opportunities & challenges for european tech employers

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Opportunities & Challenges for European Tech Employers

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Worldwide, there is a talent shortage in tech.European employers are also subject to this shortage: they have large numbers of vacancies and not enough candidates to fill them. The good news is that this gap between employer demand and jobseeker interest is shrinking in many markets. With data from Indeed, we can measure this decline and pinpoint where jobseekers are

interested in working, and in this report, we use these data to create an in-depth picture of the tech industry in Europe. With our findings, employers can better understand where opportunities in tech hiring reside—reaching more candidates with the right skills across the continent.

Tara M. Sinclair, PhD Chief Economist, Indeed

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Introduction The talent shortage in the European sector ....................................................................... 4

Section I Germany has the most tech jobs, but jobseekers prefer other locations ......................... 7

The gap between employer demand and jobseeker interest has been shrinking ............. 8

Section II Tech jobseekers in Europe are focused on a select few cities .......................................... 9

Section III UK and Ireland are top destinations for international jobseekers .................................... 11

English-language job postings receive 2X as much interest from international jobseekers ................................................................................................... 12

Section IV The Silicon Roundabout: a European tech success story .............................................. 14

Tech jobs aren't only located in London ......................................................................... 15

Section V The gap between employer demand and jobseeker interest in the UK .......................... 16

Can employers continue to close this gap and attract more jobseekers? ....................... 17

Which tech job is most popular among jobseekers? ....................................................... 18

About Us .............................................................................................................................. 20

Table of contents

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What is the state of employment in the European tech sector today? The public discourse on the topic is dominated by the skills gap: there are many openings for specialised technical roles and not enough people to fill them. The Confederation of British Industry (CBI) recently reported that more than half of UK businesses fear an imminent “skills emergency.” The CBI survey findings revealed that shortages are most prominent in sectors such as engineering, science and high-tech. The Institut für Wirtschaft (IW) earlier this year reported that 96 job types in Germany face a shortage of skilled labour and the tech sector is among the most affected. Across all sectors in the Netherlands, an average of 13.6% of vacancies were unfilled each quarter in 2014, while 21.9% went while 21.9% went unfilled in the Information and Communication industry, according to Centraal Bureau voor de Statistiek (CBS) data.

Building on the results of our latest global report “Beyond the Skills Shortage: How Tech Talent is Shaping the Economy”, this analysis aims to map the European tech sector, with its unique dynamics, in order to inform employers and jobseekers using real-time information of what’s happening in the labour market, and help them find each other at the right moment. It also includes a dedicated focus on the UK—Europe’s most successful tech market—with disaggregated data at the city level.

In the following pages, we’ll address these questions and more:

• Where are the tech jobs in Europe? And the jobseekers?

• Has the gap between jobseekers’ interest and employer demand for tech jobs increased or decreased?

• How international is the tech jobs market?

• What can employers do to make sure that they are reaching international candidates as well?

• What is the main European tech hub?

• How are other cities in the UK doing compared to London?

Today, companies of all kinds not only employ software programmers but also engineers, web developers, data scientists and many other types of specialised technical staff who work with software. Rapid technological advances are affecting every company and, as a consequence, employer demand for talent with highly technical computer and software skills is on the rise.

Over the past year, Europe has produced 13 “unicorns”—technology start ups that have reached a value of at least $1 billion, according to GP Bullhound research—suggesting that the continent is producing more heavy-hitting tech companies than ever before. According to the European

Introduction

The talent shortage in theEuropean tech sector

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Commission however, Europe invests almost one percentage point less of gross domestic product in research and development than the US, and 1.5 percentage points less than Japan. This contrasts with the fact that since 2000, the proportion of people employed in science and technology has increased in all the European countries considered in this study, with the highest relative increases in the UK and Ireland, two English-speaking countries with thriving international tech hubs.

