How Tech Concentration Hurts Your Talent Strategy

Written By: Chuck Brotman


January 27, 2020


Reports on the convergence of tech in a small number of coastal hubs describe a big problem. Does bias about where to find talent today contribute to the challenges?


Brookings Institute Report

The Brookings Institute recently shared findings that will not surprise those familiar with the history of tech. “Innovation jobs” continue to concentrate in a small number of coastal hubs, including San Francisco, Seattle, and Boston. By contrast, 90% of U.S. metros have seen declining shares of tech employment, losing opportunities for economic development and growth.

The Brookings Institute argues for federal intervention to promote “growth centers” across the country by encouraging workforce development and regulatory change. By helping regions elsewhere build out infrastructure, policymakers can spread out the benefits associated with a preference for concentration.


Talent is Distributed

Clearly, tech businesses see benefits in proximity to each other, including infrastructure and access to talent and capital. However, operating a business in a coastal hub is expensive. Given the higher costs, one would expect to see accelerated efforts to spread out into less expensive markets. The tech industry itself has done a lot to make collaboration easier across the globe. Why not look for access to exceptional talent at more affordable rates?

In 2017, Kristen Chen and Julia Stefan published interesting findings on the LinkedIn talent blog. Looking at data extracted from LinkedIn profiles, they found significant talent density, relative to demand, for sales and operations roles across the midwest and southeast. Their data suggested talent markets remain available widely across the country as a whole.

Is something else at work limiting companies from pursuing talent beyond tech hubs?


Tech Hub Concentration and Unconscious Bias

In fact, untested hiring assumptions likely contribute to concentration as much as anything else. As Peter Cappelli has argued, hiring processes remain hindered by failures to measure results associated with talent acquisition efforts. Unconscious bias is a significant issue in the tech industry. While many vendors promote technologies to solve the problem, others argue they could be inadvertently contributing to the problem.

Even thought we often think about bias as operating within a given tech hub, it also influences perceptions of talent markets beyond it. In fact, a number of regions across the country offer high concentrations of individuals with backgrounds spanning functions and industry verticals, including women, veterans, ethnic minorities, and other non-traditional candidates with tremendous experience and the soft skills that matter most in today’s economy. To assume that great talent for tech sits waiting to relocate is itself a reflection of bias towards candidates who may be younger, or not rooted to place by mortgage or family considerations – or, even worse, an unconscious preference for those who come from greater socioeconomic privilege.


Defining Tech Workers Matter

Additionally, the way analysts define “tech talent” also contributes to the problem of tech concentration. Many analysts promote the notion that product and engineering skills denote a region’s viability for a tech business. While presence of this talent remains critical, such assumptions overlook the value of sales and operations.

For example, in a recent report on US Tech Talent, CRBE defines tech talent as “highly skilled technical workers who create and enable the software and devices that are integrated into nearly everything we do.” The report looks at multiple metrics to measure markets, including office vacancy and general population trends, but the authors acknowledge giving presence of tech talent the “highest weights” in their market assessments. Is this the best way to rank regions to support industry growth? As any veteran of tech can share, revenue, marketing, and business operations roles matter deeply in the innovation sector. Businesses and analysts need to look closely at how they define tech talent to assess the viability of regions across the country.


Talent Beyond Tech Hubs

Flattering as it might be to believe that exceptional talent can relocate easily, companies need to think more about expanding beyond tech hubs as a talent strategy in and of itself. And the process for selecting a location for headquarters or expansion, much like determining a process for hiring great people, needs to be inspected for bias. This is not merely for social good; companies that achieve diversity of teams and leadership generally perform better.

The Brookings Institute paper makes a compelling case for national attention to the challenges posed by tech company concentration. Instead of waiting for the government to modify policy and make investments, companies should look closely at their assumptions today. Tremendous talent resides across America, and the best companies think differently about the opportunities to grow beyond tech hubs to secure it.