The San Francisco Bay Area continues to be a global leader in tech talent, with more than 30 Fortune 1000 companies and thousands of startups based there. Despite periods of volatility in the wake of the pandemic, the tech industry is once again thriving.
All signs point to a bounce back for the tech industry through 2024. Even amidst a series of economic challenges, industry-wide layoffs, and well-publicized socioeconomic issues, the Bay Area continues to attract the brightest minds and ambitious startups, and the future looks bright. The battle for talent is heating up in 2024, and successful Bay Area tech recruiting requires an understanding of the region and its nuances.
In this guide, we’ll take an in-depth look at tech recruiting in the San Francisco Bay Area for 2024, drawing from Rocket’s deep-rooted experience in the market, strong connections with venture capitalists, and deep insights into the local talent pool. Read on to learn how to navigate the current hiring environment and scale your team successfully.
The Current State of Tech Recruiting in the Bay Area
San Francisco's economy remains strong despite the challenges of higher interest rates and job cuts following the pandemic. With net gains over pre-pandemic numbers, 2,700 jobs were added from June 2022 to June 2023. Companies boast an overall 37,000 additional tech jobs over 2019 levels, showcasing a positive trajectory in employment.
The San Francisco Bay Area holds the largest pool of tech talent jobs in the U.S., with a notable increase of 23% between 2017 and 2022, and maintains its position as the leader. Between 2017 and 2022, the region added an impressive 75,020 tech talent jobs. These tech roles comprise 11.6% of total employment in the Bay Area, more than double the 50-market average of 5.6%.
The Bay Area hosts a remarkable concentration of software engineers, with 76.6% employed in the tech industry as of 2021, the highest among U.S. regions. CBRE's latest report looks into tech talent wages by geography, revealing that in 2021, the San Francisco Bay Area offered the highest average wages.
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Furthermore, the San Francisco Bay region shares in massive capital funding. Over $25 billion out of the $69 billion invested by US-based venture funds has flowed into the area post-pandemic, surpassing the combined investments in New York, Los Angeles, and Boston.
Despite the signs of trouble in the wake of the pandemic, including multiple layoffs after rounds of overhiring and fewer financial investments, the Bay region maintains a firm grip on its status as a leader. There’s no denying that the sector is evolving, but the San Francisco Bay Area is reversing the brief trend that concerned many about its future.
“Many Bay Area tech employers slowed hiring and made staff reductions, but most layoffs are affecting non-tech roles...However, we are seeing new start-up companies emerge; a potential sign that we are entering a new cycle. Recruiting and retaining tech talent remains a priority for many companies, in addition to creating an attractive office experience for employees”
- Chris Shepherd, Executive Vice President in CBRE’s Tech and Media Practice.
Tech Salaries & Compensation Guidelines in the Bay Area
The San Francisco Bay Area draws talent across sectors but remains an important hub for tech innovation. A recent CBRE report spotlights the Bay Area as the apex of compensation. The average tech worker salary sits at $157,000 per year, roughly $34,000 more than Seattle and the New York Metro area, the next highest markets.
Furthermore, tech workers employed in the tech industry specifically in the Bay Area earn an average annual wage of $184,425. Other tech hotspots like Seattle and Boston trail behind, with average wages of $172,009 and $121,794, respectively, but it isn’t just a salary that appeals to the masses. Tech talent enjoy benefits that span from comprehensive healthcare packages to stock options to enhance overall compensation.
If we dig deeper and look at Software Engineers, data from Levels.fyi further conveys how competitive the Bay Area is from a compensation standpoint:
Median annual total compensation for Software Engineers (base pay, stock, bonus)
While the allure of San Francisco is undeniable, startups must position themselves to attract top-tier talent beyond compensation packages. Fostering a culture of innovation, offering equity stakes, and providing avenues for professional growth become instrumental in securing a coveted talent to lead your startup into the next phase of growth.
The San Francisco Bay Area remains the region with the highest average tech salaries
Average Tech Worker Salaries Within Tech Industry
Pay Transparency and Its Effects on Recruitment
California’s Pay Transparency Act, enacted in January 2023, mandates openness in pay scales by requiring employers with 15 or more employees to disclose pay scales in job postings. This mandate extends to annual pay data reporting for larger companies, ensuring a comprehensive view of wage structures. The legislation goes beyond geographical boundaries, asserting jurisdiction over out-of-state companies with employees in California. The requirement to disclose pay ranges extends even further to remote positions potentially filled by California residents.
