If you’re the CEO/CTO/COO or Head of HR at a rapidly-scaling tech company, chances are you’ve felt the pinch of the shortage of local technical talent.
It doesn’t seem to matter what city you’re in - though admittedly it’s even more pronounced in tech hubs like Seattle, San Francisco or New York - everyone is scrambling to recruit qualified candidates.
Until recently, the primary responses have been “better mousetraps for recruiting”; either some new magic pill to identify candidates, better perks than your competitors, or talent development initiatives. These are all effective to some extent (though clearly not well- or fast-enough) but they fundamentally operate in the same legacy paradigm.
In the words of the imitable Albert Einstein, “We can't solve problems by using the same kind of thinking we used when we created them.”
Enter: remote work and remote teams.
A whole generation of remote-first companies are emerging (Zapier, Evernote, inVision, Buffer, Stack Overflow, Automattic and Atlassian, to name a few), embracing remote work as a competitive advantage for talent-sourcing and lowering their per-employee cost-base. Even legacy giants like Amazon are getting in on the game; remember the “Amazon HQ2” search of 2018?
Embracing remote teams as a formal strategy creates a talent-sourcing advantage, increases company flexibility and produces significant cost savings.
Towards a common nomenclature of “remote”
In framing the discussion it’s important to note that there are varying definitions of “remote” in the industry. In many discussions, full-time co-located employees with flexible work arrangements are considered “remote workers”; for our purposes here we’ll classify “remote workers” as individuals engaged by an organization (on a full-time or contract basis) who do not share an office space with the core organization (nuanced readers will recognize that this covers both “hub & spoke” remote workers who are an extension of a core group, and “distributed” team members where all team members are remote and there is no core group).
Legacy thinking has maintained that co-located teams are the most productive. Open-plan office design is the perfect manifestation of this thinking, with an entire generation of strategy and planning dedicated to fostering impromptu connections.
Unfortunately, the premise is flawed, with a raft of new evidence suggesting that open-plan office design leads to a drop in productivity; the people living and working in these environments hate them. Whilst this is not by definition a broad condemnation of co-located work per se, it does suggest that physical proximity, in and of itself, is not a panacea for productivity.
In contrast, remote arrangements require some proactive thinking to avoid pitfalls (more on that here), the benefits far outweigh any potential drawbacks.
Reason #1: Access to Talent
Perhaps the biggest advantage of engaging remote work arrangements is the access to a (much!) larger and more diverse talent pool. While your particular city might have a shortage of, say, mobile developers, by the time you zoom out to a truly global scale it’s a non-issue.
If your particular need is for one or two individuals, then opening your recruiting search to remote workers solves your hiring problems almost immediately. At Fuel we take this a step further and help clients build or leverage entire teams; this gives them instant access to best-in-class skills, all the benefits of pre-existing team dynamics, and the easier “hub & spoke” integration into the whole where the remote team plugs into the mothership as one unit.
For companies building fully-distributed, this phenomenon is even more pronounced, where they have the advantage of hiring literally the best candidate in the world. It’s a total game changer for talent strategy.
Reason #2: Flexibility
In the early days of a startup (say, up to and including Series A funding), flexibility is critical; revenues may be lumpy, and runway management is the be-all, end-all. Searching for product-market fit can result in a product build schedule that varies accordingly, with some months requiring furious building and others spent fixing or tweaking. Here again, remote teams can be hugely valuable.
As your company grows past Series A, remote teams can allow for specialization. Several of our clients have created or engaged a remote team for integration or customization work - typically roles that you’d build services teams for, but which a) carry all the same recruiting challenges for local hires, and b) is undesirable revenue from a valuation perspective for venture-backed tech companies. Segmenting operations using remote teams is an innovative approach to solving this challenge.
Finally, regardless of the desired team output, when you engage a remote team you can scale your resourcing dynamically as you require, giving your spend maximum efficiency and creating maximum flexibility for company leadership. Every hour billed is productive (this requires active management, but is achievable); you literally get maximum value per dollar spent.
When you engage a remote team you can scale your resourcing dynamically as you require.
Reason #3: Cost Savings
We’d be remiss in discussing remote teams if we didn’t address the cost savings associated with leveraging a global talent pool.
As an example: in San Francisco (admittedly a skewed data set), software engineers with no experience (recent college grads) average a total compensation package of $174,000USD ($130,000 base salary plus $43,000 in stock options) with senior engineers commanding an eye-watering $474,000USD (!!) all-in.
These figures don’t include the fully-loaded employee costs (payroll taxes, office costs, vacation pay et cetera. Using a conservative multiplier of 1.5x, that puts the numbers above at $195,000USD and $387,000USD cash compensation respectively.
Now consider that a typical hourly rate in a jurisdiction like Poland, Ukraine or Columbia is +/- $30USD/hour for a senior engineer.
That’s $60,000USD per year, all-in. No overheads. No payroll taxes. Fully utilized. And creating opportunity in geographies that need them. Win-win!
For startups, this cost advantage is HUGE! From Seed to Series A, the name of the game is finding product-market fit, and the greater the cost savings the longer the runway. As mentioned above, it usually makes sense to keep platform architecture and development manager in-house, but applying the cost savings of remote/outsourced to the development teams can be the difference between building successfully to the next funding milestone or running out of gas.
The cost savings of remote/outsourced to the development teams can be the difference between building successfully to the next funding milestone or running out of gas.
Where to next?
In a sense, remote work isn’t new: we’ve just always called it “outsourcing” - but until now it’s fair to say the results have been mixed. Managing the dynamics of integrating a full-time co-located team and an external remote team isn’t always easy but it’s manageable, and the benefits certainly outweigh the drawbacks.
At Fuel we’re excited to see this phenomenon grow as more and more clients realize “business as usual” won’t suffice and that new innovative approaches really can generate outsized results. Smart sourcing of partners and talent, combined with clear communication and active management, unlocks a whole tranche of value that, until recently, had been fairly hit and miss.
This is only the first inning of a rapidly-evolving game.
If you find this useful and would like to hear more, please contact us or schedule a call here. We'd love to hear from you!