This has taken place in the context of an increasingly global tech market characterized by the high mobility of specialised workers. Data coming from Indeed shows that jobs in the Computer and Mathematical field are between two and three times more likely to be clicked by international jobseekers than the average job in the US and UK. Europe faces fierce competition from US tech hubs: San Francisco, San Jose and other US tech hubs such as Seattle, WA and Austin, TX have international pull. According to Indeed salary data, the typical Java developer is

The share of the population employed in science and technology has been increasing (Index 2000=100)Source: Eurostat

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Introduction

2011 2012 2013

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paid 47% more on average in the US than in the UK. Thicker tech labor markets and higher density of tech firms allow tech workers in the US to enjoy much higher wages as a result of better job-to-person matches and higher levels of competition for talent. To a lesser extent, Europe also faces competition from emerging tech hubs in Asia and the Pacific region which are becoming more aggressive in attracting top tech talent.

We approached our research into software jobs in two ways. First, we looked at a list of job titles related to the creation of software and examined employer demand and jobseeker interest in these jobs—both in each country and from abroad—across a sample of European countries and cities.

Introduction

The job titles included in this study are:

.NET Developer Mobile Engineer

Application Developer Network Engineer/Developer

Data Analyst PHP Developer

Data Scientist & Big Data QA Analyst

Database Administrator Software Architect

Database Engineer/Developer Software Developer

DevOps Engineer Software Engineer

Front-end Engineer/Developer UI/UX Designer/Developer/Engineer

Java Engineer/Developer Web Engineer/Developer

Mobile Developer

The resulting analysis of employer demand and jobseeker search behaviors reveals the patterns of the tech sector in each country: what differentiates them and what makes them similar. Second, we looked at postings in the three non-English speaking countries of our sample and calculated a measure of how “international” job titles are based on the language used to advertise the job and the number of “clicks” coming from outside the country. The share of postings for different job titles in the software field employers advertise in English is changing across countries and this has implications for the number of people applying (clicking) to these jobs from outside the country. The final section of this report takes a closer look at job search and hiring for technical roles in the UK.

7 © Indeed

Looking at tech jobs postings and searches we can get a better idea of the availability of tech jobs, at the overall country level, across several European labour markets and in which countries jobseekers are most looking for tech jobs.

While Germany is the leader in terms of job opportunities in the tech sector, jobseeker interest seems to be more concentrated in Ireland and the UK—respectively the second and third countries for tech jobs availability, according to our measure.

Switching to our measure of jobseeker interest, in fact, the UK and Ireland are the two markets where we have the highest share of jobseekers interested in tech jobs. This contrasts with the relatively lower interest shown by jobseekers in Germany, notwithstanding the general availability of opportunities for tech roles in the country. This apparent disconnect might be related to possible language barriers which may be making the German tech sector somewhat less international, as we will see in the next sections.

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Germany UK NetherlandsIreland

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Tech job postings per million far outpace searches per million

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France

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Postings per million Searches per million

Section I

Germany has the most tech jobs, but jobseekers prefer other locations

8 © Indeed

The indicator measuring the gap between employer demand and jobseeker interest in tech jobs highlights other interesting trends as well. First, it tells us that employer demand for tech talent (as measured by the amount of tech jobs available) is well above the number of jobseekers interested in these roles in all the countries considered. The good news, however, is that this gap has been shrinking in the

last year in all but one of the countries we looked at. This suggests a convergence between the availability of tech jobs and the interest shown by jobseekers for tech roles. Germany seems to be the only country where the gap has slightly widened over time, which could be explained by the country’s rapidly growing tech sector—job openings have grown at a faster pace than jobseeker interest in Germany.

The gap between employer demand and jobseeker interest increased the most in Germany and decreased the most in the Netherlands

-40% -30% -20% -10% -0% 10% 20% 30%

The gap between employer demand and jobseeker interest has been shrinking

-50%

Germany

Netherlands

Ireland

UK

France

Section I

Per cent change from Q2 2013 to Q2 2015

9 © Indeed

There are more than nine million Java developers in the world and Java consistently ranks as the most popular programming language worldwide, according to the Tiobe index which measures popularity based on searches for programming languages on sites like Google, Yahoo, Baidu, and Wikipedia. Because Java is also the most popular programming language searched for on Indeed, we measured the number of Java jobs available in cities in each country to develop a list of national tech hubs. This gives us a list of one tech hub per country, with the exception of Germany, where Munich and Berlin show comparable levels of Java roles and are therefore both included.

