London has established itself as a global tech powerhouse. How will the city make the most of this movement to ensure prosperity for businesses and talent?
Boston’s tech scene is booming, but there’s one problem: companies have too many open positions and not enough qualified applicants.
As Beantown has grown into a worldwide tech hub, a severe talent shortage has emerged that has only worsened with each year of rapid local growth. In fact, some in the industry say they’ve never seen anything quite like it.
“I’ve had a long career in human resources and watched a lot of (hiring) cycles,” Russ Campanello, Executive Vice President of Human Resources at iRobot, told the Boston Globe, “and this is as intense as any of them.”
Let’s take a deeper look at how we got here, and what it means for Boston’s tech companies and workers.
An Insufficient Talent Pool
Taken together, two reports from the Mass Technology Leadership Council – the State of the Tech Economy report and its follow-up Massachusetts Tech Pulse Index – portray a region brimming with opportunity but simultaneously facing some challenges.
First, the good news. The first report found that nearly 10,000 new tech jobs were added in Massachusetts in the previous year, so the sector’s workforce totaled 300,000 people with another 100,000 working tech jobs in other sectors. Combined with support jobs, tech represented roughly a third of Massachusetts jobs. Further, the Pulse report found that 70 percent of tech employers expected to increase employment over the following six months.
But tech leaders also singled out a talent shortage as the single greatest challenge of doing business in the state.
“The faster these industries grow, the quicker we deplete this pool of talent,” Carbonite CEO Mohamad Ali said in the report.
According to the Massachusetts government’s occupational and industry projections, this shortage will only worsen.
Demand for most tech roles is expected to rise dramatically in Boston over the coming years. For example, the government forecasts that the number of jobs for Web Developers in the greater Boston area will rise by 26.45 percent by 2024, while the category that includes Data Analysts, Digital Marketers, and other associated specializations is expected to grow by 21.75 percent.
More Businesses Moving in or Moving up
One reason for the talent crunch is the seemingly ever-increasing number of companies looking to do business in Boston.
Amazon has opened three offices in the Boston area in recent years, including
430,000 square feet of office space in the coveted Seaport District, where they plan to hire at least 2,000 workers. Open source data giant Red Hat, meanwhile, moved its employees to a stunning 40,000-square-foot office space – complete with a hidden speakeasy – and Facebook opened into a 130,000-square-foot new office in Cambridge that features micro-kitchens, a massive cafeteria, and enough room to eventually house 400 more employees.
While Kendall Square – home to Pfizer, Google, and Twitter, as well as incubators and accelerators like Cogo Labs and MIT’s The Engine – is still every bit the tech hotbed that Boston Consulting Group once called the “most innovative square mile on earth,” other neighborhoods are also becoming popular for tech companies looking for a new address.
In fact, the Boston Business Journal reported that the city’s downtown is seeing a “tech invasion,” with 1.8 million square feet of technology, advertising, media, and information-based companies flooding into downtown, while 1.2 million square feet of science and tech office and lab space is set to open in Somerville’s Union Square soon.
Funding Pouring in Across all Industries
After setting venture-capital investment records in 2015 and 2017, 2018 was even more lucrative for Boston-area startups. In fact, Massachusetts startups raised $12 billion across 660 deals in 2018.
Of course, the biopharma and biohealth industries – long an anchor of Boston’s tech scene – were responsible for much of those funds. Recently, Relay Therapeutics secured $400 million in Series C financing, Medicare Advantage business Devoted Health raised $300 million in a Series B round, and in October, Bain Capital and Pfizer announced a $350 million funding commitment to the newly created Boston-based Cerevel Therapeutics, devoted to developing drugs for central nervous system disorders.
But other notable recent funding rounds show that Boston’s tech scene has diversified beyond being just a health hub.
Cambridge Mobile Telematics announced a $500 million investment from the SoftBank Vision Fund in December, farming startup Indigo Ag raised $250 million in Series E funding in September, and cloud-based communications solution provider Fuze announced a financing round of $150 million in May.
Other industries that are still in their fledgling stages offer the tantalizing potential to further this Boston boom. Clean energy is considered an area in which Boston is poised to grow, just years after Veolia – which designs water, waste, and energy management solutions – moved its headquarters to Beantown.
Fintech too is expected to grow rapidly in Boston as well, with experts anticipating the same talent gap issues facing other industries in the city. Specifically, they expect a particular shortage of Big Data specialists.
“The growth of Big Data – specifically, applying insights gleaned from reams of data for risk management, better customer service, marketing, and automation – is already reshaping the industry and putting a premium on people with new skill sets,” Putman Investments CEO and President Robert Reynolds and Boston Private Holdings Inc. CEO Clayton Deutsch wrote in the Globe.
“The sheer number of data-related jobs that will be required in the next 10 years is daunting and calls for fresh thinking.”
Companies are in Fierce Competition for the Top Talent
A recent Boston Globe article documented how the shortage of skilled technology workers locally – described as the “No. 1” issue facing companies there – has led to a hiring environment so competitive, job candidates are being lavished with perks.
Among the trends reported? Software Developers fetching $90,000 as a starting salary, tech workers receiving as many as 20 calls per day from Recruiters trying to lure them to a different company, and companies offering up to 25 percent raises in an effort to poach top talent. Many firms are even offering finder fees of up to five figures for employees who refer candidates successfully; Cambridge-based HubSpot offered $30,000 for Software Engineers and Designers in 2013.
LogMeIn Inc., which has roughly half of its 1,000 employees based in Boston, offered perks including Foosball, a basketball court, and a roof deck, but still reported having 50-100 tech jobs open at any given time.
“Recruiting is difficult given the sheer number of technology companies in Boston,” Dena Upton, LogMeIn’s Vice-President of Human Resources, told the Globe. “Technical professionals are in incredible short supply and there’s a huge need.”
Of course, it also follows that this competitive environment has created competitive salaries. CBRE’s Tech Talent Report found that Boston tech employees brought home an average wage of $103,746, the sixth-highest in the country.