COVID-19 accelerates a talent migration but physical hubs still important
COVID-19 has rapidly accelerated new ways of working, but the world’s ‘technology hubs’ are here to stay, according to new research from KPMG, although they may not be in Silicon Valley.
When many offices and downtown areas locked down early in 2020, entire workforces shifted to remote working, with some employees leaving major cities to find more space at a lower cost, among other factors. But tech leaders believe the industry’s future success will rely on a balance between physical workspace and greater flexibility.
Out of 800 industry leaders surveyed 39% believe ‘hub’ cities including London, Singapore, and Tel Aviv will continue to play a vital role, enabling talent to coalesce and collaborate in communities with a solid digital infrastructure. Only 22% believe hubs are no longer important. The findings echo earlier research from the 2021 KPMG CEO Outlook pulse survey, which revealed 78% of tech leaders have no plans to downsize their physical footprint and only a quarter (26%) expect to hire predominantly remote talent in the future.
The success of the technology sector has outpaced most other industries during COVID-19, with many companies growing significantly since the start of the pandemic. This has advanced the perception that creativity and innovation can now happen literally anywhere as collaboration has gone more virtual and more global. However, a company still needs to be able to innovate, and the KPMG Technology Innovation Hubs report reveals that physical workplaces and innovation hubs remain a key component of technology companies’ strategies, although they may not be located around Silicon Valley.
“Engineering talent and intellectual property are the lifeblood of the tech industry, and retaining top talent is a strategic imperative. Employers know this and are striving towards flexible work arrangements, including permanent hybrid workforce models. As the workforce disperses geographically, new hotbeds of technically skilled workers will emerge,” said Alex Holt, Global Head of Technology, Media and Telecommunications at KPMG.
Industry insiders were also asked to rank cities around the world, outside of Silicon Valley, that they believe will flourish as technology innovation hubs in the next four years. The cities making the top 10 all had strong ecosystems in place before the pandemic, enabling them to emerge stronger – and potentially provide a real challenge to Silicon Valley - as the world prepares for a post-COVID recovery.
There are a few movers to note in the top ten from last year’s survey. Seoul, ranked eight last year, dropped out of the top ten to tie for fourteenth this year while, Austin and Seattle, ranked eleventh and twenty-fourth respectively last year, moved up to share tenth spot in 2021.
While Silicon Valley is known as the dominant region in global technology, only one third of leaders feel strongly that it will maintain its long-term innovation leadership position with an equal number believing it won’t.