Private equity and remote work
Earlier in the week, this tweet from Chris Herd, the founder of HR tool for remote work, was shared in a few groups I am part of, Chris said:
…the hottest trend of the next decade for private equity will see them purchase companies, make them remote-first. The cost saving in real-estate at scale will be eye-watering. The productivity gains will be the final nail in the coffin for the office.
The optimistic reading of this idea goes a little like this. Some outdated management team running company X doesn’t see the all the benefits that comes with remote work. Enter the knights in shining armour of private equity. They give these management ogres the boot and release the workers of company X from the shackles of the office. The workers are immediately happier, more productive and huge cost savings flow from the abandonment of oversized leases and WeWorks.
This view makes a common mistake, it sees the move to remote work as a genuine appreciation for the many benefits that remote work provides staff, when, in reality, it is what sociologists call “interest convergence”. Put another way, remote work supports a plan to cut costs, it’s just a happy coincidence that lots of staff happen to like it too.
For someone who is less optimistic about the prospects of a remote first world, there is a different reading of the same tweet.
In my version private equity sees exactly the same opportunity. However they don’t really care about the happiness of the staff. They think they can be productive when working remotely, but in all honesty they are comfortable with them being slightly less productive because the cost savings on office space are so damned good.
But it doesn’t end there.
To cut costs even further, private equity combines this new acceptance of remote work with a twenty first century version of business process offshoring (BPO), a trend that started impacting office workers in the 1970s when paperwork from the US was shipped by boat to administrative staff in the Carribean.1. Consider things from the perspective of company X’s new owners. If everyone is remote first, why does it matter where in the world they are? If they pass the interview, they can do the job. And if they can pay them a lot less because their living costs are lower, well that’s just common sense.
The future is probably somewhere between these two points. And in reality I think it’s more likely to be a staged process than the double jump I describe above. At first the existing team shifts to remote work, ironing out all cultural and operation kinks. And once that is realised, the second stage of replacing expensive local talent with cheaper talent elsewhere can begin.
There is a more fundamental point here.
If your entire output is mediated by a computer, if your relationship with your boss and your co-workers is entirely virtual. Then the competition for your job just went global.
Remote work offers many benefits, but I can’t help thinking that the surge of enthusiasm we are seeing misses the inherent risk it poses to office workers in most advanced economies and the most expensive cities. And while domestically this challenge is being presented as an opportunity to “level up” other parts of the country that feels like wishful thinking to me.
So demand an office. Insist that you can visit it whenever you want. Personally I think you’ll like a flexible model more than a remote first one, and it may just prevent your job from disappearing into the ether too.
1 Metters, R. and Verma, R. (2008), History of offshoring knowledge services. Journal of Operations Management, 26: 141-147. https://doi.org/10.1016/j.jom.2007.02.012