US Professional and Technical Services Sector NAICS 54

May 22, 2025 - Tech Industry Moving Out of Regional Hubs

• The technology industry is slowly moving back to coastal bases of operation as the trend of growing regional tech hubs in cities like Austin, Texas abates, according to a report from venture capital firm SignalFire. Austin in particular, which had been luring California-based tech companies with promises of lower taxes and quality of life improvements, saw tech employment fall 1.6% in 2024 and startup employment fall 4.6%. Other regional hubs including Dallas, Houston, Toronto, and Denver also saw shrinking tech employment, while employment grew in coastal locales of New York City and San Francisco. Return-to-office mandates in regional areas, along with AI-driven businesses increasingly centralized in the Bay Area has employees and employers ditching regional aspirations and moving out. San Francisco saw tech employment increase 1.8% in 2024, while New York City, which grew 2.2%, is luring AI companies seeking to sell to large enterprises.
• A global workplace report from Gallup found that while remote workers are more engaged than their hybrid or in-office counterparts, they feel more work-related stress and are less likely to thrive in their lives. Fully remote workers are 31% more likely to be engaged in work (measured as enthusiasm for their job and attachment to their team/organization), compared to hybrid roles (23%) and on site employees (19%). The freedom of remote work comes with psychological downsides, per the report, with feelings of isolation giving way to overall stress about their jobs, loneliness without the camaraderie of in-person coworkers, too much autonomy leading to time management problems, and frustrations with the technology required to collaborate. The results were consistent across salary ranges. Companies that prioritize addressing these issues have only 38% of employees looking for new job opportunities, building more sustainable and better long-term performance.

• Employers in the US are increasingly hiring employees based on skills criteria and deemphasizing past job experience, according to global recruiting firm Hudson RPO. A survey of HR professionals in the US found that 60% of recruiters are placing more importance on transferable skills - capabilities that apply to different jobs and industries - than the historically standard educational and work experience qualifications. Workers who display transferable skills such as communications, leadership, and flexibility should have a leg up. The trend dovetails with data from consulting firm McKinsey & Company that says 90% of companies either currently have or will experience skills gaps in their workforce in the next five years. About 53% of employers told McKinsey they are tackling the problem by reskilling current employees, while the rest are relying more on skills-based hiring, shifting workers to different roles in an organization, and hiring more outside contractors.
• Companies are cutting their middle management ranks to streamline operations and save money, according to a recent survey on employee and employer power dynamics by Korn Ferry. About half of the 15,000 professionals surveyed report middle management cuts in their organization. But removing that layer can make rank-and-file employees feel directionless and forces senior leadership into a more operational role than a strategic one. Accordingly, about 72% of US senior management told Korn Ferry they are, “stretched beyond their capabilities.” The survey also found that employees are not fans of return-to-office mandates, with 64% of professional workers saying they prefer a hybrid model instead. Pay is always a source of tension between employees and management, and while 66% of those surveyed were satisfied with their compensation, 72% feel that cost of living increases in the larger economy will cut into their earnings.