Will Remote Work Grow or Slow Down During a Recession?
People pop into my DMs asking, "Will Remote Work grow or slow during a recession?"
These are my thoughts.
Possibility #1 - Remote Work Could Shrink
On the one hand, the tech job market as a whole will likely shrink. There will be fewer jobs available in total for a period of time until it grows again.
This is a typical post-recession pattern, which happened in past recessions. Long-term growth has always come after those.
As such, if we'd assume remote jobs will be a stable % of the whole tech job market, then remote work would shrink as a result.
We are seeing companies laying off staff, regardless of being remote or in the office. Layoffs are a result of their finances, not their location.
With such looming layoffs and hiring freezes, employers have a bigger upper hand than before in dictating rules.
As such, employers who mandate their employees back to the office are less likely than before to see their employees leave. People aren't as open to moving as before.
Possibility #2 - Remote Work Could Soar
Now, on the flip side. Most companies are cutting costs, as they brace for the upcoming recession.
The highest cost of most tech companies is salaries. And, on top of salaries, office-based companies have big overhead costs related to having a physical office.
These costs are growing fast in the US and Europe, as the cost of living gets more and more expensive, especially energy costs.
This affects employers who keep an office space and affects their employees who commute daily into it.
Being office-based attaches a company to a high-cost structure, which is especially heavy in expensive cities, like SF, NY, London, etc.
High local salaries + High cost of keeping a local office.
Many companies will struggle with this, especially startups and agencies.
As such, I foresee more companies ramping up remote teams as a cost-cutting exercise.
Following the Pattern
Just like blue-collar jobs over the last decades, knowledge work could also move gradually to places with lower costs of living, as employers aim to lower their cost structures.
As naval said, "What free trade did to blue collar jobs, remote work will do to white collar jobs."
With this, a couple of things will happen:
- The number of remote jobs as a % of the whole tech market will likely grow over time, including during a recession.
- These opportunities will be especially targeted at lower cost-of-living locations (eg: India, Brazil, etc).
What This Means for Talented Tech Workers Around the World
- Higher number of remote jobs available.
- But paying lower salaries on average (meaning: more companies paying location-indexed salaries).
This could create significant opportunities for experienced tech workers living in low-cost locations.
I see senior tech talent in places like India & LATAM continue being "pillaged" by US and UK companies.
Specialized profiles with high demand will land great offers!
A Burden to Employees in High-cost Countries?
Recessions have historically been a time when many companies have been created. And I see most startups being created remote-first by default.
These jobs are remote first but have tight budgets. They'll reinforce the demand for experience profiles, regardless of where they live.
On the flip side, those who live in high-cost locations could have a shrinking number of well-paid opportunities.
Those large "Bay Area"-type compensation packages will be less and less common over the coming years, as those jobs are competed over by overseas talent.
Juniors, bootcampers, freshers, etc, will also have a rough patch ahead. As the global market shrinks, companies will aim more for experienced people.
As a silver lining, as budgets get cut, some companies won't be able to hire seniors, and there could be some opportunities.
While it's certainly a time to lower your expectations and continue honing your skills, it's also a time when pockets of opportunity could appear.
Chime in your thoughts in the comments. This is only my opinion, based on what I'm seeing. I'm very happy to discuss different views with you all.
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