The San Francisco Bay Area has consistently been ranked number one in the United States for quality of living. It’s also widely considered to be one of the best places for young and hungry software salespeople to establish and grow their careers. As a result, it has long been a tech powerhouse that is only getting stronger.
In fact, in a 15-mile radius you’ll find six out of the top ten technology companies in the world and the largest amount of highly success talent pools to choose from. This abundance of sales talent has caused many of the world’s leading software companies – as well as start-ups- to choose San Francisco as their home.
What does this mean for software sales hiring?
It’s the simple case of software companies moving to where the sales talent is versus trying to get them to come to you.
In a recent study by the Brookings Institute, it shows that no city has created more jobs in the digital world over the last decade than the San Francisco Area. Not even the larger Silicon Valley neighbor San Jose.
For organizations on the hunt for software sales talent, candidate pools in San Francisco are large. But, competition is also heating up. To help employers grow their San Francisco sales forces, here’s statistical look at the San Francisco Bay Area, specifically reviewing:
- Software employment trends
- Regional growth forecasts
- Sales Hiring challenges
- Salary trends
- Employee expectations
Here is our statistical look at the software sales hiring landscape of San Francisco:
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San Francisco is at the center of Northern California’s Bay Area, a diverse region that’s home to almost nine-million residents. Not only is San Francisco centrally located in Northern California, it’s also the state’s center both financially and culturally despite it not being the largest city in the region – with a population of 800 thousand. The title of largest city in the Bay Area goes to San Jose at 950 thousand.
The San Francisco Bay Area was originally settled as part of the Northern California gold rush in the mid-1800’s. However, most people remember the region for the role it played in the “Summer of Love” in the 1960’s and 1970’s and the birth of the anti-war and hippie movement.
A more recent “gold rush” in the 1990’s, known as the dot-com boom. Along with the history of silicon and computer software businesses in the area, San Francisco was cemented as the undisputed tech powerhouse of America. During the dot-com boom, San Francisco’s gentrification accelerated quickly. This helped create the culture we see today in an affluent liberal city that is known for its inclusiveness.
When looking at the software sales hiring landscape in San Francisco, we must include surrounding cities as they’re directly connected by transit and highways. This allows more than 265 thousand residents to commute into San Francisco every day. The close proximity of Oakland to the west, along with high rental rates since the dot-com boom, has lead to a booming start-up community just across the bay, and in turn, attracting top talent.
To the south of San Francisco, there’s Silicon Valley, which includes regions up to the border of San Jose. The regions include Redwood City, Palo Alto and Mountain View. During the 1960’s and 1970’s, this area south of San Francisco was the original home of America’s cutting-edge semiconductor and computer chip manufacturers, or silicon chips. Hence the name Silicon Valley. This made it a natural home for the high-tech companies of the 1970’s and 1980’s, including Atari and Apple.
Today, four of the ten largest software companies in the world are located just south of San Francisco.
- Oracle, second only to Microsoft in software sales at 40 billion and is located in Redwood City
- Symantec, with 6.6 billion
- VMWare – sitting at 6 billion – calls Palo Alto home
- Intuit – at 4.6 billion – are located in Mountain View
The region is also home to two of the nation’s top 15 universities: Stanford and UC Berkeley. Both schools have outstanding computer science and engineering programs, which produces and attracts young talent for today’s software industry. This also facilitates the replacement of the baby boomer population as they retire.
In fact, these universities produce more than ten thousand new science and engineering graduates every year. This is part of the reason more than 46 percent of adults in the region hold a bachelor’s degree and 21 percent hold a graduate degree. This makes the region America’s most well-educated – with a minimum of a million people.
The standard of living in the area is high and people pay for it. This includes any candidates you recruit through your software sales hiring efforts. San Francisco ranks number 1 in the United States for quality of life, but it’s also the second most expensive city to live in. This results in longer commutes and overall travel times.
The appeal of the San Francisco Bay Area is easy to see due to its: desirable climate, the low unemployment rate of approximately 2.6 percent – with the national average being 3.9 percent – and wealth of culture.
However, it’s not perfect for everyone. As tech industries and young people have begun to dominate the area over the last decade, families are leaving San Francisco in search of a more affordable family life. This has led to one of the lowest rates of family households in the US at 44 percent, with 56 percent considered non-family households.
New York comes in at 61 percent family housing to 39 percent non-family. The national average is 66 percent family to 34 percent non-family. For organizations looking to bring on top performing sales executives who are young and hungry, this is perfect. For sales reps that have established families, organizations will have to provide a cash incentive for relocation or agree to remote sales roles.
