How the Emergence of International Remote Work Will Transform the Global Workplace
By Jian Lu
In the last few years, the COVID-19 pandemic has drastically shifted not only the way we work, but also trends in the workplace. Business leaders have dedicated much of their time and resources to understanding the myriad shifts taking place. People constantly strived to answer the question: are these trends cyclical that come and go? Or are they secular that come and stay in the future, and become the new normal? LinkedIn’s China President Jian Lu examines the answers to these questions and discusses the future of work in an exclusive piece for the AmCham China Quarterly.
Dr. Jian Lu joined LinkedIn China as President in April 2018, leading the R&D of products and technologies in the China market and overseeing LinkedIn’s business in China. Dr. Jian Lu has over 20 years of experience in leading product and technology innovations in Silicon Valley and China. He is also an inspirational team leader, a renowned technologist, and an experienced entrepreneur.
Prior to LinkedIn, Dr. Lu was the partner of Hujiang and CEO of CCtalk.
Dr. Lu holds his bachelor’s degree in Mechanical Engineering from Zhejiang University and his master and doctor’s degree in Electrical Engineering from China Academy of Railway Science and Dartmouth College, respectively.
Photo courtesy of Linkedin
One trend that we believe is firmly entrenched for the long run is remote work. And not just local remote work that’s confined to an individual city, province, state or even a country. Remote work is going international, and it’s providing companies with more flexibility than ever to access a distributed pool of global talents and opportunities.
As the leading professional platform, LinkedIn strives to always be at the forefront of workplace developments. We are simultaneously observing and setting trends. As a new normal in the world of increasingly flexible work materializes in which talents and opportunities are more globally distributed, here are some of my thoughts to share with organizations and HR departments about how to ride this trend for continued success.
The Emergence and Stay of Remote Work
The COVID-19 pandemic has forever changed the way we work. Its most significant impact has come in the form of offering professionals and businesses a more flexible workplace.
As many as 45 percent of global jobs once located in an in-person or office setting have gone at least partly remote during the past two-and-a-half years, according to polling agencies, and many of those positions will remain in a hybrid or fully remote role as the pandemic subsides.
While a fair percentage of executives still reject the idea of managing a remote team permanently when lockdowns are over and prefer that staffers eventually return to the office, research finds that most employees are now embracing flexibility. A McKinsey survey of employees revealed that 52 percent now prefer a hybrid work model that combines remote work with time in the office, while 11 percent prefer to work completely remotely. Only 37 percent of surveyed employees wish to return to a full-time on-site setting.
Just months before the pandemic, only 30 percent of employees preferred hybrid work and 8 percent wanted to be fully remote. More than 6 in 10 still desired to be on site at all times.
At LinkedIn, we found that supply and demand for remote work surged globally, almost immediately as the COVID-19 virus began to spread. In January 2020, only 2 percent of all new jobs posted involved remote work. By March of this year, that number had increased to 20 percent. What’s more, 30 percent of all job views and about 27 percent of all applications for new jobs were for remote positions — indicating that growth in job seeker’s demand for remote jobs outpaced supply of those jobs.
Going back to our questions from earlier: is this trend cyclic or secular? Can we really go back to the old “normal” of office work? It depends on who you ask. Surveys from WFH Research suggest that half of employees would refuse to return to a full-time on-site schedule at their employer’s request. Surveyed employees said they’d go as far as leaving their jobs, if necessary, before returning to the office full time.
Such was the case recently for an executive, who left the company last month over its return-to-office policy, only to land at a rival company. He resigned in protest when his former employer, one of global top tech giants, wouldn’t let him work remotely as often as he wanted. Other companies, most notably Tesla, have demanded employees return to the office full-time or resign.
“Remote First” Prioritizes Off-Site Work, “Born Remote” Embeds it in a Company’s DNA
There is also a new concept called “remote first,” which is reminiscent of the “mobile first” transformation we witnessed a decade ago. “Mobile first” meant that a product or business prioritized mobility in its planning and development. For example, a developer of a software product would consider the mobile version of the product before the desktop version, or go without the desktop version altogether.
“Remote first” means prioritizing remote work and planning when launching a new business or setting up a team. A range of firms — including Nationwide, Shopify, Pinterest, and Dropbox — have already established “remote first” policies by making remote work the default option for most of their employees. As LinkedIn data finds the demand and supply for remote work is surging, traditional companies must adapt, too, by thinking “remote first.” Corporations like Coca-Cola, Microsoft, Deloitte, Capital One and State Farm now offer employees the choice of working from home if their physical presence in the office is not essential.
Many startups are now even “born remote,” meaning they started the business without a physical office, and have their entire team work remotely. Firms such as DevOps software developer GitLab and job platform website Turing have embodied the “remote first” vision since the day they launched.
Talents and Opportunities are Everywhere with International Remote Work
When we embrace the remote working model, it’s not limited to the same city or even the same country. To employers, talents are everywhere. To employees and jobseekers, opportunities are everywhere.
