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05.3

Talent Trends

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Impact of Covid-19 on the European tech job market

Data partner, Indeed, provides interesting insights into tech job trends on a country-by-country basis across Europe. The data explores changes in the relative level of tech job openings, the relative ease or difficulty of filling those roles, and changes in the search volume by potential candidates for tech jobs.

The data highlights that the impact of Covid-19 has varied significantly across the region. In certain countries, the impact of Covid-19 led to a contraction in the relative supply of tech jobs and large spikes in search volumes for new jobs, helping to ease the challenge of filling vacant roles for companies that kept roles open and could tap into pools of demand. In other countries, notably in Southern Europe, there are opposing trends visible in the data.

Indeed tracks the number of month-by-month open tech job postings relative to total job postings in a country, which serves a useful proxy for changes in tech hiring patterns. In other words, are tech jobs growing or shrinking faster relative to others? It is, therefore, also an interesting lens to use to explore the impact of Covid-19. What is noticeable across the board is volatility with wild swings up and down in the months since March 2020. In some markets, such as Portugal and Ireland, the number of tech job postings spiked massively relative to non-tech jobs, presumably as job postings in other sectors disappeared from the market due to more aggressive hiring freezes outside of tech positions. In others, such as Sweden, Denmark and, notably, the US, tech positions declined in volume relative to the broader job market. Also of note are the variances across countries in how the relative share of job postings evolved through the summer and into the second half of 2020. While tech postings remained at elevated levels in some, in others the relative share of tech jobs started to decline, presumably as more non-tech jobs started to come back to market.

Share of 'tech' job postings as % of total job postings by country in the last 12 months

Legend

  • Spain
  • Belgium
  • Portugal
Note:
'Tech jobs' included in the search for example: software engineer, programmer, application developer, UI/UX/graphic designer, web developer, frontend developer, backend developer, data scientist, business intelligence, IT support.

Indeed’s data also enables an interesting insight into the relative importance of tech as a share of total job postings across countries. While not shedding light on the absolute volume of tech job postings, it’s useful to pinpoint countries where tech’s role as a driver of the job market has elevated importance. This is most notable in Spain and Portugal, where the relative share of tech jobs is far higher than other European countries. It’s also interesting to observe how the impact of the pandemic has only served to underline this even more, given material share gains for tech jobs relative to the overall local job markets. In that context, it’s interesting to note how Portugal is succeeding in attracting global tech companies, such as Cloudflare, to open local offices. Cloudflare reasons for doing so included an attractive immigration policy, high standard of living, as well as logistical factors such as time zone and direct flights to San Francisco’ as key factors in their decision. This is the bar that other tech companies will expect if they are to be tempted to relocate.

Tech job postings per 1M job postings by country and by year

Legend

  • Oct 2017
  • Oct 2018
  • Oct 2019
  • Oct 2020
Note:
'Tech jobs' included in the search for example: software engineer, programmer, application developer, UI/UX/graphic designer, web developer, frontend developer, backend developer, data scientist, business intelligence, IT support.

Portugal has all the ingredients needed to create tech companies - besides being a country where people want to live, we have very good technical talent and universities. The limiting factor used to be capital and that changed in the last years.

The success of Talkdesk, Farfetch, Outsystems has inspired more people to create companies, captured the attention of investors that started paying attention to the local ecosystem and helped move the local investment landscape forward. We now have professional investors and independent VC funds like Indico, combining expertise and capital to help these companies scale.

Cristina Fonseca

Indico Capital Partners

Partner

Indeed’s data can be used to perform an analysis of how demand for tech jobs has evolved during 2020 relative to changes in demand amongst overall jobseekers. In other words, are there more or fewer searches for tech jobs conducted as a relative share of overall job searches carried out by jobseekers? For ease of comparison, the data is rebased to November 2019 to allow for a simple analysis across a 12 month timeframe and to see the relative increases in demand. The trends surfaced in the data are not uniform across all countries, but there are clear patterns that are replicated across a large number of European markets that provide a clear indication of how demand for tech jobs boomed from March 2020 onwards. This increase in the relative share could well be driven by increased demand from newly-available talent, but most likely reflects an increased interest in tech due to its perceived position as a Covid-19 beneficiary or a relative safe haven within a challenging job market. Interestingly, Portugal is one of few markets where the local demand for tech jobs has not skyrocketed.

Change in share of 'tech' job searches by country in the last 12 months, November 2019 rebased to 100

Note:
Examples of 'tech jobs' included in the search: software engineer, programmer, application developer, UI/UX/graphic designer, web developer, frontend developer, backend developer, data scientist, business intelligence, IT support.