Public transit fares are significantly better than most cities, ranked as the number 2 transit system in North America trailing only New York City. An extensive short and long-haul rail network connects the entire bay area from north of San Francisco to the south of San Jose, which consistently ranks the region very high in transit coverage to job access.
The high quality of living, access to transit and education, has created a large pool of qualified candidates. It’s also one of the main reasons software companies choose the area. As more tech companies move in, so do more young candidates, and the cycle continues.
Software companies take many factors into consideration when deciding where to locate. The main reason businesses will choose to call the San Francisco Bay Area home is the supply chain. There’s a large qualified workforce, STEM education, related businesses to build relationships, and over 70 percent of technology-focused venture capitals are found in this region. For financing factors alone, more than 150 major software specific companies are headquartered in the bay area.
Although not specific to software companies, this Silicon Valley heat map shows that there are two main areas where tech companies are choosing to operate:
- The city of San Francisco
- Silicon Valley stretching from San Mateo south through Palo Alto, Mountain View and North San Jose.
With the extremely high cost of living throughout the region, the workforce is facing some real pressures. The truth is that when looking at where software salespeople live, the answer is often: wherever they can.
“Silicon Valley has some of the highest housing and living expenses in the world thanks to its booming tech industry. Between 2010 and 2015, tech jobs grew 24.5 percent, leading to an influx of talent to the Bay Area. But housing has grown only 2.6 percent over the same period, sending prices shooting through the roof. Real estate database firm Zillow estimates a single square foot in the city costs US$495 today; the average rent is triple the United States average at US$3,390 a month.”
This has led to some unique solutions, including companies like Facebook paying employees up to ten thousand dollars to move closer to their Menlo Park campus. Tech companies are learning that shorter commutes lead to better lives and more productive workers.
Housing for tech workers is a long-term problem in San Francisco and area but this hasn’t stopped companies from calling the area home. San Francisco continues to take the number one spot on a list of cities of the future. It’s also why every year you’ll find roughly 20 companies from the Fortune 500 list headquartered in this region. Tech companies like HP, Intel, Apple, Cisco, and Google dominate the list.
Market and Business Landscape
In late 2017, the San Francisco-San Mateo area posted its best jobless numbers ever at only 2.2 percent unemployment. The East Bay and Santa Clara region hit an almost 20-year low, matching rates set in 1999.
Despite the great unemployment numbers, job growth in the region is down over the last couple of years. The Bay Area has had job growth of 4 percent in 2015, 3 percent in 2016, and below 2 percent for 2017. For tech jobs specifically, the growth is larger, but also slowing from 6.4 percent in 2014, to 6 percent in 2015, to 3.5 percent in 2016.
Don’t let the growth numbers fool you. San Francisco and Silicon Valley is still the top destination for tech start-ups. High rents are forcing companies to look elsewhere, but for now, Startup Genome’s 2017 report has them ranked number 1:
“28% of the global investments into Early-Stage startups are captured by Silicon Valley companies. Its top contenders are NYC and Beijing, which capture about 11% each. Silicon Valley also has the highest Global Resource Attraction score at 21%.”
This supply chain of talent and financing makes the area compelling despite the cost challenges.
To no one’s surprise, tech industries will continue to be a driver in San Francisco for the foreseeable future. They’re expected to continue to outgrow all other industries in the region and as a result, the need for software sales reps will also continue to grow.
It’s not the only industry that’s growing. San Francisco is the second largest financial hub in the US, which makes sense when you consider that the city is home to the largest venture capital industry in the country. While the high cost of the Bay Area has relocated some start-ups, the money is still located here.
Due to the predicted job growth, the population is expected to grow 20 percent by 2035 and more than 80 percent of that growth is expected to happen in just 20 percent of the San Francisco metro area. Investment is already underway on 7 large billion dollar projects that are expected to completely transform the region and increase density.
Population growth in the tech industry will boost the hospitality, health and construction industries. Adding density has already led to record costs in the building industry creating a boom of its own.
The Bay Area currently has more than 3500 unfilled software sales jobs on Indeed, second only to NYC at 4300 – similar ratios can be found on Glassdoor and LinkedIn. The region is a powerhouse for tech jobs, and software sales is no exception.
Software Sales positions are available at a variety of levels, including:
New York has around 20- 30 percent more openings due to being three-times the size of the Bay Area. But, the average salary offered is higher in the Bay Area, partly because there are significantly more jobs per capita.