By international remote work, we mean specifically employing and working remotely across countries. A LinkedIn survey of U.S. HR professionals this April found over 86 percent were considering hiring remote candidates. Most notably, almost half of the surveyed recruiters said they’d be open to hiring internationally remote workers for a variety of positions including IT, engineering, sales and business development. The hiring professionals cited the UK, India, Canada, Germany, Ireland and China as top markets for international remote positions and said bringing on such overseas talents would help expand firms’ talent pools, reduce labor costs and enhance employer branding.
International remote work helps facilitate the flow of talent and economic opportunities across the globe. It promotes social equality in part by raising tax revenue for less-developed regions and countries. It fosters a more inclusive and global community as hiring geography is expanded and more cultures included.
The benefits of international remote work go much beyond major U.S. firms and the talents these firms hire. By bolstering globalization and expanding talent pools, this style of work makes it easier for Chinese businesses and other startups across the world to go global.
It’s important to note that international remote work does present major challenges. First, business leaders must figure out how to source and hire talent in remote markets where they likely don’t yet have business entities or knowledge about the local talents. They face potential operations issues, primarily in how to be compliant when hiring professionals from other markets. They also have to figure out payroll and taxes while creating appropriate benefits packages. Finally, with remote teams across different countries, businesses face challenges in building company culture and a sense of belonging among employees.
These myriad challenges have created opportunities for innovative entrepreneurs who are developing a new category of remote HR platforms.
Jian Lu speaking at AmCham China’s 2020 Technology and Innovation Summit
Photo by Jin Peng
The Remote HR Platform Space Is “On Fire”
Besides employee and HR surveys, the business world is perceiving the international remote trend at a more macroscopic level through the remote HR platform space. In this space, businesses offer remote talent hiring, management and development solutions. The space is “on fire,” according to Crunchbase, and it’s growing incredibly fast.
Crunchbase data shows that a growing number of companies have surfaced in the remote HR platform space with sizable funding in recent months. Companies, including Omnipresent, OysterHR, Remote and Deel have all raised over $100 million this year, and are entering Series B and C funding rounds, meaning they are in the expansion stage of their startup.
Deel, one of the remote HR platforms, was the fastest-growing to $100 million annual recurring revenue (ARR) among a number of other booming startups. It took Deel just 20 months to grow from nothing to $100 million ARR by April of this year. The fast growth of these remote HR platforms is a strong indication of the demand for international remote work.
So, what exactly are remote HR platforms? LinkedIn can be categorized as one of them, as businesses can source and hire talents everywhere from the LinkedIn platform. The other ones are the so-called Employer of Record (EoR) tasked with solving compliance problems in local markets. They provide HR services such as payroll, taxes and more, including designing and implementing benefits packages and helping employers build company culture among remote teams. Most importantly, they assist with managing talents in countries where a company may not have a business entity.
Upwork study estimated that over 36 million professionals in the United States will be working remotely by 2025. And as of now, a remote HR platform will charge an estimated $7,000 service fee per employee per year. Multiplying the size of the remote workforce by this service fee per person, per year, the target addressable market stands at a whopping $250 billion per year.
I personally believe the $7,000 per employee per year figure represents a premium now and will drop when competition in the remote HR platform market increases. However, the number of remote workers will continue to increase at the same time, and the estimated market potential should still be reasonably enormous.
International Remote Work Will Increase New Talent Circulation
The implications of international remote work and remote HR platforms for business rely on whether a company is hiring internationally remote or whether it will consider hiring internationally remote in the future. HR leaders and professionals of multinational companies are in many markets today because their companies expanded into those markets with a physical business entity and team. Consider that these same companies want to enter a new market in the future, say Romania, or simply want to hire talents from that new market, they don’t have to set up a new business entity anymore. They don’t even need in-house HR anymore, because they can now use a remote HR platform. Even HR functions can be outsourced to these remote HR platforms; so, it’s not farfetched to envision some portion of in-house HR functions may be replaced by these remote HR platforms for efficiency or cost reduction. Our survey of companies in the audience during my keynote found only 35 percent of respondents are currently hiring for international remote work, but that 61 percent plan to eventually consider doing so.
The new concept for remote HR platforms, called Globalization as a Service (GaaS), is very illustrating. Most people are familiar with SaaS – Software as a Service. Now comes GaaS as these remote HR platforms provide the HR infrastructure to support sourcing and hiring of international remote workers. We at LinkedIn believe that international remote work, with the support from remote HR platforms, will increase new talent circulation beyond borders.
In perspective, the increasingly more flexible world of work and new circulation of talents are accelerating globalization. Global employers can hire remote talents in China, while Chinese companies can also explore remote global candidates to grow their global reach. Regardless of how the channels will expand and further upgrade, the bottom line is that the remote trend is here to stay, and we’re not going back to how we used to work. International remote work is connecting talents from everywhere around the world with opportunities. Remote HR platforms provide a wider infrastructure for each and every mode and will help usher in a new era of globalization. We have new ways to hire and manage talents, but we should also be prepared to face new challenges.
This article is from the AmCham China Quarterly Magazine (Issue 3, 2022). To access the entire publication for free, sign up on our member portal here.