Jobseekers who search for tech jobs in Europe are attracted to a few centers of tech employment, and that interest is becoming more concentrated over time. In 2013, interest in those centers was 1.9 times greater than interest for other cities in the countries considered. By 2015, it was 2.2 times greater.

Going a step further, we analysed employer demand and jobseeker interest for tech jobs in the main centers of tech employment in each country. The two English-speaking tech hubs—London and Dublin—come right after the two German tech hubs in the ranking of cities with the highest concentration of opportunities in tech. While Munich and Berlin seem to have an higher level of tech jobs concentration, they show somewhat lower levels of jobseeker interest for tech roles compared to London and Dublin. This confirms the pattern we observed at the country level—employer demand is outpacing jobseeker interest for tech roles to a greater extent in Germany than in the other countries we considered and the gap does not seem to be closing. As we will see in the next section, this might be related to the fact that Germany, while being a popular destination for international jobseekers, does not enjoy the “competitive advantage” in attracting foreign jobseekers interested in high-skill tech roles that the UK, Ireland and the Netherlands enjoy.

Section II

Tech jobseekers in Europe arefocused on a select few cities

10 © Indeed

Munich

Munich is Europe's leading center of tech employment

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Tech jobs per million, Q2 2015

Berlin London Dublin Amsterdam Paris

Tech jobseekers now search in tech hubs 2.2X more often than in other cities (Index: all cities = 100 in January 2013)

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All tech hubs All cities

January '13 July '13 January '14 July '14 January '15 July '15

In order to understand which countries are more appealing to international jobseekers looking for tech jobs, we studied the job searches coming from abroad. We found that the UK and Ireland are the two most desirable locations for international jobseekers looking for tech jobs, followed by France and the Netherlands. Even though the availability of tech jobs is higher in Germany than in those countries, there is only a slight difference between international jobseekers' interest in tech jobs compared to all jobs in Germany (see table below). This might be seen as a sign that the German tech sector is more oriented towards tech talent located within the country while being already a popular

destination for jobseekers interested in a range of other roles. On the contrary, the UK, Ireland and the Netherlands are the three countries where applicants from abroad are most likely to click on tech jobs than all jobs. Searches for tech roles coming from abroad on Indeed.ie and Indeed.nl are twice as common than searches for all jobst. The figure is 2.4 for Indeed.co.uk. This might reflect a more internationally oriented tech sector in those markets, where the English language may also be playing a role, as we will see in the next section. Employers in these markets can benefit from a tech talent pool that extends well beyond the borders of their countries.

International jobseeker interest in tech jobs compared to interest in all jobs

Share of international clicks for Computer and Mathematical jobs

Share of international clicks for all jobs

Ratio

UK 8.2% 3.4% 2.4

DE 5.4% 4.1% 1.3

FR 5.6% 3.7% 1.5

NL 5.4% 2.9% 1.9

IE 16.1% 8.2% 2.0

Section III

UK and Ireland are top destinationsfor international jobseekers

11 © Indeed

12 © Indeed

In order to understand how international the tech sector is in the non-English speaking countries we analysed, we created an indicator of how international are the main tech jobs postings related to software. Among our key findings:

• English is used most often in tech job titles in the Netherlands

• In all the countries studied, "Data Scientist/Big Data" stands out as a job title that only appears in English

Of the three countries here considered, the Netherlands turns out to be the most easily accessible to international candidates interested in tech roles thanks to the fact

that more than half of all tech jobs postings are advertised in English. As shown in the table on page 11, such postings receive on average about twice as many clicks from abroad compared to postings using the national language. The magnitude of this phenomenon is quite striking for Germany where one out of three clicks to tech job postings in English is coming from abroad.

Tech employers facing difficulties in filling their open roles may consider having their job postings in both the national language and English to make their job postings more attractive to jobseekers from abroad and to tap more effectively into this potential source of qualified candidates.

