer— despite accompanying decreases in compensation. In May, the app Blind held a poll revealing that 66% of professionals are willing to relocate out of the Bay Area, New York, and Seattle. Yikes! Check out this data:
38% of Facebook professionals would consider relocation with a pay cut.
20% of Bay Area professionals would be willing to accept a 10-20% pay cut.
The Bay Area (35%), New York (30%), and Seattle (31%) showed similar proportions of intent to relocate with a pay cut.
New York (75%) has the highest proportion of those wanting to leave the Metropolitan Area.
Most tech companies have stated their stance on compensation for relocation - letting employees know they could see a 10 - 20% decrease for relocation. VMware, for example, communicated to their employees they can plan to see an 18% reduction in their salary if they decide to relocate. [source] A employee at VMware responded by saying, “I’ll gladly do this. It’s only a reduction on base, and base makes up half of my Total Compensation. So a net 6.5% decrease in my TC to move to a place where houses are 20% of the price and taxes alone make up ~5-6% difference? Sign me up!” [source]
With talent moving across the country - we are about to see an extreme indication of loving what you do vs. going through the motions. Assuming you’ve moved to a more modest area and your salary has not decreased by more than 20%. Are you committed to a cause greater than yourself? With the combination of companies rushing to go public, companies not taking diversity seriously, and edTech companies like Udacity growing fast, with Q3 bookings up by 120% year-over-year and average run rates up 260% in H1 2020 - means a large number of highly qualified free agents are entering the job market. 2021 technical talent acquisition is going to be crucial, especially since 79% of CEOs stated the lack of key technical skills from their employees is threatening the future growth of their organization. [source]
A gold mine for tech thirsty Startups.
These shifts, remote work, unprecedented company exits—are creating a surplus of quality technical talent ripe for recruitment. These workers, typically chained to desks in traditional tech hub cities, are now free agents— for a little while, anyway. Google’s interview process is typically 5-6 interviews (1-2 personnel and the rest technical)—now, it's one technical interview, and if hired, there is a 6-8 month waiting period. Startups can take advantage of this by snapping up these transitional techies who are willing to temporarily work for less cash and happy to work on cool projects.
There are also world class iOS devs who are simply looking to come out of pandemic isolation and join a team…
It’s my prediction that in the next 2-3 years we will see a significant increase in the market for and of technical contract talent— because along with the mass migration of devs to up and coming cities in the tech hub pipeline, comes the freedom to choose jobs based on interest, rather than the pressure to pay million dollar mortgages and $5k rents.
Written by Marlon Avery, Technical Director, Lightship Capital