Scramble for AI talent puts cities in the spotlight

Businesses are increasingly working toward using artificial intelligence for everything from streamlining repetitive tasks to speeding up product development.

So much so that a recent IBM Institute for Business Value (IBM IBV) survey found that four in five executives say generative AI will change employee roles and skills.

Yet despite AI job posts on LinkedIn more than doubling in two years, 87% of executives surveyed by global online learning platform edX, say they’re struggling to find people with the necessary skills. More than three quarters claim their business strategies are being disrupted as a result.

“Tech talent was already in high demand and low supply, but a host of new AI roles now need to be filled across all sectors,” says Molly Goodliffe, Senior Consultant for JLL Work Dynamics. “Additionally, there’s a need for specialists that can deal with AI related issues such as ethics and cybersecurity.”

In fact, a WEF 2023 Future of Jobs study, suggests demand for AI and machine learning specialists is expected to grow 40% in the next five years. And with generative AI productivity gains potentially raising global GDP by 7%, the stakes are high for businesses.

“For those who want to avoid missing out, it means identifying which cities will be able to provide the future talent pipeline they need and what this means for corporate location strategies,” Goodliffe says.

Emerging AI hubs

The U.S. remains the top destination for AI talent, according to think tank MacroPolo. Firms benefit from relaxed AI regulation, while President Joe Biden’s Chips and Science Act promises $280 billion of investment into the related semiconductor industry.

The San Francisco Bay Area, in particular, has emerged as an AI superhub, JLL research found.

“The Bay Area leads the way in AI venture capital funding with over $120 billion secured since 2018 alone,” says Chris Pham, Senior Research Analyst at JLL. “We’ve identified a total of 1,223 AI firms headquartered there, including OpenAI, SandboxAQ Nuro and Anthropic, to name but a few.”

He adds that Seattle and Boston have emerged as secondary AI hubs, with both large firms and numerous tech start-ups, gravitating towards existing tech talent and the plentiful streams of local college graduates.

The UK is also bidding to compete in the global AI race seeking to position the country as a leader in the safe regulation of the technology.

London has been home to DeepMind, Google’s largest AI research division, since 2019, thanks in part to a permissive regulatory environment, while ChatGPT Developer OpenAI, recently selected the city as its first international hub location, citing an opportunity to attract world-class talent.

Goodliffe says people with AI skills or those aspiring to careers in tech will naturally follow the industry’s big players. “Cities with tech clusters become magnets for other companies and start-ups. In turn, this attracts investment, creating fertile breeding grounds for expertise – so it’s really a virtuous circle.”

“London is renowned for its universities, leading to a deep data science talent pool,” she says. “As a buzzing multi-cultural city, it also attracts people from around the entire world, who want to live and work there.”

Thinking strategically when location planning

When it comes to real estate planning, how do firms go about predicting the next hotbed of AI talent?

“Not all firms can relocate to London or San Francisco, nor would they want to, as acute demand puts labor costs through the roof,” says Goodliffe.

Instead, she says it’s about doing research to identify cities creating the right conditions for the next wave of AI talent to flourish.

Government policies, educational initiatives, partnerships or investment in AI are all factors that indicate long term commitment to nurturing a future pipeline of suitable skills.

Take Slovenia’s national program Purity, which has a budget of €100 million ($106 million) and aims to promote the development and use of AI. Ljubljana, the capital city, is also home to the UNESCO International Research Center on Artificial Intelligence (IRCAI), established to advance AI in line with the UN’s Sustainable Development Goals (SDGs).

“Secondary markets yet to be saturated may well offer less competition and lower-cost AI talent, plus opportunities for outsourcing,” Goodliffe says.

Poland, UAE and Egypt are among those who have already implemented national AI strategies and allocated budget to educational reform aimed at upskilling populations to work with AI. In Germany, universities in Berlin and Munich now offer several AI masters courses, and their technical institutions are regarded among the world’s best for broader computer science.

While location is one factor, Goodliffe says it’s important to remember that future AI talent may be found working remotely outside core metropolitan areas.

“We’re looking at a new dynamic with different generations entering the workforce who place greater emphasis on wellbeing and work-life balance,” she says. “Employees are likely to want greater freedom over when and where they work, especially with the productivity gains that AI itself is supporting. It means finding the talent is one thing, but keeping it is another.”