Research and Insights

Why Digital Product Agencies Thrive in Small Cities

As the tech industry soars, so does the cost of living in metropolitan tech hubs. This has led to many folks in the industry looking beyond Silicon Valley for innovation and opportunity. Cities like San Francisco, New York and Boston may provide close proximity to many Fortune 500 companies, but does this geographic convenience come at a cost for your employees? Or even at a cost for your company culture?

We consider ourselves experts in thriving outside of major tech hubs, finding that we can serve the world’s leading companies from areas near top-tier research institutions. In fact, we have found that our unique situation helps us provide a higher level of expertise, closer relationships, and more rapid innovation for our clients and their products. So what is it about small cities that makes our clients and teams excel?

When it comes to tech regions, bigger isn’t always better

Big cities tend to come with bigger price tags across sectors. This is certainly true when it comes to major tech hubs, with homes costing approximately [82% more]( than in other large metropolitan areas. Many attribute the higher cost of living to higher wages, but the increase in wages does not bridge the affordability gap. For example, in San Francisco, only 14% of homes are affordable to the middle class versus 60% in smaller tech regions like Raleigh/Durham.

In addition to lower housing costs, other cost of living factors support greater long-term stability for employees and their families. For instance, it is estimated that residents in San Francisco and New York pay an average of 30% more on groceries than people in other budding metro areas. Because goods and services cost less in smaller tech regions, employees are more likely to invest long-term in a company (and the local area) and grow with it. The wages saved from lower housing costs can be put back into things like more education for employees and their families.

Co-located spaces are key

As affordable housing is becoming less available in large tech markets, employees are forced to live farther from their workplace. This distance inevitably amounts to added stress, time, and money associated with hectic metropolitan commutes. With long commutes turning employees off to working in the office space, companies in larger tech markets have started offering work-from-home options. However, forgoing co-located spaces can have serious impacts on the culture of your company.

Co-located spaces help bridge communication challenges between employees. The concept encourages group-oriented solutions, helps solidify routine practices, and even elevate overall company morale. On average, remote workers report having more negative communication experiences with other employees, and even rank their overall culture below others in co-located spaces. When you appease a culture of commuting, you lose the culture of collaboration. Working under one roof encourages side-by-side communication between teams and clients, which is why partnership is one of WillowTree’s core values.

The priceless role of research universities

For companies who venture outside of major markets, it’s key to still position yourself among a diverse talent pool. That’s why cities with top research universities provide a uniquely advantageous market and culture for technology. The most obvious reason for this is the opportunity to recruit talented graduates from surrounding schools. Partnering with neighboring universities has helped us establish a funnel for diverse talent and provides us with numerous opportunities to teach and share knowledge with the growing tech community in our region.

For WillowTree, universities such as the University of Virginia, James Madison University, Virginia Tech, University of North Carolina-Chapel Hill, and Duke have become vital sources for talent and thought leadership. This hiring practice can also help prevent a brain-drain for the region post-graduation, encouraging candidates to continue growing in the area versus moving to a larger city with a surplus of existing talent.

In addition to having a competitive talent pool, the presence of academia adds to the overall culture and diversity of the area. Our talent pool offers a wide range of gender and ethnic diversity, adding to WillowTree’s vibrant, inclusive culture. We also notice greater age diversity and variety in prior career experience among applicants. All of these factors emphasize the value of different perspectives and skill-sets in creating a prosperous team environment. This translates outside the workplace to a thriving art and food scene, making the region engaging and exciting for employees and their families. It also happens to provide a uniquely refreshing setting for hosting our clients!

Small cities offer greater stability for clients

When employees are more financially stable in their career, teams are less likely to experience turnover. This means that employees have more opportunities to grow with projects, and ultimately, establish stronger partnerships with clients. Additionally, there is less of a need for knowledge transfer, which encourages productivity and agility among teams. Less ramp-up time can equate to more time for innovation and deeper project exploration.

Opting for agencies in small cities can also help eliminate tricky corporate bureaucracy. The culture of tight-knit teams empowers employees within their team structure to easily facilitate changes and improvements on client projects. For clients, this helps our team be more autonomous and flexible when changing direction. It also helps clients establish a greater personal connection with the digital product team.

To help sum it up…

  • The added cost and pressure of living in large cities creates immense pressure for employees, which can ultimately affect productivity and stability for team members and their families.

  • Positioning your company around research-driven universities provides a unique opportunity to recruit top talent and still engage in culturally diverse experiences.

  • Cities outside Silicon Valley can provide greater personalization and stability for clients through tight-knit team structure and decreased employee turnover.

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