Employers are expanding their search for tech talent to largely untapped locations as demand starts to outpace supply, according to the latest findings from CBRE.
CBRE’s inaugural Global Tech Talent Guidebook identified Bucharest, Porto, Seville, Tallinn, Valencia and Wroclaw as emerging markets across Europe that offer opportunities, based on a range of factors including tech talent growth, educational attainment, governance and existing tech ecosystems.
Researchers said the shift to those geographies is driven by high labour costs and a greater acceptance of remote workforces in many well-known global markets.
CBRE added that the deployment of new technologies such as artificial intelligence is driving the search for skilled tech talent in Europe. This in turn will lead to increased capital funding, particularly in relation to specialist university programmes.
Mike Gedye, CBRE’s head of tech, media and telecoms for Europe, said: “The surge in tech talent demand in a number of countries across Europe is outpacing supply, leading more tech companies to seek out lesser-known markets where they can be an employer of choice.
“Rising demand for tech skills in various industries is further fuelling a shortage of skilled professionals, with the fastest growing fields such as artificial intelligence, deep tech and even quantum computing set to see the strongest competition.
“The future of tech talent will be centred around quality as much as quantity, and the search for these specialisms will be increasingly distributed across tech clusters that can sustainably deliver this specialist expertise.”
How rents affect market expansion
When evaluating the cost to expand into a new market, office and apartment rents were found to be a heavy consideration for companies. Paris had the highest average annual asking rents for office space in Europe at over $98 (£78) per sq ft in Q3 2023, according to the report.
Office rents were lower in cities in southern and eastern Europe, aligned with lower compensation packages.
For apartments, Dublin, London, Amsterdam and Paris had the highest average rents in the region at over $1,800 per month. However, Berlin and Lyon offered the lowest rents, with both averaging below $1,000.
Companies also compete for skilled tech talent by offering attractive compensation packages. Software engineers in Amsterdam received the highest total compensation globally in 2023 at $204,673, including base pay and additional benefits.
London, Berlin and Frankfurt completed the top five for total compensation alongside San Francisco Bay Area, with salaries totalling more than $170,000 in all four markets. Lower levels of remuneration are offered in parts of southern and eastern Europe, such as Budapest, Warsaw and Rome.
Emerging markets gain ground
Richard Holberton, head of office occupier research for Europe at CBRE, said the cost barriers in the most expensive cities provide an opportunity for these emerging, lesser-known markets to compete.
Holberton said: “Well known, leading markets such as London and Paris will continue to be seen as tech powerhouses based on their scale and long-term fundamentals. However, it’s really interesting to see so many new markets coming to the fore, all of which hold strong growth potential and offer diverse benefits in terms of skills and infrastructure for agile companies.”
Meanwhile, investment in tech companies accounted for more than half of global venture capital 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 totalled almost $235bn in 2023, 21% of which was placed in Europe, the Middle East and Africa. By deal count, EMEA claimed 28% of total VC activity due to the region’s high volume of start-ups.
Advancements in AI have attracted historic levels of VC funding, leading to increased demand for skilled talent. VC funding in AI companies globally stood at $26.5bn in 2023 across more than 1,900 deals, 27% of which were in the EMEA market.
The report analysed key labour trends across 75 global markets, a third of which are in Europe.
Image © Gerd Altmann/Pixabay
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