Companies are clamping down on budgets, but startup CEOs shouldn’t assume that costs will go down just because it was decided they need to. They need to go in with eyes wide open.
The realities of execution are far different than simply slashing the bottom 20% performers, especially when even the most limited international operations are involved. The international element looms large, because it affects nearly every tech company today.
The pandemic accelerated the development of a global workforce by virtually eliminating geographic boundaries for businesses; remote work became the norm. This enabled companies across a wide range of industries to fully tap into and secure talent all over the world, often at a much lower cost than in Silicon Valley.
Hiring international employees and contractors is not a new phenomenon, but with labor shortages in several industries and visa struggles with tech workers in the U.S., the practice has become even more common. Customer service is often outsourced to India; manufacturing to China or Latin America; maybe developers are in Europe or Korea.
No one is going to want to do business with you if your company violated cultural norms by letting workers go without respecting their needs.
Customers and partners, and thus the teams to serve them, come from all over the world. And different cultural norms and labor laws make everything from layoffs to everyday communication infinitely more complicated when navigating a potential recession.
I’ve exited two companies with international operations, one through a previous downturn, and here are a few things I’ve learned along the way:
Communication is about providing context
Communication is an essential component of running a healthy business, but it’s especially important in the current climate. Some regions are in a totally different place economically, and there may be a bit of a disconnect in understanding how unstable the U.S. economy is right now.
Business might be booming where employees are located, which may make it harder for them to comprehend things like hiring freezes and budget cuts. So not only does a company have a responsibility to keep employees informed about what’s going on, they must do it in a way that will best resonate with their respective audiences.