Tech and Digital Job Growth Have Never Been Stronger
It’s no secret that the job market in Austin is hotter than ever. The pandemic is finally in our rearview mirror, and life is getting back to some sense of normalcy. Companies that may have slowed or ceased hiring in 2020 are now growing at full throttle, and Austin is a major hub for skilled talent, as is Denver and most recently, Costa Rica.
Specifically, the tech and job market seem to be getting much of the love, fueled, in part, by fast-growing start-ups, expansions and relocations. Built In Austin says venture funding on the Austin tech scene increased substantially over its previous total in April. Austin is home to nearly 6,000 startups and tech companies, placing it as the number one tech town in the nation.
What’s driving the growth in Austin and elsewhere? A few things:
In 2020, COVID caused most companies to trim budgets and team sizes, as well as pause hiring. Thankfully, the market is opening up in 2021, resulting in companies hiring back not only the lost 2020 headcount but additional headcount for delayed and new initiatives.
According to the Austin Chamber, 12,000 new jobs have been announced in the Austin area so far in 2021. That’s on top of a record 22,114 jobs announced from relocations and expansions last year. Many of the new jobs pledged this year will be in the technology sector.
The private equity and venture capital money was frozen in 2020, but it didn’t disappear. This year, that money is now burning a hole in these investors’ pockets. This money is going to existing companies, as well as fueling new startup growth and creating new jobs in Austin, Denver, and other tech-centric cities.
CompTia Tech Town Index 2020 lists the best places for IT professionals to live and work, looking at 20 metropolitan areas with populations greater than 250,000 and where tech talent is greatest. Austin and Dallas came in at number one and two, respectively. This provides great motivation for private equity and venture capital firms to focus on Texas.
The report says Austin experienced record venture funding in 2019, with local startups raising nearly $2 billion for the year, 87% more than in 2017. Startups in Colorado, particularly Denver, have raised even more venture funding in 2020, $2.2 billion, to be exact, an 86% increase in the past five years, with SaaS, AI, and fintech leading the way.
Where is all that money going? In Austin, startup companies like Brinqa, Overhaul, Volcon, Homeward, and Wheel are the beneficiaries. In Denver and other Colorado cities, DispatchHealth, Outrider, Wunder Capital, JumpCloud, and Boom Supersonic are among the biggest winners.
With so much money just looking for an opportunity, many more companies are benefiting, nearly all of which need tech and digital talent.
California is among the high-tax states losing businesses to Texas. Hoover.org says, “California businesses are leaving the state in droves. In just 2018 and 2019 – economic boom years – 765 commercial facilities left California. The reason? Economics, plain and simple. California is too expensive, and its taxes and regulations are too high.”
New York isn’t far behind. In fact, more than 20 companies have relocated their headquarters to Central Texas in 2021, with others choosing Denver. There’s no reason for that trend to slow down.
The pandemic only highlighted the fact that companies don’t necessarily need expensive office space. Texas and Florida are among the most desired destinations, thanks to their tax policies, regulatory climate and access to talent. In 2021, Texas was named the number one state for business for the 17th year in a row, attracting Tesla, Apple, Wayfair, and Samsung, to name a few.
A good life
Now, more than ever, people want to enjoy where they work and live. The pandemic proved we could work effectively remotely, giving people incentive to move wherever they want. People and companies are ditching high rent, high tax, high crime metropolitan areas for places like Austin.
Multiple sources consistently rank Austin as the best city in America to live, not only for the jobs but for the relatively low cost of living and quality of life. With no shortage of jobs, plenty of greenspace, and a vibrant social scene, Austin seems to have it all. Of course, for those of us who live in Austin, we know infrastructure is the biggest roadblock.
Elon Musk even tweeted the fact that there isn’t enough housing in Austin for all the people he wants to hire for his new Tesla factory, and Austin roadways haven’t kept up with the rapid population increase. Austin will have to tackle these challenges head-on in the coming years if it wants to remain in the top positions for all of “the best of” rankings.
Demand and Capacity
The influx of hiring companies is exciting, but it’s coming with challenges. Austin and other tech markets are now flooded with open job requirements and not enough qualified candidates. In March 2021, Austin’s jobless rate was 5.3%, and that’s coming off of the pandemic. Prior to COVID-19, Austin boasted a 2.6% jobless rate.
Why is there a talent shortage, specifically in tech and digital positions?
Not only is there a surge in tech and digital companies, but companies in all industries are automating more processes, integrating more systems, transitioning to the cloud, leveraging AI, investing in cybersecurity solutions, and building digital and online capabilities. Each one of these initiatives requires tech and digital talent.
Finding talent to fill these jobs isn’t as easy as putting out a job description on a career board. If only it was that easy. Type in “data analytics manager in Austin”, one of the most in-demand job functions, on a top online job site, and you’ll get more than 500 listings.
Tech and digital job openings are skilled positions and much harder to fill than more general jobs. If companies want to grow, excel and compete in 2021 and beyond, they must hire the best they can afford, understanding that each new hire is an investment in the future.
For many, the answer to hiring woes is partnering with a firm focused specifically on tech and digital recruiting. Not only should they have access to a larger pool of skilled tech and digital talent but also talent that may or may not be actively seeking a job. By crafting an offer they can’t refuse, these firms are better able to entice happily-employed tech and digital talent away from their current employers.
The State of Compensation
The gap between demand and capacity is affecting compensation in Austin and nationally. Tech and digital talent salaries are increasing at a rapid pace, an average of 25% more from this time last year for the same skill set and role.
Companies are realizing that they either have to give up more money to get the talent they need to grow or look to nearshore or offshore talent. Remote working is the new norm, proving the world has no boundaries when it comes to talent. People with all kinds of skills can be found all over the world.
With the shortage of qualified talent and compensation spikes, we are seeing Costa Rica rise in popularity as a go-to for nearshore talent at a fraction of the cost of similar talent in the U.S. The cost of living is much less in Costa Rica compared with that of the U.S., giving companies in hot markets like Austin and Denver a new talent pool to consider. Costa Rica is conveniently in the same time zone as Austin and only an hour off from Denver, making it even more attractive to companies looking for tech and digital talent that share the same workday hours.
For those set on U.S.-based talent, companies are having to get creative and serious about their compensation packages. Similar to Austin’s super competitive housing market, companies have to offer better compensation packages if they want to win top talent from their competition.
Deloitte found 41% of surveyed executives rated competing for talent as one of their most pressing concerns, with 63% of them saying they worry about employee retention. Compensation talks, and if companies aren’t willing to pay competitive salaries and offer comprehensive benefits packages, they risk losing candidates to the competition and losing the talent they already have to the competition.
Keep in mind that compensation isn’t limited to annual salary, but gone are the days where a ping pong table and in-office happy hours did the trick. Today, people want health insurance benefits, 401k matching, opportunities for cross-training and advancement, flexible work hours, hybrid workplaces, and work-life balance.
The state of the tech and digital job market in Austin is bright, glowing, in fact. Austin has its challenges, but all indicators point to more growth and greater opportunities for companies and job seekers alike. Looking to fill skilled positions without all of the work? We can help, bringing you the best U.S. and nearshore resources to get work done faster, better, and more cost-effectively.