The growth in overall demand for tech jobs is perhaps more visibly noticeable by isolating the year-on-year change in relative search volume for tech jobs across different countries. This highlights how demand from jobseekers in France and Spain has boomed in the past 12 months, relative to demand for all other non-tech jobs. It also, again, highlights how demand in Portugal has been more muted.

Change in share of tech jobs searches per million by country, October 2019 to October 2020

Note:
This data measures the relative number of searches per country for tech related job postings as a share of every million searches on the local Indeed site for each country. 'Tech jobs' include: software engineer, programmer, application developer, etc.

Whilst we have offices in London, Barcelona and Munich, we have seen the most significant transformation occur within the Spanish startup ecosystem in the last couple of years driven by few notable developments. First, the Spanish market has seen an increase in companies maturing with large exits and IPOs, signalling to European investors to look more closely at Spanish opportunities with great potential. Additionally, there is a larger amount of capital available locally - more than ever before - which enables companies to raise Seed and Series A locally first, therefore, making it more appealing and less risky for international investors who feel more comfortable participating at Series B and beyond.

What’s more, there is a stronger pool of founder talent, top management and staff stemming from three waves of Spanish entrepreneurship in the past two decades. Each of these waves have strengthened the ecosystem and nurtured startups by supplying invaluable talent.

Successful Spanish enterprises have also inspired a new generation of founders with great international track record to return to the region, bringing knowledge, expertise, language skills and the ambition to succeed internationally. Indeed, all these factors have led to the increased interest from international VCs.

Jordi Vinas

Nauta Capital

General Partner

To complete the dive into the impact of the pandemic in changing supply and demand dynamics for tech jobs, Indeed’s data also provides an interesting proxy for the relative supply-demand balance across countries by measuring the the share of tech jobs that are classified as hard to fill as a percentage of total tech jobs. Hard to fill is defined as a job that has remained advertised on the Indeed site(s) for more than sixty days. Portugal sees the highest share of tech jobs that are classified as hard to fill, according to Indeed, followed by the Netherlands and Belgium. On the other end of the spectrum, employers posting tech jobs in Denmark, the UK and Ireland are least likely to find their position hard to fill.

Share of tech jobs (%) that are hard to fill by country per year

Legend

  • Oct 2019
  • Oct 2020
Note:
Examples of 'tech jobs' included in the search: software engineer, application developer, UI/UX/graphic designer, web developer, data scientist. Hard to fill is defined as % of 'software engineer' job postings on the Indeed site(s) for more than 60 days.

Before Covid-19, European employers seeking to fill tech jobs had found it increasingly difficult with growing numbers of open positions classifed by Indeed as hard to fill, in other words that they remained open for longer than six months. In the UK, for example, there had been a 43% increase in the share of tech job vacancies classified as hard to fill between October 2018 and October 2019. For the year to October 2020, however, this trend has been completely reversed, resulting in a 23% decline in the share of tech jobs classified as hard to fill. Similar patterns are repeated in other countries, such as France and the Netherlands. Interestingly, the reversal has much much less apparent in certain markets, such as Portugal, Germany and Belgium, which indicate that it remains challenging to find the demand to fill the supply of available tech jobs.

Change in share (%) of software engineer job postings that are hard to fill, 2018-2019 versus 2019-2020

Legend

  • Oct 2018 to Oct 2019
  • Oct 2019 to Oct 2020
Note:
%-point change in % of software engineer jobs that are hard to fill in Oct 2018 versus Oct 2019 and Oct 2019 versus Oct 2020 by country. Hard to fill is defined as % of 'software engineer' job postings on the Indeed site(s) for more than 60 days.

It’s interesting to note that while most countries are ending the year with a declining trend in the share of tech jobs that are ‘hard to fill’, this only followed a further spike in the months of April and May that actually initially exacerbated the trend of recent years. 'Hard to fill' is defined as the share of software engineer job postings that have been on the Indeed site for more than 60 days.

Share of tech jobs that are hard to fill by country over last 12 months, rebased to 100

Legend

  • Spain
  • Belgium
  • France
  • Netherlands
  • Denmark
  • Portugal
  • Germany
  • Italy
  • US
  • UK
  • Ireland
  • Sweden

Building locally with an international mindset

Europe's billion-dollar companies are more likely to have internationalised by setting up office locations outside of their home market than their counterparts from the US. This is driven, for the most part, by a desire to increase the size of their addressable market by tapping into one of the world's most important and largest markets for consumer and enterprise spending.

Share of leading VC-backed European and Bay Area tech companies (%) with an international office footprint

Legend

  • International office location
  • No international office location
Note:
Based on a sample of VC-backed 132 European tech companies and 265 Bay Area tech companies that and have reached $B+ milestone, excluding Biotech. Based on data up to 30 September 2020.

