What will international hiring mean for local tech ecosystems?

Editor’s note: This is the final of a four-part series on the history, current state and moral implications of outsourcing for tech companies. In the first part, we looked at the history of outsourcing. In the second, we covered why tech firms are hiring so much internationally — and where. In the third, we addressed what business leaders should keep in mind to hire abroad ethically. Read those first.

Though fewer than two-dozen employees, the company played an outsized role that benefited other companies that hired technical talent in the region. For years, if someone had to buy the pizza for a local tech meetup, SmartLogic would step up. In 2012, they counted nearly 3,200 slices of pizza were eaten at tech meetups they sponsored.

The next year Flicker argued the “objective” reasons why it made sense for companies in Baltimore to use Baltimore-based software developers.

Policymakers and civic leaders popularized the “ecosystem” metaphor to defend this logic across the country at the time. Big companies should hire local technical talent and outsource to nearby software firms because that investment would benefit them, and the entire community, over time. A healthy “ecosystem” requires many species filling different niches in a kind of harmony.

With local tech hubs, experienced technologists and entrepreneurs got sharper, and they were more accessible for those aspiring to follow their economically productive career paths.

In some sense, it was an old idea, once called “labor market pooling.” In the early 2000s, the concept was further popularized as “agglomeration effects” by Harvard economist Ed Glaeser and others as an academic term that underpins most of urban economic development strategy. Put enough smart people together for long enough, and together they’ll invent marvelous things. The highest share of patents come from university centers and suburban business parks, and the most breakthrough innovations come from cities, according to 2017 research. Professional networking follows suit.

In the 2010s, pizza-powered tech meetups flourished as a place for technologists and entrepreneurs to meet each other. They exposed each other to new ideas and challenged each other to sharpen their skills. It’s in this era that we at Technical.ly started, informing and connecting a cohesive and identifiable community of people who shared both geography and professional interests. This was doubly helpful: Experienced technologists and entrepreneurs got sharper, and they were more accessible for those aspiring to follow their economically productive career paths.

This flowed out of Silicon Valley, so other big cities in the United States were the first waves, but other international cities soon followed. Then, technologists from around the world started to get involved in US tech work in a different way.

“Starting around 2018, I started hearing more startups and small tech company CEOs start talking about their first few international hires or hiring some outsourced company in, like, Eastern Europe,” one CEO told me. “COVID and remote work and the crazy salaries have made this commonplace.”

The gains and losses in the shift to global

No one I spoke to is worried about the most experienced technologists and entrepreneurs. In many ways, they’re already this era’s economic winners. What happens to the places these people once called home?

For one, as if we needed any more reasoning why, local economic development strategy should prioritize people, not companies. Don’t begin with “How can we attract or retain this company?” and instead ask: “How can we attract or retain the people who might power a given company?”

I do worry the powerful economic coalition of the last 20 years is cracking.

Last year, SmartLogic, the Baltimore-founded company that helped spur that city’s tech meetup boom, announced it was going entirely remote. At the time, the CEO Flicker told me it didn’t necessarily mean they’d never have an office again, but it was the right decision for the time. But in the short term, I believe Baltimore is worse off without him buying pizza.

When I asked Brian Berkey, a business ethics professor at the Wharton School of the University of Pennsylvania, how philosophers might think about prioritizing economic gains, he shared the approach taken by the philosophical tradition he most identifies with, called cosmopolitanism.

Just hiring people who live in poorer countries isn’t necessarily doing anything morally.

When prioritizing the most good, Berkey’s peers would say we should give more weight to the “absolute degree of improvement” of those who are in a worse position. Put another way, if a job helps a person go from a well-being level of 5 to a well-being level of 10 then that’s worth far more than if a job helps someone go from an 80 to an 85 on a scale of 100.

Berkey’s own writing focuses on how often we ignore the ripple effects of our moral decisions — how much more does hiring one person help those around them than someone else? I put it to him: Does a hypothetical Ph.D. in Poland need help more than a high-school dropout in West Baltimore?

“Just hiring people who live in poorer countries isn’t necessarily doing anything morally,” he told me. ”What is the right theory of well being? What makes a person’s life good and how do we compare the goodness of two people’s lives?”

“That’s a lot for a tech company to consider,” he added.

Return to the rational self-interest of so-called agglomeration effects. The reason cities have endured so many predictions of their decline is because the true super power of humans only comes when we are together. Geographic proximity has always made that easier.

Whether technological change and cultural shifts have finally conspired to make that no longer the case is the big bet companies are making right now.

Companies are only stories we tell each other as an organizing principle. People are what matters. I do not have a prediction as to whether all software-powered firms will end up fully remote a generation from now or not whether physical proximity for work will endure. I do know that the way we’ll answer that question is for all of us to make our own incremental decisions. If we make them more thoughtfully, we’ll end up in a better place. That’s the goal of this story.

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This summer, I moderated a panel among business executives who were growing tech teams in Lithuania — itself a budding tech hub. I asked whether talking so intently about a geographic hub for hiring technologists was already outdated. One CEO said the terminology will change but tech communities will remain important because even if we’re all working remotely for an endless array of companies, “we’ll still need someone to have a beer with.”

“The world doesn’t have enough tech talent, period. No one country or company or strategy is going to solve that,” he said. “Do the best you can for your business. You know what’s in your heart.”