As the veil of secrecy surrounding pay scales is lifted, job seekers are equipped with insights into compensation frameworks. Armed with this knowledge, candidates can confidently navigate salary negotiations. Beyond this, transparency fosters a workplace culture of fairness and inclusivity. Race, gender, and ethnicity are no longer subliminal factors, but rather they play a major role in creating equity, and opportunity.
Remote, Hybrid, and Onsite: Trends and Considerations
The Bay Area has been at the forefront of remote and hybrid work trends. Statistics paint a vivid picture, with remote tech job postings surging to 20% of the total tech job market, and half of all posted jobs deemed remote-eligible. Despite this trend, a notable shift is underway, as seen by the decline in the number of individuals working exclusively from home since 2021.
Remote work has been normalized, with 12.7% of full-time employees embracing the convenience of home-based work environments. Yet hybrid models are most popular, with 28.2% of the workforce splitting time between home and the office.
As work models evolve, so do recruiting strategies and candidate expectations. The relationship between in-person and remote/hybrid work is pivotal in shaping salary negotiations and compensation packages. For tech talent, the flexibility afforded by remote and hybrid models is frequently a key negotiation item.
Startups, in particular, are tasked with crafting innovative strategies to attract and retain top talent. Embracing the value of flexibility and autonomy enables startups to leverage remote and hybrid work arrangements as a potent recruitment tool. By fostering a culture of inclusivity and belonging, they carve out a niche as employers of choice.
Navigating the Venture Capital Landscape
Venture capital (VC) is a vital source of financing for startups and early-stage companies with high growth potential. Unlike traditional loans, VC investments hinge on future returns, favoring firms with disruptive technologies, innovative business models, and rapid expansion prospects.
For startups, VC funding offers invaluable resources, expertise, and network access. It fuels growth, provides mentorship, and enhances credibility, paving the way for further investment and partnerships.
In Q4 2023, the San Francisco Bay Area secured a staggering $5.1 billion in venture capital funding through 273 deals, solidifying its position as the primary hub for investment. This amount eclipsed second-place New York's $3.4 billion.
Despite New York briefly overtaking AI funding capital in Q4, the San Francisco Bay Area retained its hold on the top spot with an annual total of $9.2 billion across 291 deals in 2023, affirming its support for innovation and entrepreneurship. Key players in San Francisco, such as Sequoia Capital and Andreessen Horowitz, continue to drive innovation and support startups with strategic guidance and capital.
Client Story: Human Capital
VC firms understand that finding the right startup talent will make the difference between ordinary and extraordinary growth. That's why they refer their portfolio companies to Rocket to build out their organizations, from strong individual contributors to seasoned leadership.
Human Capital is one of Rocket’s many VC partners. As its trusted recruiting partner, we’ve helped scale teams at some of its top portfolio companies, including Elon Musk’s startup The Boring Company, and 1047 Games, one of its top gaming gaming startups. Our partnership was so successful that Human Capital connected us directly with 1047 Games, where we’ve helped the startup place more than 40 roles, increase its hiring capacity by 10x, and achieve an 85% close rate.
Challenges and Opportunities
Startups grapple with a host of challenges when it comes to recruiting and hiring top talent. From the allure of remote work to the fierce competition for skilled professionals, wading through the demands of recruiting requires resilience and strategic foresight.
The Bay Area's reputation for high living expenses poses a challenge for startups seeking to attract and retain talent. With an abundance of tech companies vying for top talent, competition is fierce and talent costs are high, even in an employer’s market. To stand out from the crowd, startups must cultivate a compelling brand, showcasing a unique culture, innovative perks, and opportunities for professional growth.
Despite the Bay Area's reputation as the global tech hub, startups face a shortage of skilled professionals, particularly in niche roles. Companies can invest in healthy and progressive hiring processes, offer training and development programs, and cast a wider net to recruit talent from other regions or countries.
While recruiting in the San Francisco Bay Area does come with challenges, the region is still ripe with opportunity for startups, with a high concentration of software engineers and world-leading tech talent, and the highest level of venture capital investment in the country. For startups that are setting up shop and recruiting tech talent in the region, the future looks bright.
Conclusion
As top tech recruiters in San Francisco and the Bay Area, we understand the nuances and conditions of the market. Our technical recruiters focus on fostering strong relationships and providing exceptional candidate experiences, while our proprietary AI technology finds hidden and untapped talent. Our tech recruiters engage 5x as many candidates in half the time. This means we focus on client and candidate experience, instead of low-value administrative stuff.
As the tech industry continues to evolve, Rocket remains at the forefront, helping startups with their recruiting needs at every stage of growth, from seed to IPO.
Connect with Rocket today to explore the best way to find and retain the top tech talent for your startup.
