Talent-Driven Globalization

image by Spero Ventures

If you Google “Covid and globalization,” you’ll see many articles on how the pandemic will kill globalization, rolling back decades of economic changes. The argument is that the pandemic coupled with recent trade turmoil will cause companies to move their supply chains closer to home. Frequent business travel will now be seen as a risk, and operations will grow more localized.

I argue the opposite: Covid will accelerate globalization. Only now, it’ll look different than we thought. Moving forward, globalization will be driven by white-collar jobs rather than manufacturing — by services rather than by things.

Virtualization → Globalization

Widespread virtualization has allowed white-collar workers to be globalized in ways they couldn’t before. We’ve had these tools for a long time, but suddenly, everyone’s been forced to go remote and get used to working this way. As a result, we did 20+ years of adoption in three months of remote work. As it turns out, many companies are finding that this is working out pretty well.

This trend today:

• Nationwide, a Fortune 100 insurance company, announced that they are eliminating most of their smaller field offices while keeping all the employees. They discovered their field offices were exactly as efficient when operated virtually as they were in brick-and-mortar form. This isn’t a tech company; it’s a business in the midwest that’s deciding to reduce its cost structure and make its employees happier by going virtual where it makes sense.
• Here at Spero, we hired interns for the first time ever this year. In the past, we never felt like we could provide a reasonable in-office intern experience. None of us were at the office that much, and the partners were always traveling. But once Covid hit, things changed: we realized working remotely wasn’t going to be a diminished experience for the interns under these circumstances. As a result, we ended up with three awesome interns from all over the country. That opened our minds to all the talent that’s out there — and now, we’ve brought on a full-time team member without first meeting him in person.
• Right now, my son is doing an internship at a startup that has never had an office. Its employees are spread across many time zones, as are its customers. He works a weird schedule of morning meetings and evening meetings, as different parts of the team come online. His fellow student interns attend east coast universities, and like him, are sheltering in place back home. Their homes, though, are in different countries in Southeast Asia, literally on the other side of the earth. Although perhaps not the original plan, it is allowing the company to operate in a way that it never imagined operating before.

What this might look like in 10 years:

Globalization in manufacturing created all kinds of new efficiencies and new markets, changing the structure of many companies. Similarly, thanks to talent-driven globalization, companies might look really different 10 years from now. It will be much more common for companies to have employees all over the world and perhaps no physical office at all. Barber shops and hair salons won’t be virtual, but the software companies that provide their appointment booking tools might be.

Business travel could change dramatically. Right now, business travel is oriented largely around the short visits of salespeople and executives attending a couple of hours of meetings and returning home. This is expensive and not very efficient. Post Covid, it seems likely many of those meetings will remain virtual. Instead, I can see business travel moving to an extended off-site model — travel that brings disparate corporate teams together for a week and builds the bonds that let them remain in sync when they are physically apart. This will change what type of venues are popular.

Finally, this could level the playing field for startups and small businesses: smart, motivated people are everywhere, but opportunities have historically been concentrated in certain locations. Now, opportunities might become more distributed, not only to the outskirts of cities, but across borders around the world. So, maybe that next employee is in a small town, but in Chile, because they have the skills and that’s where they happen to live.

In short, globalization isn’t in retreat; it is adapting. Instead of changing the market for materials and resources, this new wave of globalization will change the market for services and talent. Like the globalization in material goods, it will bring disruption, opportunity, bad things and good things. I’m excited to see what entrepreneurs will do with this.

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Thanks for reading! If you’re an entrepreneur building something awesome, get in touch with me at marc@spero.vc.

This article was first published in my newsletter.