Why Major Technology Companies and Industry Leaders Are Moving Away from Silicon Valley
Why Major Technology Companies and Industry Leaders Are Moving Away from Silicon Valley
There is a frequently reported narrative about major technology companies and industry leaders leaving Silicon Valley, but the reality is a bit more nuanced. It is important to understand that moving headquarters to another state is not the same as 'leaving California.' For example, while companies like Oracle and Hewlett Packard might change their primary bases of operations, they do not necessarily close all of their campuses or lay off all California employees.
Despite these movements, there does not seem to be a significant increase in people actually moving out of the state. This phenomenon can be better understood by examining the cost factors involved.
The Move Away from Silicon Valley: Cost Factors
There are several states with lower corporate or personal tax rates and simpler tax structures compared to California. These lower costs have a significant impact on the operational expenses for companies. Additionally, the corporate landscape might differ slightly for Delaware residents, but they do not pay taxes on the capital gains from the sale of corporate shares, unlike California residents who do.
For growing companies, the primary questions revolve around finding talent cost-effectively and determining the most ideal locale to set their salary baselines, especially in a world where remote work has become a viable model on a staggering scale.
Insights from Industry Leaders
Based on my experience and research, the following points might provide valuable insights:
Companies that do not NEED to be in Silicon Valley should seriously consider relocating. The operational costs in the San Francisco Bay Area, including San Jose and the Silicon Valley, are extremely high. Moreover, the quality of living is quite poor compared to other regions in the USA and EU. Many companies are relocating to find less expensive real estate for office space and to reduce employee salaries, as a living wage in the San Francisco Bay Area is much higher than in states such as Nebraska, Kansas, or Texas. The concept of remote work (working from home or telecommuting) has proven itself, making it feasible for companies to operate on a large scale with fewer physical offices. This has led to a reduction in the need for as much office space.Examples of Relocation
Several notable companies have already moved their headquarters, likely due to cost-saving measures. For instance, more companies are moving their operations to states like New Mexico, Texas, and Florida, where the cost of living is significantly lower.
Conclusion
Ultimately, if your company doesn't NEED to be in Silicon Valley and isn't a monopoly, you should seriously consider relocating. The high operational costs and poor quality of living make it a less attractive option compared to other areas. However, it's crucial to weigh the benefits and drawbacks before making such a significant change.