It looks like startups will lead the way in tech hiring for a while. Nearly 90 percent – 87 percent to be precise – of startup executives plan to hire this year, according to Silicon Valley Bank’s Startup Outlook. That’s up from 83 percent last year. It’s also higher than the numbers cited in a Dice report released late last year, which found 64 percent of hiring managers in a wide range of companies expected to add tech workers during the first half of 2013.
“The difference doesn’t surprise me for two reasons,” says Mary Dent, vice president of public policy for Silicon Valley Bank. “Startups are growth-focused. They’re intent on taking an idea and translating it into a company. These aren’t small businesses or more mature companies that are focusing on the bottom line.”
Secondly, Dent noted that most studies find net job creation comes from younger, high-growth companies. “So it makes sense we would see more job creation with startups.”
Funding Fuels Hiring
Obviously, startups have to be careful with how they spend their investors’ money. Aside from hiring, those funds must cover everything from office space to product design, development and customer support. Hiring, Dent notes, “is also dependent on how much capital you need and how far you can go with the capital that you have … Software companies are capital efficient, whereas life sciences companies require a lot of capital to run the business.”
Where Startups are Hiring
Enterprise software startups are expected to do the most hiring this year: Some 91 percent of those types of companies included in the bank’s study said they plan to add employees. Meanwhile, 90 percent of both hardware and cleantech startups expect to increase hiring, as well.
Other areas planning to hire, according to Dave White, president and founder of recruiting firm SC Palo Alto, are mobile/cloud companies who create applications that simultaneously share real-time information – such as photos, video and location data — through the cloud and multiple mobile devices and even automobiles. Another area is business-to-business e-commerce.
Although Silicon Valley is a magnet for tech talent, companies in the region still complain about the difficulty they face in finding candidates with the right qualifications. Startups involved in mobile hardware products are having a hard time filling positions because of the high demand for professionals experienced with smartphones and tablet hardware. Semiconductor startups are also struggling.
These companies need to fill their openings more and more. As the economy improves, companies are pushing to get prototypes and products developed more quickly. One sign of those efforts is the types of hires being made when they first begin taking on staff. Currently, some 80 percent of those early hires are engineering and technology professionals, as opposed to marketing, sales and other types of business people.