Section III

English-language job postingsreceive 2X as much interest from international jobseekers

w

Tech job titles % postings in German

Software Developer 91.5%

.NET Developer 80.0%

Java Engineer/Developer 75.0%

PHP Developer 73.6%

Application Developer 73.3%

Web Engineer/Developer 72.9%

Front-end Engineer/Developer 59.9%

Network Engineer/Developer 23.9%

Software Engineer 15.6%

Tech job titles % postings in French

PHP Developer 98.2%




Mobile Developer 95.3%

Network Engineer/Developer 93.3%


Software Engineer 39.7%

UI/UX Designer/Developer/Engineer 23.1%

Tech job titles % postings in Dutch

Application Developer 44.3%

Software Developer 42.5%



PHP Developer 15.6%



English vs. national language tech job postings

Java Engineer/Developer

Share of clicks from abroad

Job title in French/Dutch/German Job title in English Ratio

FR 9% 16% 1.8

NL 10% 21% 2.1

DE 14% 32% 2.2

13 © Indeed

14 © Indeed

The UK is home to Europe’s most successful and dynamic tech sector. Its center is the Silicon Roundabout in London, which is a symbol of the country’s ability to fuse tech with other industries such as media, finance, advertising and fashion. London’s high density, highly skilled workforce has set the city apart in recent years. The number of companies in London’s digital technology sector has grown by 46% since 2010, while the sector now employs close to 200,000 people, a 17% increase on five years ago, according to Oxford Economics.

According to data compiled since 2000 by GP Bullhound, the British investment bank, the UK has produced most of Europe's "unicorns"—companies valued at over $1bn—with 17 firms achieving this

distinction. British tech companies to join the elite club in the past 12 months are in sectors like fintech and fashion, where the UK is most competitive. Notable examples include Skrill, the web payments company recently acquired for €1.1bn, and Farfetch, the online luxury fashion store, valued by investors at $1bn in March. Figures from Dow Jones VentureSource, the research group, show the UK tech and digital groups receiving $1.9bn in funding in 2014, up from $1.1bn three years earlier.

As more employers are attracted to a city, competition for talent drives up wages over time. The culture and amenities that these companies foster often attracts more tech and knowledge workers to the location as well.

Section IV

The Silicon Roundabout:a European tech success story

15 © Indeed

When size is not taken into account, London stands out as the dominant tech hub in the UK in terms of raw volume of tech job postings, with almost one out of every three tech jobs in the UK being located in the city.

But when we control for size, a different picture comes into focus. The “tech jobs concentration" measure—which takes into account the population of tech jobs markets across different cities—helps us see where tech jobs are concentrated throughout the UK and gives us a

Where are tech jobs located in the UK?

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Postings for tech jobs per million, Q2 2015

comparable measure of the availability of tech jobs across different cities.

When size is controlled for, Cambridge and Leeds have a greater number of tech jobs per million than London, while Bristol, Manchester and Birmingham come right after. This should come as no surprise—employers in Cambridge and Leeds benefit from the world-class universities within their cities while also having significantly smaller urban areas that are still well connected.

Tech jobs aren't only locatedin London

London26.5%

Rest of UK73.5%

Section IV

16 © Indeed

Over the past two years, the gap between employer demand and jobseeker interest decreased the most in Cambridge and increased the most in Birmingham

Across the UK, there is a gap between the share of job postings in tech and the share of searches for those jobs. This talent is hard to find and there are not enough people with tech skills to meet employer demand.

Looking at the difference between jobseekers’ interest and employers’ demand for tech talent over time, we can see slightly different patterns across UK cities. Over

the past year, this gap has decreased in Cambridge and Manchester —a change that is beneficial for employers that now have more candidates to choose from. The gap decreased less in London and remained almost the same in Bristol. There was a slight increase in Leeds and Birmingham over the same time period, which is good news for jobseekers interested in tech roles who have seen the number of opportunities available to them increase.