Though there is likely a recency bias to consider given the fact that companies will typically only internationalise their office footprint after reaching a certain point in their journey, it's interesting to observe a notable downward trend in terms of the share of younger companies that have internationalised. One possible consideration is that more recent cohorts of companies are now scaling to billion-dollar valuations within their home markets simply because of the scale of the market opportunities that can be tapped as tech increasingly moves into gigantic industries, such as finance or health, that have the scale to enable companies to grow to huge outcomes without the need to internationalise.

Share of European, VC backed $B+ companies that have expanded to the US by founding year

Legend

  • Expanded to the United States
  • Did not expand to the United States
Note:
Based on a sample of 132 European tech companies that have reached $B+ milestone, excluding Biotech and Pharma. Based on data up to 30 September 2020.

The pandemic has offered us a great opportunity to be more inclusive than ever, due to the remote work culture that it reinforces. We all could see and leverage the potential of multi cultural teams across the globe going forward.

The pandemic has offered us a great opportunity to be more inclusive than ever, due to the remote work culture that it reinforces. We all could see and leverage the potential of multi cultural teams across the globe going forward. Our team at Future Females is distributed over 3 countries and 2 continents and we have always seen that as a big advantage. Now this is possible for many more companies and teams. So far I have not seen a lot of change but 2021 will be a completely new year in terms of structuring. We are hoping to see a positive trend of women starting businesses (partly due to COVID implications) and hence changing the landscape of business owners to a more diverse one.

Cordula Pfluegl

Future Females

Europe Director

Though caveated with an element of recency bias, it's also interesting to observe how younger cohorts of VC-backed $1B+ companies from the Bay Area are less likely to have expanded their office footprint into Europe versus those founded in earlier years.

Share of Bay Area, VC-backed $B+ companies that have expanded to Europe by founding year

Legend

  • Expanded to Europe
  • Did not expand to Europe
Note:
Based on a sample of 265 US tech companies that have reached $B+ milestone, excluding Biotech and Pharma. Based on data up to 30 September 2020.

The top 10 most popular countries for international office locations of European tech scale-ups is dominated by other European countries, most frequently Germany and the UK. Although companies have been slower to expand to the US, the large market opportunity presented by the US still means that it ranks by far number 1 amongst most popular location for international offices for European tech scale-ups. Other interesting locations such as Singapore and Australia are high on the list compared to other European markets that are closer geographically. It is also worth pointing out Spain ranking above France and the Netherlands.

Note:
Based on a sample of 132 European tech companies that have reached $B+ milestone, excluding Biotech and Pharma. Based on data up to 30 September 2020.

Meanwhile, English speaking countries take precedence for Bay Area scale-ups as well as India.

Note:
Based on a sample of 265 US tech companies that have reached $B+ milestone, excluding Biotech and Pharma. Based on data up to 30 September 2020.

Europe: a powerhouse for technical talent

Europe is home to 10 of the world's highest rank universities for computer science globally, including four of the top 10.

European universities among global top 50 in computer science and their global rank

Note:
Rank refers to position in global list of top 100 institutions for engineering and technology qualifications. Compiled by the Times Higher Education Supplement and includes 827 universities across the world.

The gender composition of Europe's leading engineering universities provides a validation that there is a strong pipeline of engineering talent that are women in excess of current employment level benchmarks in European tech.

Share of female students and rank of select European universities among global top 100 in engineering

Note:
Rank refers to position in global list of top 100 institutions for engineering and technology qualifications. Includes 1,098 universities across the world. Share of females refers to share of female students attending the university.

It's important to benchmark the gender composition of the European tech workforce. TalentUp, which has reviewed a sample of over 2 million unique European tech workers, provides such benchmarks across a range of different technical positions, enabling better insights into the distribution of the European technical talent pool by gender and role profile. Looking at the gender composition of software developers in Europe on a country-by-country basis, a number of countries stand out including three from the Nordics region who rank across the top 5 countries with the highest share of women software developers. On average, there are 3 women software developers for every 10 in Europe.

Share of software developers by gender in Europe

Real data on real salariesCombined Shape
Note:
Based on a sample of over 2M unique tech workers in Europe. Only countries with over 8,000 software developers included.

As a woman aware of diversity issues and committed to promote it, I also regret having difficulty recruiting women into the team!

I feel very lucky because everyone on the team is driven by this same desire to improve the way we produce food. We all have different backgrounds but each one of us wants to improve the society in our own way. It’s very motivating for the people who want to join our team. On the other hand, the agricultural sector and the R&D skills required at our stage of development are very specific (agronomy, robotics, mechatronics, etc.). Sometimes it takes a little time to find the perfect match, both interested in our mission, qualified and autonomous. As a woman aware of diversity issues and committed to promote it, I also regret having difficulty recruiting women into the team!

