TLDR: Fully remote leads to much lower salaries for high cost of employment countries as an inevitable logical and economic consequence. Example below of Zendesk. I've been saying this for long, most people who are asking for full remote would be the ones most negatively impacted by it. That is, if you live in a country with high cost of employment (USA/Canada/rich EU contries in this order). Case study - Zendesk. It went fully remote: https://www.zendesk.es/newsroom/articles/introducing-the-next-evolution-of-our-way-of-working/#georedirect If you check the openings page of Zendesk, you can see that: More than 75% of job openings are in Poland, Mexico or Phillippines (low cost of employment). In engineering, more than 85% are in Poland (mainly), Serbia, Portugal, Mexico or Phillippines. If you check the linkedin people distribution of Zendesk, this was definitely not the case before: https://www.linkedin.com/company/zendesk/people/ Almost 50% of people lives in the US, followed by Ireland, Australia (60% of workers living in those high cost of employment countries alone). This is just what is going to happen with fully remote companies due to basic market forces. Explanation: This is just a consequence of basic offer-demand in labor market. For non-remote jobs, companies pay the minimum they can pay IN THAT LOCATION. Companies so far valued having engineering teams close to business, founders and leadership, and were willing to pay to hire people there. Most companies/leadership have been founded and grew in high cost of living, generating competition for workers resuting in ever higher salaries, so that is how we came to be in the current state of things, especially in the US. Over time, companies expand to other countries as they grow, but that takes time and effort, because they wanted leadership close to those workers, and closeness to higher up positions. That's why large companies (think FAANG) mostly open organization hubs in europe, india, etc. As time progresses sometimes they want more organizations to happen there to save money. If your company completely disregards location, then all the variables change. There is no advantage of hiring in any location, because you will be equally far from everyone, leadership, buisness, organization, whatever. Therefore, you are not competing with local salaries but with global ones. The same companies (think FAANG) currently pay 2-3x for a US worker than for a EU one (depending on country). They probably pay 4x than a worker in India and 5-6x than a worker in other less developed countries with weaker markets. This is a tremendous imbalance and there is a strong incentive to hire in cheaper markets for equal or close to equal employees. Basically, you can save 2/3 in salaries or hire 3x more people. So remote salaries would be completely doomed over time. This did not happen immediately in the pandemic due to many factors: Not wanting to hire people in random locations to keep the RTO door open (as it happened later companies walked back), overhead of establishing a legal entity in many countries to hire there, etc. However these would be over or smoothed out if going for a full remote push. So eventually obviously companies would have a stron bias towards hiring cheaper, making people in high cost of employment countries less and less competitive, leading to much less demand in those countries, and much lower salaries as a consequence.
I ain’t reading all that. I’m happy for you. Or sorry that happened
TLDR fully remote leads to much lower salaries for high cost of employment countries as an inevitable logical and economic consequence
Same result as importing immigrants on indentured servant contracts.
Once again this analysis ignores time zones. For the type of work I do (not engineering) I work with people at other companies throughout the US often. I could be on east coast, or west coast, as long as I am within US time zones and willing to work the core hours here. But someone in Europe or Asia would have to work in the middle of their night every night in order to do my job. So it's just not practical for them. Also, it takes knowledge of the local US business practices which I doubt a foreign worker would excel at. Currently I'm paid a mid range US salary and live in LCOL area, which I think is fair. I don't expect a Bay Area salary just because I'm in the US.
There are about 600 million people in your same timezone willing to do your job for 1/4th the salary.
Not really. South Americans are often not permitted to work for a US company and/or don't speak English well enough for a people-focused role. Also, again, I make just over $100k. It's not high enough that the company would significantly save if they cut me.
Offshoring isn't new bub
If you read the post you understand why "offshoring" was considered a pain by companies. Basically, due to location-person-closeness reasons, which completely disappears with full remote
So when 80% of your workforce are in a same country, probably a same city and same building, do you still call that full remote?
Zendesk switched to full remote less than 1 month ago, see the OP. They started hiring aggresively in low cost of employment and hiring almost nothing in high cost, as is expected. The replacement of the existing ones is just a matter of time really.
