Remote work is freeing tech talent from the limits of geography

Five years ago, if you lived outside the U.S. and wanted to be a software engineer, most likely you’d have to get into a great school, leave your country and family, and find a company that would sponsor a work visa and pay you well enough.

You were constrained by bureaucracy and geography on many fronts. Access to skilled job opportunities was limited and unequal across borders.

Fast forward to today and a different reality is unfolding. Software engineers are, of course, still in high demand in California. But they’re also increasingly based in geographies like North Carolina, Mexico, Pakistan, the Dominican Republic, and more.

Remote work is creating a new wave of globalization, accelerated by the pandemic. It’s democratizing access to high-paid opportunities across the globe. One can work from anywhere and still have access to a high-paying job in an intellectually stimulating work environment. This wasn’t possible even three years ago.

A potential for growth in local economies

Assuming global hiring continues its upward trajectory, there are several positive–and potentially some negative–effects.

The easiest to pinpoint is wellbeing. Giving workers the ability to stay closer to their friends and family has been shown to improve worker mental health and productivity. Remote work eliminates much of the daily commute for workers, which is equivalent to 89 million hours each week in the U.S. Hiring people from a diversity of geographies certainly increases a company’s diversity of backgrounds, cultures, and thinking.

Another big benefit is rising wages for skilled workers in certain parts of the world, reducing the wage gap across geographical regions. Higher salaries benefit the local economy since remote workers pay local taxes and have purchasing power. More demand for talent in a given region could also lead to greater urban development, like the creation of more schools and local businesses.

In 2021, ADP Research Institute found that 64% of the global workforce was negatively impacted by COVID-19, including 28% who lost a job, were furloughed, or were temporarily laid off, and 23% who took a pay cut. Today, our research shows that a global recovery is in the works with remote work salaries on the rise – even amidst looming economic and geopolitical issues.

In the last six months, based on over 100,000 work contracts processed from Deel, U.S. tech hiring abroad has grown by 74% alone. What’s even more striking is that engineering salaries in these countries are on the rise by an average of 29%, narrowing a wage gap that’s existed since the dawn of the internet. From July to December 2021, wages of people hired via Deel grew in Mexico (by 57%), Canada (38%), Pakistan (27%), Argentina (21%), and India (8%).

The dynamics have yet to play out, but the benefits are already here. A couple of years ago in Argentina, the median salary for an engineer working remotely was $33,000. Now it’s $43,000, according to Deel’s data. Multiply this phenomenon around the world, and you start to grasp the impact.

The top five jobs in terms of global demand were Software Engineer, Account Executive, Quality Assurance Engineer, Product Designer, and Consultant. Remote hiring is even happening for advisory board members and C-level positions.

Global hiring can also distribute innovation faster. For example, people who use the platform are increasingly (10% increase month-on-month) taking a percentage of their paychecks in cryptocurrencies. Latin America and Africa are leading this trend.

The risk of a virtual brain drain

Over time, a more global talent pool could discourage companies from building a regional presence because they could hire remote workers instead.

It might also disadvantage local companies because they won’t be able to afford the best talent and compete with larger corporations for talent–a “virtual brain drain.”

A rise in wages might further widen the wealth gap between skilled and service workers.

Another potential downside stems from the “remote” aspect of work itself. A lack of physical proximity to coworkers might hurt some work cultures and stymie collaboration. Working from home can also blur the line between professional and personal life, exacerbating employee burnout. Retention might be harder for businesses now that more opportunities abound in more places. Hiring practices, compliance, tax laws, and payments systems can vary across borders and be hard to manage.

The dynamics have yet to play out, but the benefits are already here. Remote work and the acceleration of borderless hiring is a phenomenal global opportunity for geographical equity.

The internet is enabling the creation of labor markets where geography doesn’t matter anymore. Talent is everywhere, opportunity is not. But what if it could be?

In the future, if you want to be a well-paid software engineer, you will be able to stay exactly where you are.

Maxime C. Cohen is a professor at McGill University. Alex Bouaziz is co-founder and CEO of the global hiring and payroll platform Deel.