48% of tech workers are now remote, so I know the prospect, as a long time remote employee, of going onsite to an office for 4-5 days a week for 8+ hours isn't what you want to hear, but that's not the only or even the most important workplace trend that will unfold as we exit the current downturn.
#1 Growth companies will be mostly onsite
There are a few things going on with growth companies and I say growth companies because companies that are looking to grow quickly and are expected to make venture returns have unique timing challenges. Speed of execution is the only true advantage for a startup. It really is everything until you capture a market or manage to become cash flow positive. The move to remote during Covid highlighted to a lot of founders and managers the challenges in aligning and driving teams when they are 100% remote. Talking to other founders, many commented that remote work is lonely and startups are hard. Success is harder to see and celebrate, while failures are all too obvious. This, I believe, is leading to burnout where team members either quit for a break or leave for another company just for a sense of change. This is not tenable for a startup where the team needs to be bought in, executing, and connected with one another on vision.
Not all growth companies are the same, and some products and teams are uniquely situated to operate remotely, which I believe is a competitive advantage, but the vast majority of products and teams will need to colocate their talent in either one or a set of offices to keep execution speed up and the team bought in.
#2 Growth companies are going to add less headcount
Cheap capital allowed growth companies to solve their challenges through more people. This led to large teams and drove up compensation across functions as the talent pool was limited. Going forward, growth companies will be onsite AND they will be smaller teams. Growth companies will leverage more tools going forward, either APIs for their core product or productivity tools to leverage the team they have (think GPT applications). Expensive capital will force growth companies to be more thoughtful about what they are adding to their operating expenses and will solve problems first through tools and only when necessary by growing the team.
#3 Contractors and services will be the new normal
Startups are already starting to rely on service companies for recruiting and finance. Going forward, I think it will be abnormal to build full HR/Finance functions, instead hiring heads of these departments (or key personnel necessary for the business) and then rely on outside services and products to take care of the reporting and fungible, non-strategic work. For instance, a HR function in the future might be just a few people even at a large startup, with those in-house people managing a host of service providers and contractors to make their function work.
In the longer term, the reliance on contractors and service providers will expand to strategic functions. The current agencies and independent contractors are not well suited for plug and play product development, but there will be an opportunity here and new companies will fill the void as startups look to manage their opex across growth spikes and product development cycles.
The benefit to startups using contractors and services is that they can expand and contract to meet the needs of the business, without having to rely on costly hiring and lay-off cycles.
#4 Remote work will be mostly contract work
This pairs well with item #3. Where do we go with remote work? I don't think companies will make drastic changes to their policies, but as they experience execution challenges they will hire onsite and slowly move away from their remote workers. As these remote workers roll off, they will want to stay remote, and will be able to pick up contract work either through an agency or independently. Companies will be more willing to take on a remote contractor that has a different cost structure when on contract, than allowing full time members to remain remote.
As stated above, half of the tech workforce is remote. I don't think that will change. The relationship with the entity that employees you will. Less full time, more contractors working remotely.
Summary
These are big changes that will not unfold overnight. We still have a lot of layoffs coming and a lot of insolvent tech companies will go under as they fail to raise additional capital. The companies that can figure out remote while not sacrificing execution speed will be at a distinct advantage, as access to top talent will be a strength. However, most companies will build colocated teams augmented by tools, services and contractors to be successful. As we come out of this downturn we'll see these trends unfold.
While change is hard, there is a lot of opportunity in this shifting dynamic. There is a world where the gold standard of being a full time employee will have competition with a new way of working; persistent remote contract work. The opportunity is in unlocking the power of a fungible, easily accessible talent resources that startups will need but is also serving the needs of top talent that wants to work remote, but have the same benefits and opportunity as a full time employee.
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