San Francisco is also ranked as the number one city in the country where vacant jobs are difficult to fill. Software and technical sales jobs make the task of recruiting new talent difficult. These qualified candidates are some of the most difficult to find and this delay can result in significant dollars lost:
“Paycor Inc., which sells cloud-based software for human resources and payroll management, said it would have forecast $2 million more in 2015 revenue if it had hit it’s 2014 hiring goals for new sales reps in 2014. The time spent bringing new reps up to speed means the company doesn’t see the full benefit of their productivity until 12 to 18 months into their tenure.”
This all sets the stage to explain the demands on hiring for software sales in the Bay Area. A sample of Software Sales jobs on GlassDoor often include qualities you may not have traditionally found:
- Analytical/Mathematical Acumen – ability to analyze sales data
- Analyze data from multiple sources to uncover opportunities
- World-class interpersonal and communication skills to make complex contractual, technical, and financial details sound simple
- Able to work cross-functionally during the sales cycle
The last point may be the most important. Quite often, jobs now require a deep knowledge of the technical aspects of the business. The salesperson no longer defers to a team to do so for them.
Lastly, experience is the number one request that is consistent on almost every post. Usually with direct knowledge of cloud services, SaaS, and B2B solutions.
The Bay Area, on average, will have the highest salary offerings for software sales positions. It goes without saying the top software sales jobs are located where the top tech firms call home. In recent years, Forbes looked at the companies that compensated their sales force the best, and every single one of them is in the software business. And, 80 percent have their headquarters or a satellite office in the Bay Area. Business Insider notes that in Enterprise Software Sales, attracting the top reps will cost you top dollar.
In fact, an Oracle sales rep has an average base salary of 110 thousand dollars and an on target earnings potential of 250 thousand dollars. However, there are some people in the company who are expected to earn over 500 thousand dollars. For more senior level roles in these organizations – such as a VP of Sales – they’re earning an average of 300-400 thousand dollars per year.
None of this is surprising when you look at the Bureau of Labour Statistics. Sales jobs in the region will have a salary approximately 50 percent higher than the national average. According to their latest report, Sales Representatives in technical and scientific fields are averaging 100 thousand dollars annually. Sales Engineers can expect to make 154 thousand dollars annually. This includes all fields beyond just software.
To drill down and look at software sales jobs specifically, salary aggregators give us a more accurate look. According to Paysa, the average salary for software sales reps, managers and engineers in the Bay Area is closer to 167 thousand dollars annually.
There are a couple challenge factors when hiring for software sales positions in the San Francisco Bay Area. High living costs, high salaries and high demand for employees are all major issues. However, the benefits of locating your business in an area with the highest talent pool outweighs the negatives. The Bay Area certainly fulfills that requirement for software sales jobs.
The region is also shifting where jobs are located within the Bay Area, which is posing a new set of challenges for the companies looking to hire the best talent here.
Silicon Valley is very crowded, and the shift in demographics is making it harder to attract top talent to the southern Bay Area. Those workers prefer life in San Francisco over the valley. Traditionally growth has always been strong in Silicon Valley, but now you’re seeing numbers dramatically rise in the city as companies create a San Francisco employee strategy to deal with these challenges:
“But the Silicon Valley of old is running out of space and many millennials, the new generation of knowledge workers, want to be closer to, if not in, a city with nightlife and culture. That’s led the likes of Google, Yahoo, Cisco and others to open big offices in San Francisco. Spurred by tax incentives, Twitter set up its headquarters in the City by the Bay in 2006, and there it remains.”
The Bay Area is still experiencing tech growth, but the growth is expected to shift towards the city of San Francisco from Silicon Valley. As this shift occurs, it puts further pressures on rents and forcing businesses to make room. For example, Blue Shield is moving its headquarters from downtown San Francisco to Oakland. The same is true for Uber. All this shuffling around is what is allowing room for companies like Apple to move in.
The other major challenge is that other regions are starting to attract the talent. As you saw in the Genome Startup report, many cities are nipping at the heels of the bay area for the tech crown. This has allowed for start-ups to not only spread across the country but also the globe. Recent studies show as many as 40 percent of Bay Area employees suggesting they’d like to leave the region. It’s important for employers to tackle the issue head-on.
WalletHub recently completed their comprehensive job market scoring for 150 of the most populated US cities across 17 market indicators including unemployment, job satisfaction, average salary, job security, benefits and more, and listed San Francisco at number 2. Fremont on the east side of the bay area at number 19. Silicon Valley doesn’t make an appearance until number 31 with San Jose.
The region will continue to dominate the software and tech industry for the foreseeable future. Experts suggest that employers should expect the software sales hiring landscape to remain very competitive.
Here are some additional articles about hiring landscapes in similar markets:
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