Wayfair, Amazon Led Boston Tech’s 2015 Hiring Binge—What’s Next?

Boston-area software companies just capped off their busiest year of hiring since 2012, but there are signs of a possible slowdown on the horizon.

Local digital-tech companies added approximately 755 net new jobs in the fourth quarter last year, according to the most recent quarterly study of local data compiled by John Barrett, a Boston-area partner with executive recruiting firm On Partners. Overall in 2015, Boston’s tech sector posted its strongest annual hiring gains since Barrett began tracking local data in 2012.

“The market continues to be unbelievably hot,” Barrett says in an interview.

Barrett tracks data from about 200 Boston-area software companies—primarily in consumer Web, small business software, advertising and marketing tech, and payments—that employ at least 10 people. His statistics are gathered by searching LinkedIn for the number of locally based employees working for those tech companies. That means the data are not comprehensive—some employees might not update their LinkedIn profiles in a timely fashion, or might not even have one. But Barrett says his data are usually within 5 percent of official hiring numbers.

His survey also tracks tech hiring in New York, where digital companies added about 1,720 net new jobs in the fourth quarter, but full-year hiring was at its weakest since 2012.

In recent quarters, the bulk of Boston tech hiring has come from a few dominant employers, Barrett says: Wayfair (NYSE: W), HubSpot (NYSE: HUBS), DraftKings, Amazon (NASDAQ: AMZN), and Google (NASDAQ: GOOG). The first three are homegrown companies, while Amazon and Google are based on the West Coast but have been beefing up their East Coast operations. The pair of tech giants made On Partners’ top-10 tech hiring lists in both New York and Boston in three out of four quarters last year. They were the only companies to crack the top 10 in both cities in 2015.

Boston tech hiring, 4Q 2015
CompanyNet new jobs
1. Wayfair254
2. Amazon81
3. HubSpot52
4. TripAdvisor32
5. CarGurus29
6. Google26
7. DraftKings20
8. Virgin Pulse19
9. EverTrue16
10. Salsify16
Source: John Barrett

Wayfair, the home goods e-retailer, has led the Boston pack in recent months. It added 254 net new jobs in the area in the fourth quarter, after posting a similar increase in the previous quarter, Barrett says. The next-highest hirer in the fourth quarter was Amazon, which grew its local headcount by 81 people.

Wayfair has been expanding in other locations, too—in February it announced about 1,000 new jobs in Maine and its intent to hire 450 people in Texas. “They’re just a machine,” Barrett says.

Still, he is concerned that much of the hiring in Boston is “concentrated in relatively few companies.” “You would much rather see it spread out among a lot more companies,” he says. “I think that would bode well for a healthier ecosystem.”

It’ll be interesting to watch how things play out over the next few months, amid a volatile stock market and falling valuations of some private tech companies. Barrett says hiring remains robust among his clients, but TechCrunch reported that some San Francisco Bay Area tech recruiters have noticed softening demand for certain jobs, like business development executives. (Demand for software engineers, on the other hand, remains seemingly insatiable.)

And a number of tech companies nationwide have laid off workers this year, reportedly including well-funded New England firms Actifio, DataGravity, and Localytics.

Are these layoffs blips on the radar, or a sign of a correction in the software industry? Barrett thinks there will be a slowdown in hiring this year.

“Nobody knows exactly what’s going to happen with the overall stock market, but presumably most people think it’s going to continue to be soft this year,” he says. “If that’s the case, eventually it’s going to show up in hiring.”

And if there is a downturn in the tech economy, Barrett predicts we’ll “see increased concentration of hiring around larger, particularly public companies, where stock is less of an attraction tool for candidates.”

“And I also would expect to see actually a pickup in the need for sales talent, as companies increasingly get anxious about hitting their revenue” goals, he adds.

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