Silicon Valley will no longer be the technology innovation center of the world in four years, according to the results of a survey by analyst firm KPMG. Some 60 percent of the 740 technology-industry leaders queried in the survey believe that it is likely or very likely that Silicon Valley will cede that role to New York City, with other cities rapidly catching up.
After New York, the respondents’ highest-ranking U.S. cities were Boston and Austin (tied in ninth place) and Washington, DC in 13th place. San Francisco placed 17th, and Los Angeles and Chicago both landed in twentieth.
While billions of dollars’ worth of investment by tech giants into new workspaces and tens of thousands of new positions vaulted New York into the top ranking, the survey also underscores the continuing decentralization of technology innovation.
“As we’ve looked at cities, we’ve asked: ‘Why is the innovation economy drawn to certain places?’ It all starts with universities that have some research-based programs in areas that feed the tech economy,” Tim Zanni, global and U.S. technology sector leader for KPMG, told Dice.
In New York, for example, you have Columbia University and Cornell functioning as great drivers of local talent. “You’ve also got a lot of folks going to NYC—as someone born and raised there, I know I always tell people if you’ve got a year to live somewhere in your life it should be New York,” Zanni said. “It’s just a great location for young folks.”
As Zanni noted, New York City’s government has also been very proactive with incentive programs to help startups and tech incubators and foster entrepreneurial talents. “I think another factor you’ve got to have are some success stories—success breeds success,” he said. “Entrepreneurs don’t tend to stay with the same company, they will move around and start new things, and New York has great successes with digital media, with financial tech—it’s got all the ingredients to be more successful.”
Despite Amazon deciding to abandon New York City as one of the locations for its “second headquarters,” the online retail giant still has 7,000 employees in the city… a number that’s growing.
“Apple and Google are there and growing as well, so I think New York is well positioned in the future,” he said. “One of things I see in the TMT world—technology, media, and telecom—as it comes comes together, New York is always going to be attractive for the media component, and as a result of that, you’re going to have tech elements there—but it’s the talent pool companies are going to be after.”
In Silicon Valley, factors such as cost-of-living and outdated infrastructure are fueling the perception that the area might not continue to dominate tech innovation. In short, it’s an expensive place in which to live and work, which makes other tech hubs seem more enticing by comparison.
The Rise of Other Hubs
For smaller cities that want to become up-and-coming tech hubs, meanwhile, the first step is figuring out how to integrate a nascent technology industry into local businesses. “It goes back to the convergence of tech into all other sectors,” Zanni said. “Any particular city that may have agriculture as a leading industry, as agriculture comes infused with tech, there are businesses that will be born in these organization,” he said.
But cities must invest in people—which means not only schools, but also culture, recreation, and infrastructure—in order to attract companies. Cities such as New York City have an advantage in that regard, as they have the investment and private-public relationships to foster that sort of development.
In Zanni’s view, that means other big, similarly-monetized cities could also become major hubs in the years ahead, including Toronto, which boasts a strong mix of universities, startups, and some major tech firms: “Each time I go back I become even more bullish on it. Someday Toronto will be up near the top of the list.”
Sarah Stoddard, Glassdoor community expert, said the website’s research continues to show that more and more tech jobs are moving beyond Silicon Valley to major metros such as New York City, which is already home to several tech companies and a large pool of skilled, educated talent.
“Plus, we found that Gen Z and Millennial workers are keenly interested in applying to tech jobs, with the majority of these young talent pools applying to jobs in New York City before hubs like San Francisco and Los Angeles,” she said. “There is a strong opportunity for tech companies to recruit and retain skilled workers in the Big Apple.”
As Stoddard noted, when looking into job openings in tech across the U.S., three metros stood out as having seen the biggest gains in software-related jobs over the last few years: Seattle, WA, Washington, D.C. and Detroit, MI.
“Each of these three metros offer competitive wages, lower costs of living when compared to tech hubs like San Francisco or New York City and are home to several top-notch companies, thus helping them attract the attention of talented tech workers,” she said. (Although to be fair, rents in Seattle and Washington, D.C. have shot up in recent years, along with the cost of living in general.)
Echoing the sentiments made by Zanni, Stoddard noted how nowadays, every company is a tech company—and the demand for tech workers has spread across industries from retail to automotive. That helps small- to mid-sized metros across the country attract tech talent.