It’s fairly often I hear that hiring talent in Europe is really quite tough — especially if you’re an early-stage startup — and that there are big shortages for certain roles. But new data from Atomico’s 2025 State of European Tech report suggests access to top-tier talent is actually improving.
40% of survey respondents said it’s become easier to hire and retain top talent over the past year, the highest level ever in the past five years. The report adds that the talent supply has “rebounded”, and becoming an operator at a startup is, once again, seen as a clever career move.
The shift comes after a tumultuous few years for Europe’s talent market, with waves of layoffs and AI reshaping team sizes and org charts across the industry. But Atomico’s research suggests those pressures have begun to ease in 2025.
The data shows Europe’s pool of tech professionals grew 4% to 4.6m in the past year. And, from 2016 to 2025, the continent’s pool of senior tech employees also nearly doubled, growing faster than the US from a smaller base.
Europe is also rivalling the US on that all-important engineering talent, which AI companies are fighting tooth and nail for. In 2025, Europe counts 2.7m technical or engineering employees, 1m fewer than the US — although Europe’s numbers are growing faster: 11.2% per annum versus 8.2% in the US.
“AI and everything else”
Tech recruiters on the ground see the picture differently. Ellis Seder, founder of tech recruitment firm Santa Monica Talent, says the hiring market in Europe has split into two: AI and everything else.
The “top 1%” of AI companies with a strong brand and the cash reserves to pay top salaries are naturally having an easy time hiring top profiles, says Seder — especially given it’s a “hirer’s market” and there’s an “oversupply” of quality tech talent in Europe.
Liv Parry, talent partner at VC firm General Catalyst, draws another distinction: AI-native versus AI-enabled companies. “Some senior engineers will gravitate towards wanting to work for AI startups, rather than software startups that are retrofitting AI as a feature or component,” she says. If you’re in the latter category, pitch top talent the opportunity to lead on how AI is being incorporated into the company’s strategy, adds Parry.
AI hiring isn’t just competitive, it’s expensive. Seder says annual salaries for AI engineers in the UK are up by at least 20-30% this year — typically starting at £140k — while roles outside of AI remain stagnant.
Some well-backed AI companies are hiring AI engineers for salaries of £250k and are vacuuming up most of the top 1% of talent in the process, adds Seder — but those offers are still rare. In some cases, companies have offered salaries of £700k to snatch up the best people in AI.
As AI has shrunk team sizes, it’s also put more experienced operators back on the market.
“Lean, multi-purpose teams seem to be yielding really great annual recurring revenue (ARR) results over the last year, with the average age and size of those teams on the whole being lower — which is leaving a few more experienced operators available to assess opportunities,” says Parry.
Outside AI ain’t rosy
However, “it’s not rosy if you’re not in AI,” says Seder. Many companies outside the sector are still struggling amid continuing economic uncertainty and some are finding it hard to raise VC capital. Others have barely replenished the hires they lost in their last round of layoffs, particularly in departments like marketing and HR.
Parry says teams in stealth or that currently lack a big brand name still have a shot at hiring top talent, but only if they can stand out. “Brand or no brand, you have to be synced up entirely on what differentiates you, so come up with individualistic language to articulate that,” she says.
“Whether that’s around the founder story, your product or the market segment you exist in, authenticity is what makes the difference with experienced operators who can sense what feels real and what feels hyped.”
