Get ready for a wave of outsourcing of everything from tech to bpo like the US labor market has never seen in the coming 6 months.
Once employers go through the initial pain of setting up remote work, the more than 50%(and sometimes as much as 80%) cost savings will be irresistible. If you are not in government, healthcare, or other industry that does not have legal requirements to maintain a US presence and you work in an office, I would be saving every penny and working on a career change ASAP.
Time zones are still a thing. No matter how remote someone is, if they're more than a few times zones away it becomes problematic. More than nine timezones across the company is nearly impossible to do well.
So if we're talking about a US company, if you want anyone on the west coast, hiring continental Europeans will be tough, unless one of those groups is willing to work outside normal hours.
Also, taxes can be hard. I'm sure as remote working gets more popular, services will pop up to help with this and maybe laws will change, but right now, it's really hard to hire someone outside the US, and it's fairly complex to hire someone inside the US in state that you aren't already in.
The most likely outcome of remote work is a lowering of salaries in the big cities and a raising of salaries in more rural areas, as salaries tend towards the national median.
Also: Culture barriers, language barriers. Even if the cheaper market speaks decent English, there will be a greater communications overhead.
Also, skill compatibility. Maybe your labor pool is bigger, but so is the employer pool of everyone with world-class skills in whatever domain you're operating in.
I wish things like this mattered. I've worked for more than one company where the bulk of development happens in India.
Even though we would have a 2-3 hour window in the morning US time where meetings happen, there is lack of business context, and language/skillset barriers, the cost savings is just too much to overcome.
Had a similar discussion with a tech company that was outsourcing to fairly competent developers that I figured were sandbagging because the defect rate was so high that it didnt make sense.
I talked to the director who was in charge of this and brought to light the impact on the customer base.
The response? We were paying devs on the order of 10% of what we would pay in the united states, and if they padded it to 3x it still would save us an insane amount of money.
There's nothing wrong with outsourcing per-se, but its lovely when the actual "we dont care about the customer's result" comes out of someone's mouth.
Also, taxes can be hard. I'm sure as remote working gets more popular, services will pop up to help with this and maybe laws will change, but right now, it's really hard to hire someone outside the US, and it's fairly complex to hire someone inside the US in state that you aren't already in.
Inside the US is a solved problem. I haven't worked for a company in 20 years that did its own payroll. ADP, Insperity among others solve this for you. You can even set this up with a small business account through Bank Of America.
It's absolutely not solved. I run a company with employees in multiple states.
The payroll company takes care of some of the problems, but for example, every state has different rules about worker's comp. Most states require you to get your own, but you still have to let them know. Some states require you to buy into their state system, which requires signing up.
Then there is corporate registration. Many states require you to register as a foreign entity. Payroll doesn't take care of that.
Then you have to pay state taxes, or if you just have employees, you have to file a form that says "I don't owe your state any income taxes".
There are other things different states do differently that the payroll provider doesn't take care of.
For what its worth payroll companies like that do exist, but they generally only work as staffing/funding companies - you pay a markup and they manage workers comp pools/state legal issues/etc (though most only have regional not national support) - unfortunately that might be worth 1.3-6% of your payroll :|
Management doesn't care about this. They don't care about language barriers, cultural differences, time zones, etc. All they care about is reporting to their boss that they cut expenses by 50% and hired people who at a glance look just as suitable for the job.
Remote work has been a possibility for employers for a few decades now. Nothing has drastically changed since the new wave of WFH to change that, other than its more widely discussed.
> 50%(and sometimes as much as 80%)
is there a source for this?
I'm not convinced that the only reason "everything gets outsourced" hasn't happened yet is because employers are lazy.
I worked as what would now be considered a full stack developer during the dotcom bubble (and bust), and during that time thousands of engineering jobs were outsourced overseas. There were a couple main issues that I'd be curious to see if modern development teams would be able to overcome:
* The communication lag. When developers are working opposite hours from the rest of the team, small issues can take a day or longer to resolve. Even simple stuff like "can I cut the branch or is your feature not QA ready?"
* Rigidity. Specs are almost always incomplete (or inaccurate) in one way or another, and remote developers who aren't familiar with a company's product and goals have a difficult time distinguishing between what a product owners wants and what they ask for.
These aren't insurmountable issues, but they were the two things that really slowed things down for the teams I worked with.
I have an anecdata. I work for a fortune 500 financial company. I am personally acquainted with someone who transitioned from our offshore (India) team to the US. His salary went up 3x doing the same job with the same title, and all he changed was geography.
Eh, companies have had this option and many have engineering offices in lower cost of living countries long before the current situation. There are a lot of reasons for companies to hire in the US.
What wouldn't surprise me though if/when remote becomes a bigger chunk of certain types of jobs, is if salaries across US regions equalize more given that local labor market rates become less of a factor for setting salaries. In the extreme case (which won't be the norm), your decision to live in a high CoL city is no different from your decision to live on expensive oceanfront property.
IMO FAANG is doing its best to try and hoover up all the tech talent that wants to work for them. Which is to say that while they won't necessarily have to pay people an arm and a leg to attract them to overcrowded high-COL areas, they do still want to hoover up people who happen to already live in high-COL areas.
COVID has shown us that remote work is feasible, but it still introduces frictions that employers/employees may not want to put up with, and the main thing attracting people to high-COL areas in the first place is the relative ease of networking and switching jobs. The death of the high-COL tech hub is greatly overexaggerated.
I don't really disagree. I'd also say that FAANGs specifically distort the overall salary picture a bit. My observation is that a fair number of non-FAANG companies, especially those who don't have a significant presence in the Bay Area, already don't try particularly hard to out-compete (on the basis of compensation) local Bay Area employers.
> your decision to live in a high CoL city is no different from your decision to live on expensive oceanfront property.
That's certainly possible.
Of course, that would incentivize people to move out to cheaper areas, which would reduce the demand on expensive big cities, with the end result being that the price delta would become somewhat reduced.
Yeah, there are a lot of complex dynamics going on and things will play out over quite a while in a way that doesn't lend itself to absolute statements. That said, I tend to think that, even if a handful of large West Coast employers (and NYC fintech firms) tend to continue paying top-of-market rates, you're probably going to see some equalizing of salaries across the US overall (and perhaps some but less equalizing of CoL).
But many preexisting remote-focused US tech companies are not heavily outsourced. They've gone "through the initial pain of setting up remote work" and are subject to the same economic forces. If these companies haven't been tempted into heavy outsourcing, why should we imagine that new companies entering into their situation will?
Once employers go through the initial pain of setting up remote work, the more than 50%(and sometimes as much as 80%) cost savings will be irresistible. If you are not in government, healthcare, or other industry that does not have legal requirements to maintain a US presence and you work in an office, I would be saving every penny and working on a career change ASAP.