By Isabelle Bousquette

Nearly five years after Austin, Texas, became a darling of the tech industry, luring companies out of California with the promise of lower taxes and a better quality of life, the city is now bleeding tech talent that is flowing back to the coasts.

A new report from venture-capital firm SignalFire shows that in 2024 Big Tech employment declined 1.6% in Austin, and startup employment fell 4.9%. Tech employment in Dallas and Houston also declined, along with cities like Denver and Toronto. Tech employment grew, on the other hand, in New York and San Francisco.

It is a shift from five years ago, when Texas seemed like a growing Sunbelt beacon for tech, luring companies like Tesla, Hewlett Packard Enterprise and Oracle from California, and inspiring a number of remote tech workers and startups to follow them. But many of those companies have since laid off workers and Oracle actually relocated from Texas to Nashville, Tenn.

"I think that promise was never realized," said Asher Bantock, SignalFire's head of research. "This idea that it would become a new startup hub didn't materialize."

Return-to-office requirements combined with the burgeoning artificial-intelligence industry centralizing in Silicon Valley drew workers back West, while Austin's fluctuating living costs and outdated infrastructure left new transplants frustrated, Bantock said.

Gabriel Farid Guerra said he was extremely underwhelmed after moving to Austin from New York in 2022. Working a completely remote job at the time, he said he signed a one-year lease in the city, chasing the idea that it was "the new, booming U.S. tech hub."

Compared with New York and San Francisco, he said, tech events were harder to find, the quality of events was lower and opportunities for new roles were sparser. Public transit also left something to be desired, he said.

He broke his Austin lease after six months, and after bouncing to Boston and Washington, D.C., Guerra moved to San Francisco. He recalled that when he was living in D.C., he was asked in which regions his then-employer, startup Antithesis, should promote its software product.

"They gave me a list of cities and asked me about Austin, and I said, 'No, not Austin. It's kind of dead.," he said.

Reza Khosravi, a startup founder, relocated in 2021 from San Francisco to split his time between Dallas and Austin. He found the move to be a big culture shift. Innovation and diversity are deeply ingrained in Silicon Valley culture, he said, adding, "I did not find that in Austin."

AI brought him back to San Francisco, where the networking and learning opportunities are unmatched, he said. SignalFire's numbers show that Big Tech employment in San Francisco grew 1.8% in 2024, while startup employment grew 0.8%.

Thom Singer, chief executive of the nonprofit organization Austin Technology Council, said Austin remains a compelling tech city and believes its best days lie ahead. The city is improving infrastructure and fluctuating costs of living are stabilizing, he said. While the scale of opportunities and the AI hub in San Francisco can't be denied, Austin has a unique sell, and it isn't trying to compete with the coasts, he said.

"You can't view a short-term slowdown following unprecedented growth as the end of the story," he said.

New York also is drawing talent, fueled by an influx of AI companies that aim to sell to large enterprises. Big Tech employment in New York grew 2.2% in 2024, while startup employment grew 3.7%, according to SignalFire.

LinkedIn's data tells a similar story. From May 2024 to April 2025, the migration of tech, information and media workers from San Francisco to Austin decreased 23%, compared with a year earlier. New York to Austin moves decreased by 11% over the same period.

But workers are still moving to the Sunbelt, said Kory Kantenga, head of economics for the Americas at LinkedIn, and some of the workers leaving Austin are staying nearby in cities like Dallas.

"People are putting down roots in these regional tech cities all across the country and I think that's frankly good for America," said Julie Samuels, president and CEO of Tech:NYC, a nonprofit advocacy group for New York's tech sector.

"But people who want to ride the AI wave, people who are really ambitious, who are trying to build big companies, those people are really attracted to the coasts right now," she added.

Write to Isabelle Bousquette at isabelle.bousquette@wsj.com

(END) Dow Jones Newswires

May 20, 2025 12:14 ET (16:14 GMT)

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