Alexia Rey

NeoFarm

Founder

Diving deeper into the gender composition across technical positions, there are clear differences where women are more equally represented than their men counterpart. The share of UX designers is almost split between men and women, but there's still much work to be done to close the gap across all categories.

Gender composition by tech position

Real data on real salariesCombined Shape

Legend

  • Men
  • Women
Note:
Based on a sample size of over 400k unique tech workers in Europe.

Beyond gender, we also looked at the overall number of software developers per country and found that, on a population-adjusted basis, Finland and Ireland have the highest number of software developers per 1 million inhabitants.

Number of software developers by country per 1 million inhabitants

Real data on real salariesCombined Shape
Note:
Based on a sample of over 2.6M unique tech workers in Europe. National population estimates obtained from the United Nations World Population Prospects 2020 database.

10 European universities made it to the top 50 engineering ranking. They are spread across the UK, Germany, Switzerland, and the Netherlands. The share of international students across these institutions remains above 30%, with École Polytechnique Fédérale de Lausanne ranking highest with three in every five students being international. The ability for universities to attract and retain talent is key to strengthen the depth of the tech ecosystem in Europe.

Europe's universities among global top 50 in engineer and share of international students

Note:
Rank refers to position in global list of top 100 institutions for engineering qualifications (general, electrical and electronic, mechanical and aerospace, civil and chemical engineering). Includes 1,098 universities across the world.

The strength of the European talent pipeline and the role that its globally competitive education system plays in feeding it is captured by an interesting analysis, conducted by Marco Polo, and highlighted in The State of AI Report (see link in notes), that shows that 22% of top-tier AI researchers completed their undergraduate degree in Europe, a number that is second only to China.

Where do top-tier AI researchers come from?

Source:
Link to the full reportCombined Shape
Note:
Country affiliations are based on the country where the researcher received their undergraduate degree.

Europe, however, has a leakage issue when it comes to top-tier talent. While 22% of the world's leading AI researchers studied in Europe, just 14% of them now work in the region. This equates to a leakage equivalent to a third of the relevant talent pool. The biggest beneficiary of this is the US. While only 20% of top-tier AI researchers gained their undergraduate degrees in the US, 59% of them now work in the US thanks to the strength of the US tech ecosystem in absorbing world-class talent.

Where do top-tier AI researchers work today?

Source:
Link to the full reportCombined Shape
Note:
Country affiliations are based on the headquarters of institutions in which the researchers currently work.

Drilling down into the European talent pool to the country level (though analysis notably has excluded the UK), France is the biggest source of top-tier European AI research talent based on where they received their undergraduate degree with 26%, followed by Germany (15%) and Italy (12%). Interestingly, Belgium makes it into fourth place with 6% of top-tier European AI talent graduating from the country despite its smaller relative size.

Where do top-tier European AI researchers come from?

Source:
Link to the full reportCombined Shape
Note:
Country affiliations are based on where the researchers received their undergraduate degree within Europe. The UK is not included in Europe.

France also ranks highest both in terms of where top-tier AI researchers in Europe work today with 31% of all top tier AI researchers based in Europe working from France, followed by Germany with 17% and Switzerland with 15%.

Where do top-tier AI researchers in Europe work today?

Source:
Link to the full reportCombined Shape
Note:
Country affiliations are based on the geographic location of the researchers within Europe, not their institution’s headquarters. The UK is not included in Europe.

Although Europe as a bloc has what it takes in terms of a robust expertise of some of the best scientific researchers in the world and a vibrant startup ecosystem, the continent is still lagging behind China and the US in its AI advancements. This is largely because the talent and resources are scattered across the various European countries.

At this point, there is no denying the fact that Artificial Intelligence will continue to be a dominant force in how global competitiveness and productivity shapes out. Although Europe as a bloc has what it takes in terms of a robust expertise of some of the best scientific researchers in the world and a vibrant startup ecosystem, the continent is still lagging behind China and the US in its AI advancements. This is largely because the talent and resources are scattered across the various European countries. Thankfully, many European leaders are raising their ambitions to make the region more AI competitive. Creating ethical or ‘trustworthy AI” is a major objective here and I believe this is one area in which Europe will have an advantage over the others because it already has an effective regulatory system.

Being someone who works with start-ups, I can say that entrepreneurs in the tech industry especially those who incorporate AI technologies in their operations are well supported, even though there still exist some disparities along gender lines in who gets funding. But generally, Europe is poised to give China and the US a run for their money when it comes to AI and the startup ecosystem will be a significant contributor to the realization of that goal.

Moojan Asghari

Women in AI

Co-Founder