While having distributed teams was “a thing” long before the pandemic, people’s increasingly familiarity and comfort with working “virtually” has accelerated the trend of startups hiring employees outside of their local cities. This is particularly true for startups headquartered in Tier-1 cities with higher costs, like New York; where the founders and senior execs may want to stay within the local ecosystem but the calculus for hiring the remainder of the team is very different.
One source of “friction” in remote hiring is legal compliance. While most NYC startups are Delaware corps, Delaware law does not govern their relationships with their employees. Typically the law of where the particular employee is located governs. This can get complicated fast for a young company with not a lot of internal resources to manage the chaos of multi-state and even multi-country compliance.
Thankfully, a number of “compliance as a service” tools have popped up that we are seeing more of our clients use.
For international hiring, Globalization Partners and Remote HR serve as legal compliance intermediaries between startups and their international employees. Instead of having to hire counsel in each country to navigate the local laws, they have experts and infrastructure for compliance in the vast majority of countries any tech company is likely to hire in, and for a fee can reduce 95% of the time-spend in managing those issues.
For cross-state compliance in the U.S., another tool that was recently announced is “Agent” from Middesk. It serves as a dashboard and intermediary for managing legal compliance of state-level rules.
There are even companies emerging to help with sourcing remote talent. One client of ours, Austin Software, serves as a sourcing platform for top latin american tech talent. Their LATAM focus has to do with time-zone differences. It can be much more convenient to hire someone in, say, Uruguay or Chile with only a couple hours in time zone difference, relative to Europe or Asia where the differences can make real-time collaboration challenging.
The increasing maturity of remote hiring “infrastructure” is fascinating, and we expect to continue seeing development in this area in the years to come. The end-result will be a more geographically diverse labor force for emerging tech companies, and also lower costs.