I’m currently visiting Zürich for work, and there are many things that immediately differentiate it from the big American tech cities like San Francisco and New York. Some are nice, like the relative lack of catcalling and absence of heroin needles on the sidewalks. Others are not, like how much everything costs here, even by the former cities’ standards. This raises a larger question: why don’t big tech companies have much engineering in cheaper cities? There are many data centers spread out in rural areas, certainly, but not the software development and related jobs. And there’s no shortage of tech workers claiming that not even they can afford to live in the big hubs many of the tech jobs are located in. While a rise in rural tech has been supposedly championed before, not much has come of it. Why? I believe there are several factors at play.
One issue is that there’s a natural tendency for the big companies to have big offices. This makes it easier to keep multiple teams in close proximity for better communication, as well as transferring people to different teams when projects change as they so often do. If a project being worked on in a smaller office ends you want to be able to find new roles for them without layoffs, which both hurt the company’s image and lose institutional knowledge that they have. Larger cities can of course support larger offices. Larger offices are cheaper per-person as well; the much-touted benefits like free food are easier to distribute among a small number of large offices rather than the reverse.
A related problem is that of the labor pool. Opening an office is only feasible if people can be found to work there. The cheap areas being championed are generally the victims of long-term brain drain, making it difficult to start an office just from locals. Getting people to move there is difficult as well. I know I would not be willing to move to a small town in exchange for the promise of somewhat better purchasing power. That power is already extremely high and most of the benefits of living in a place like NYC or San Francisco cannot simply be bought. The exceptions to this are places like Austin and Atlanta, which have seen a tech influx recently. However this certainly does not apply to most of the US.
While this will draw no praise from the “ideological diversity” set, another problem is that the rural areas being touted are generally conservative parts of the US. They are governed by people actively hostile to many – including myself – who might move there. If you voted for a serial sexual predator, don’t be surprised when non-deplorable people want to stay as far away from you as possible.
And what if an office does work out and start expanding? Soon it’ll find other companies in the area trying to take advantage of the newly enlarged – and cheaper – labor market. As the market grows the tech companies will soon start dominating the area, drawing resentment from the locals as well as higher prices. Soon all the nice things that the company came for in the first place have sadly evaporated, destroyed by the very people trying to enjoy them. The smaller the city, the bigger a problem this is due to there being fewer people in other industries to balance things out.
Many of these issues aren’t a problem for smaller tech companies such as startups, but the labor supply problem is still there. In fact it’s even worse for them since they don’t have many existing employees from other offices to relocate, nor can they afford extensive internal training that big tech companies tend to have. Their best bet for survival and growth is to poach experienced people from the big companies with promises of lucrative equity if they succeed — but that requires big tech offices to draw people from in the first place.
Of course there is a labor problem in tech, but it can’t be reduced to just “open offices in cheaper areas”. Some of it can be ameliorated with expansion in places like Austin and Atlanta, but much cannot. A bigger issue is that of the cities themselves, which have tended to either ignore unaffordability problems or treat tech workers as “the problem to the solved”, creating a confrontational attitude that helps nobody.