Recruitment

Recruiters face fierce competition as the tech industry decentralizes from Silicon Valley

Recruiters for tech companies say the battle for top talent is intense, and smaller organizations are struggling to compete.
article cover

Klaus Vedfelt/Getty Images

· 5 min read

For tech industry recruiters, the gravitational pull of Silicon Valley is experiencing interference from cities more traditionally associated with the Mormon Church, a Will Smith party anthem, iconic American cars, and other things that have nothing to do with Mark Zuckerberg, according to a new report.

The Tech Hiring Report from Datapeople, a maker of people-analytics software, indicates that tech-industry job listings are spreading out far from the industry’s historic epicenter of the Bay Area and into other markets such as Salt Lake City, Miami, Detroit, Chicago, and Austin.

The diaspora, combined with the widespread normalization of remote work due to the pandemic, has tech recruiters navigating a new economic and geographic landscape. Remote candidates are now commanding Silicon Valley-level salaries as they work hundreds, if not thousands, of miles away from the sleek corporate campuses of Facebook and Google, Paul Wallenberg, senior director of technology services at the recruiting and staffing firm LaSalle Network, told HR Brew.

“The thing that’s made [recruiting] a bit more difficult is the level of salary inflation that’s crept into the non-Valley” markets, he said. “What we’re seeing is basically a 40% premium when comparing current ranges against pre-Covid salaries [for tech workers].”

With the tech industry spreading out farther than ever, recruiters are facing new challenges that necessitate creative thinking, as remote applicants, in addition to those interviewing for jobs based in-person in smaller markets, ask for the salaries commanded by their counterparts residing in Silicon Valley, Tejal Wagadia, a recruiter for a major cloud computing company, told HR Brew.

“There have been conversations around compensation where the candidates expected to be paid the same if they were located in Silicon Valley,” Wagadia said—except the jobs were for remote candidates in areas with a lower cost of living.

🎶 Where have all the tech jobs gone? Save your lovelorn tributes to the fabled corporate campus, because in-person tech jobs are opening up at companies with offices nowhere near the Spaceship. According to Datapeople’s report, which synthesized “2 million jobs posted in 2021 from over 10,000 employers,” tech-job listings are surging, but applicant pools are thinning out: “After a slowdown in 2020, the overall advertisements for tech jobs in 2021 was nearly double the number for 2019 and 2020,” the report states. “Compared to 2019, average candidate pool sizes were 25% lower in 2021. Compared to 2020, they were 35% lower.”

Between 2019 and 2021, job listings at tech companies headquartered outside of Silicon Valley grew by 45% in Miami, 38% in Salt Lake City, 36% in Austin, 25% in Atlanta, and 15% in Detroit, the Datapeople report found. The job listings in growing markets are “typically not fully remote roles and are based either in headquarters or offices or for specific job locations,” Maryam Jahanshahi, research scientist at Datapeople, told HR Brew.

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.

Companies are reacting to the squeeze in the labor market with more lenient degree requirements on a more frequent basis, with Master’s degree requirements falling by 35% and MBA requirements slumping by 17% in 2021 compared to 2020, the report suggests. (The most prominent publicly-traded tech companies still covet Master’s degrees “more than ever, with 25% more of their jobs asking for them,” the report concluded.)

Remote or not, the landscape is changing. Even with companies establishing offices in new markets, the allure of remote work remains strong, but has presented obstacles for recruiters.

Wallenberg said smaller companies are trying to stay competitive with the likes of Facebook, Twitter, and other big players by offering remote working options. In his experience, however, candidates searching for remote jobs outside of Big Tech are sometimes commanding Big Tech salaries. “Not only are people asking for more [compensation], but people are getting it,” he said. Employees of certain Big Tech companies may bristle at that idea: Last year, Google faced an outcry from workers after it announced plans to cut pay for employees who opt to work remotely full time.

But the remote workers asking for higher salaries present a problem for smaller organizations outside of the Big Tech arena. “Even though there are companies outside of the Big Tech publicly traded companies that have adjusted their ranges to accommodate the market…for every company that’s able to do that, there’s 100 to 200 that aren’t,” Wallenberg said.

When the budget’s tight, improvise. An inability to pay competitive salaries can be finessed through a more enticing total compensation package, both Wagadia and Wallenberg agreed. “Attracting candidates has been tougher in the last two years than it has been in a little bit,” Wagadia said. “Companies are offering additional RSU equity, [and] sign-on bonuses that are paid up front.”

Smaller companies looking to attract remote talent can compete with Big Tech through “total rewards—they have incredibly generous retirement plans, or they have a LTI [long-term incentive bonus],” Wallenberg added. 

Want to learn more about total rewards? Step right this way.

HR is challenging. HR news doesn’t have to be.

HR Brew keeps you effective in the fast-changing business environment.