Somewhere.com Acquisition: A Nightmare for Nick Huber, Shaan Puri & Investors

Introduction

Today, we're diving headfirst into a tale of high stakes, bold moves, and a twist of irony. We're talking about the globalization of talent, and why the recent acquisition of Somewhere.com might just be the nightmare that Nick Huber and his band of investors never saw coming.

1. Background: Economics 101 and Job Market Cycles

Picture this: the job market, a beast driven by the simplest of economic principles—supply and demand. When the demand for labor spikes and the supply falters, salaries shoot through the roof. Conversely, when there's a glut of workers and fewer jobs, wages plummet. It's a cycle as old as time, or at least as old as modern economics.

Globalization has always played a key role in this cycle. It began in earnest during the Age of Discovery in the 15th century, when European explorers connected the East and West, laying the groundwork for international trade. Fast forward to the Industrial Revolution, and globalization entered a new phase, characterized by rapid industrialization and the movement of goods and labor across continents. The rise of multinational corporations in the 20th century further accelerated this trend, making the world more interconnected than ever before

In the last 50 years, we've seen this beast roar and retreat. Outsourcing surges whenever the US job market overheats. Companies, cornered by skyrocketing salaries, turn their gaze overseas. India, the darling of the pre-2008 boom, became a tech hub overnight. The US market cooled, and salaries followed suit.

2. The Push and Pull of Offshoring: A Fad, Not a Trend

Remember the pre-2008 housing bubble? The US economy was on fire, and so was the job market. Salaries ballooned, pushing companies to seek refuge in cheaper labor markets like India. It was a frenzied dance—competitive US salaries leading companies on a merry chase across oceans.

From 2020 to 2022, job switchers were raking in 20-30% salary hikes. Companies, once again squeezed, are looking towards LATAM and beyond. It's a tale as old as globalization, but is the ending about to change? This surge in offshoring is driven by the need to cut costs, but it's not without its pitfalls. Rising wages in these markets are beginning to erode the cost advantages that initially made offshoring attractive.

3. The Remote Work Factor

The dream of a global talent pool rests on the backbone of remote work. But here's the kicker: remote work is scaling back. The grand exodus to remote during the pandemic is seeing a reversal. Companies are pulling employees back to the office, and with it, the allure of global hiring dims. Without widespread remote work, the benefits of hiring internationally diminish, making it harder to justify the complexities of managing a global workforce.

4. The Limits of Global Talent

Let's talk talent. Offshoring to LATAM and APAC sounds great on paper—cheaper labor, better margins. But reality bites. Cultural disconnects, language barriers, and smaller talent pools often mar the picture. LATAM, once favored for its proximity and English proficiency, now faces a talent crunch. Hiring a talented SDR in LATAM? Be prepared to shell out $3-4k/month, a price tag not far off from US-based resources.

5. The Talent Discrepancy

Outsourcing isn't about finding the best talent; it's about finding cost-effective talent. But as salaries in India, LATAM, and APAC rise, the financial benefits shrink. Soon, it won't make sense to outsource when you can hire a slightly more expensive, but local and culturally aligned, US worker. The erosion of cost benefits, coupled with the challenges of managing a dispersed team, makes this a losing proposition in the long run.

6. The Political Dimension

The US job market is a political hot potato. Presidential approval ratings can hinge on job numbers. Both Biden and Trump love touting their job reports. A shift in political winds could see a push to bring jobs back to the US, throwing another wrench into the global talent strategy. Political leaders are keenly aware of the electorate's sensitivity to job market fluctuations, and this awareness can drive policies that favor domestic over international hiring.

7. The Nightmare of the Somewhere.com Acquisition

Enter Nick Huber and his valiant crew of investors. Armed with $29.7 million, they set sail to conquer Somewhere.com, betting big on the global hiring fad. LATAM was their goldmine, a region ripe with talent and promise. But here's the twist: the global talent market isn't as bottomless as they hoped.

Rising costs in international hubs, coupled with a cooling US economy, spell trouble. Nick and his team might soon find themselves pivoting back to US talent, a move that would highlight the volatile nature of their bet. The cyclical beast of the job market shows no mercy.

Conclusion

So, there you have it. The Somewhere.com acquisition is fraught with peril. The cyclical nature of job markets, rising global salaries, and political influences all suggest that this is a fad chasing opportunity that may not sustain its initial promise. This fad-chasing opportunity sold for $29 million might not hold the promise it seemed to. As the tides turn, we'll watch how these global talent providers adapt. Best of luck to Nick Huber and his investors—they're in for a bumpy ride.

Teaser for Next Week's Article

Stay tuned for next week's edition of Recruit Juice, where we'll dive into the Modern Recruitment tech stack. Don't miss it—your recruitment game is about to get a major upgrade!

Sources:

• Economic Policy Institute

• Harvard Business Review

• U.S. Bureau of Labor Statistics

• Monthly Labor Review