@LrAH25 Whats preventing companies from doing the above... zendesk did it and it worked... So it means that all these companies that are Not remote can go remote and move offshore... I dont see it having to do anything with going fully remote but rather just going where cheap and quality labor is .. if what you say is true then irrespective of whether its fully remote or not companies would eventually go where theres cheap and quality labor
It's a cost issue. Swiss companies like hiring in other EU countries for the same reason. They don't have timezone challenges either.
Yeap, if I were a swiss worker working remotely I would be 100% aware I am completely toast. Much larger market in its own timezone with much lower salaries than the home market, and the easiest process ever to hire them.
Never heard of reshoring ? I worked in a role where I replaced 3 India hires.
This
Yeah, these companies will hire in LCOL and fire in HCOL over time. Showing up at HCOL office won't save you. Being remote in LCOL might, because you can take a paycut and still have a good life. Not if you have $20K house payment in HCOL.
So guys as Pole I have to take a voice, I know very well market Polish and overall in Europe. I would add Poland as HCOL country but with lower wages. Cost of Living: Quick facts, cost of flat sqm around 6 - 12k usd in city center in major cities like Kraków, Wrocław, Warszawa, Gdańsk etc. I checked how much it would cost in Seattle, around 8 - 9k in city center(checked on Zillow as new a furnitured flat, It might be incorrect) Taxes? 45% from base salary. From RSU -> 19%. Food & services are 60% cheaper but this is matter of time. Cars? Mustang 75k usd. Health care? You need to have public and private, for private you will spend 2 - 5% because major things you will cover with the public one (if you are lucky and there is not 2 - 3 years queue :) and you are paying for it in taxes 9%). So overall not so cheap when food & services are small amount of your spending in Poland or in US (if you have bigger family it might matter but these days it is rare). Salaries: 1.Google is paying by default ~100 - 150k usd as TC for L5. If you are remote worker you might negotiate with them above 200k usd easily but base salary will be like 100k the rest in initial stock grant you have to cover (better because lower taxes) Amazon is even worse 2. US startups: 120 - 240k USD as Base salary on contract where you are paying 15% taxes :) + stocks/options etc. 3. Other top-tech companies 200 - 350k USD as TC. The best Poles are working remotely for US startups. Zendesk is offering 6 - 7k usd monthly, which is around 3 - 4k, for this money you are average in a Polish major city. Skills: Yes, maybe we are great engineers etc. but Poles are not good in LC and they will not learn it so you guys are SAFE! :D Btw. We are earning more than Germans net. E.g before 2020 TCs in Poland for top tech was like in Google - 100 - 150k usd but cost of living went up significantly and now we can say that a good TC is around 250 - 300k usd. Last month Visa opened an office in Warsaw. They are offering 100 - 120k usd for Staff engineer. Meanwhile levels.fyi is showing that in the US the average on this position is 158k :) One time I heard that German guy was complaining on Polish developers that they are low skilled, meanwhile his company was paying in Germany 80k usd as TC and in Poland 60k :) the answer is in numbers.
Still easily 2x cheaper than in the US, and yes of course Poland is getting more expensive for cost of labor fast., but you get the idea when translated to, let's say, Phillippines or Argentina
LrAH25 there is difference from going to country which had highly educated workforce always and huge pool of talents than country which are developing this pool of talents which is migrating very fast after the first year to HCOL. You can see what are doing Poles. You joining to Google in Poland, after 1 year they are applying to Switzerland or US, simple as that.
We are doing it coz we got acquired by a private equity firm whoz only concern is to reduce costs and make the company profitable. Doesn’t work like this for other companies that are public or well funded. For tech firms salaries should never be a concern and hire where talent is( read Bay Area, Seattle etc). Zendesk is also promoting remote coz they can hire in LCOL in US.
Thanks for the context. The "hire where the talent is" and not caring about costs sounds great, but whenever you make a decision to hire person A or person B, at equal, cost will still be a factor even if less weighted. Before there was another factor of location and closeness to team that was determinant and would not exist anymore.
You get what you pay for
For a while, until the low-cost talent up skills
If you could get haircuts from anyone in the world, you would be paying 1/5th to 1/10th what you pay in your high cost of living. You are not paying for a 5x or 10x better haircut. You are paying for a haircut market IN YOUR LOCATION. This is so obvious that anyone working at any company should realize it once explained.