Majority of tech leaders expect Silicon Valley to be eclipsed in next four years

12 March 2019 Consulting.us

58% of 740 leaders surveyed in in KPMG’s seventh annual Global Technology Industry Innovation Survey said that Silicon Valley won’t be the tech innovation center of the world in four years.

This is the first time in the survey’s history that global tech leaders said the southern San Francisco Bay Area wouldn’t remain the center of the tech world. But the insight isn’t that earth-shaking, as there has been an ongoing trend for tech-related firms to set up shop elsewhere in the past few years.

"The belief that Silicon Valley will be displaced as the leading hub underscores the continuing decentralization of technology innovation, spurred by investment in other cities and regions globally, as well as contributing factors in Silicon Valley," said Tim Zanni, KPMG Global and U.S. technology leader. "Several much-discussed factors ranging from the cost-of-living to an overmatched infrastructure to questions about corporate culture are contributing to the perception that Silicon Valley may not continue to dominate tech innovation in the coming years."

Basically, the rent is too high, people are tired of Silicon Valley 'tech bros,' and there’s too much traffic and not enough public transit. Companies are also probably eager to avoid California’s relatively high business taxes.

Cities outside Silicon Valley seen as leading tech hubs over next four years

That being said, survey respondents saw New York as being the top global tech innovation hub outside of Silicon Valley in the next four years – and New York’s cost of living isn’t all that great either. However, the city checks a lot of boxes on the list of elements KPMG says a city needs to have to be an innovation hub, which includes having a pipeline of skilled talent, an urban locale to attract millennials, positive demographic trends, research universities, available investment funding, and a history of successful startups.

However, the survey was conducted in December and January – before Amazon announced that it was backing out of its plans to put half of HQ2 (and 25,000 tech jobs) in Queens, NY. How much that would’ve put a damper on NYC’s ranking is tough to say, though. The city will likely do well on the innovation front, regardless.

Boston and Austin, meanwhile, rose up to crack the top ten on the list of predicted leading innovation hubs in the next four years, with the rhyming cities tied for ninth. Washington, DC went up to number 13, buoyed by the Amazon secondary headquarters project – which still has the go ahead there, at least.

Beijing ranked second after New York; Tokyo and London tied for third; and Shanghai and Taipei tied for fifth. Singapore and Seoul rounded out the top performers, at seventh and eighth, respectively.Countries that show the most promise for disruptive technology breakthroughsThe KPMG survey also found that other countries are closing the gap on global tech innovation leaders US and China. Though the US maintained its top spot as the most promising market for tech innovation and breakthroughs that have a global impact, it dropped its share of respondents from 34% last year to 23% this year. China remained in second, though its share dropped from 26% to 17%.

As such, while the US and China were voted the top two countries by 60% of respondents last year, only 40% voted for them this year – pointing to a perceived decentralization of tech dominance.

The UK rose to third place in the ranking (9%), displacing India, which fell to fifth and was tied with Singapore – holding a 5% share of respondents. Japan came in fourth with 6%, while Germany, South Korea, Israel, and The Netherlands rounded out the top ten with 4% apiece. 

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