Global Demand for Tech Talent Fueling Growth in New Markets, According to New CBRE Analysis

Deployment of new technologies like artificial intelligence is driving the search for skilled tech talent globally, according to CBRE’s inaugural Global Tech Talent Guidebook. Demand for tech talent is beginning to outstrip supply in some markets, spurring employers to expand their hiring to relatively untapped metros.

CBRE’s Global Tech Talent Guidebook analyzes key labor trends across 75 global markets and the impact of those trends on tech industry growth and real estate costs. Nearly all global markets recorded tech industry employment growth between 2017 and 2022.

The Asia-Pacific region has the largest tech talent markets. Beijing, Bengaluru and Shanghai had more than 1 million tech talent workers, while London, New York, Paris, the San Francisco Bay Area, Tokyo and Toronto were the largest markets outside of India and Mainland China, with 300,000 to 500,000 tech talent workers each.

High labor costs and the acceptance of remote workforces in many well-known global markets have opened opportunities for emerging markets. CBRE identified 20 emerging markets based on several metrics such as tech talent growth, educational attainment and existing tech ecosystems to find that markets including Bucharest, Romania; Cape Town, South Africa; Cebu City, Philippines; Hanoi, Vietnam; and Huntsville, United States offer favorable conditions for expansion.

“Demand for tech talent remains high as businesses seek new ways to leverage technology to drive transformation. Employers seeking innovation and efficiency are expanding into many established and emerging markets for skilled tech talent, lower labor costs and strong growth potential,” said Colin Yasukochi, executive director of CBRE’s Tech Insights Center. “New innovations like artificial intelligence are poised to catalyze the next growth cycle, creating employment opportunities and real estate demand in new and existing tech ecosystems across the world.”

Costs That Impact Market Expansion

Companies compete for skilled tech talent by offering attractive compensation packages. Software engineers in Amsterdam received the highest total compensation in 2023 at $204,673, which includes base pay and additional benefits. London, San Francisco Bay Area, Berlin and Frankfurt had the next highest salaries totaling over $170,000. India and parts of Latin America offer the lowest salaries for software engineers at less than $56,000, providing potential cost benefits to companies.

When evaluating the cost to expand to a new market, companies also consider office and apartment rents. For office space, Singapore and Paris had the highest average annual asking rents over $98 per sq. ft. in Q3 2023, whereas India and Latin America had rents less than $27 per sq. ft. For apartments, New York, San Francisco Bay Area, Los Angeles/Orange County, Boston and Seattle had the highest average rents over $2,100 per month. However, Lyon, São Paulo, Montreal and Berlin had the lowest apartment rents - all under $1,000.

“The surge in tech talent demand in countries like Poland, Singapore and Costa Rica is outpacing supply, leading more tech companies to seek out lesser-known markets where they can be an employer of choice. By deploying a global tech talent hiring strategy that targets locations in established, expanding and emerging geographies, companies stand to reap a variety of different benefits while mitigating risk,” said Chris Volney, Americas Managing Director, CBRE Consulting.

Venture Capital Funding Varies

Meanwhile, investment in tech companies accounts for more than half of global venture capital (VC) funding since 2012, making the tech sector the top industry to receive VC funding for over a decade. CBRE’s analysis of CB Insights data found that global VC funding across all sectors totaled almost $235 billion in 2023, about 48% of which went to the San Francisco Bay Area, Shanghai, Beijing, Mumbai and New York.

Advancements in artificial intelligence (AI) have attracted historic levels of VC funding, leading to increased demand for skilled talent. In 2023, VC funding in AI companies globally was $26.5 billion across more than 1,900 deals. North America claimed about two-thirds of AI funding from 2017-2022, mostly in the U.S.

Most Top Universities in US and Mainland China

New tech talent and innovations are often produced by universities that invest in technology programs and form partnerships between academic discovery and commercial product development. The U.S. and Mainland China had the most universities ranked among the top 1,000 universities globally in 2023, according to CBRE’s analysis of U.S. News & World Report rankings.

To read the full report, click here.