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Cambridge

Manchester

London

Bristol

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Section V

The gap between employer demand and jobseeker interest in the UK

Per cent change from Q2 2013 to Q2 2015

17 © Indeed

For many employers, resolving this gap between job postings and workers to fill them will require locating new pockets of talent. When looking at where jobseekers are searching for tech jobs, we observe a much larger interest in the country’s main tech hub—London—as opposed to the rest of the country and this gap has been growing over time. This trend confirms London’s position as one of the most desirable destinations for people looking for tech roles.

Interestingly, while Manchester has been catching up in the last two years in terms of jobseeker interest with respect to the rest of the country, the difference between jobseeker interest in London compared to interest in Manchester remains sizable. This situation may be changing, however, as housing shortages in the capital city are driving up real estate prices and pushing many people out. Jobseekers might eventually find it less appealing to work and live in London to the advantage of cities with a rising—although still much smaller—tech sector.

Tech jobseekers are more interested in working in London in than the rest of the UK (Index: Rest of the UK = 100 in January '13)

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Can employers continue to close this gap and attract more jobseekers?

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Section V

18 © Indeed

In five out of the six cities we studied, Data Analyst comes out on top, followed by Web Engineer/Developer. Data Scientist/Big Data is the second most common job search in London and third in Cambridge. Cambridge is the only city where Software Developer is the most popular tech job search by volume. Web Engineer/Developer is present in the top five searches for all the cities, while PHP Developer only for Bristol. The composition of the most common searches ranking suggest a somewhat diverse talent mix looking for tech opportunities across

UK cities. While London and Cambridge would seem to be the most preferred destination for data scientists, the other cities tend to attract more the attention of Web Developers and Front-End Engineers/Developers. This may reflect differences in the skills mix demanded by employers.

By studying which areas of the tech industry candidates are most attracted to, employers can gauge where interest lies and how they might decrease the talent shortage over time.

Which tech job is most popular among jobseekers?

Section V

1 Data Analyst

2 Web Engineer/Developer

3 Network Engineer

4 Software Developer

5 Software Engineer

UKTop 5 most common tech job searches (Q2 2015)

1 Data Analyst

2 Data Scientist & Big Data


4 Java Engineer/Developer

5 Network Engineer

London

1 Data Analyst


3 Network Engineer

4 Software Engineer


Manchester

1 Data Analyst


3 Network Engineer

4 Software Engineer

5 PHP Developer

Birmingham

1 Data Analyst


3 Software Engineer

4 Network Engineer

5 Front-end Engineer/Developer

Leeds

1 Data Analyst



4 Front-end Engineer/Developer

5 Java Engineer/Developer

Bristol


2 Data Analyst

3 Data Scientist & Big Data


5 Software Engineer

Cambridge

19 © Indeed

20 © Indeed

Tara M. Sinclair, PhD, is chief economist at Indeed and an associate professor of economics and international affairs at The George Washington University. Her research focuses on examining historical patterns in data to understand both the current and past structure of the labor market and to forecast future movements. Under Tara’s direction, the Indeed Hiring Lab is developing original research using proprietary Indeed data to uncover exclusive insights into the labor market.

In addition to conducting her research, Tara is frequently invited to brief the media on economic and labor trends as well as offer commentary. She has been quoted in the New York Times, the Wall Street Journal, and the Washington Post, and she has appeared on CNN, C-Span, NPR, Fox Business, Bloomberg Radio and TV, and many other local and international news programs.

About the author

About us

21 © Indeed

The Indeed Hiring Lab is a global research institute committed to advancing the knowledge of human resource and talent management professionals worldwide.

Contributors Daniel Culbertson Eleanor Hooker Mariano Mamertino Ryan Sawyer

More people find jobs on Indeed than anywhere else. Jobseekers can search millions of jobs on web or mobile in over 50 countries. Each month, more than 180 million people search for jobs, post CVs, and research companies on Indeed, and Indeed is the #1 source of external hire for thousands of companies.

For more information, visit indeed.com.

About the Indeed Hiring Lab

About Indeed

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opportunities & challenges for european tech employers

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