Old ways of working won’t meet the challenges of the next economy

At a recent Fortune Global Forum event in New York, I had the opportunity to talk through predictions of a turbulent year to come with fellow CEOs and hear J.P. Morgan’s Jamie Dimon share his thoughts regarding the shifting economic tides. 

For those of us who have had our foot on the gas during several years of macroeconomic hypergrowth, it’s important to adjust our business models to compensate for a macroeconomic drag on resources without losing sight of product and market innovations necessary to remain competitive. To be successful in times of a downturn, leaders need to balance what the metrics and data are suggesting with what our experiences and instincts tell us about running a business efficiently. 

As the founder and CEO of a company that has been fully remote since its beginning in 2010 and now has a workforce across more than 140 countries, I can attest that committing to remote work and borderless hiring has been key to our growth in times of both boom and bust. We have tested our operating model through several jarring shifts and vicissitudes—wage stagnation, recovery, and domestic and international conflict—and have full confidence that this is not just a novel recipe for success at Toptal. This is simply how good companies operate. 

Correction signals transition, not stagnation

Economists will tell you that recession is a trailing indicator; we can’t know the length or depth of the valley until we have climbed out and up the other side. As CEOs, we know that this uncertainty is one of the most precarious business environments to navigate. Pull back too much on essential innovations and strategic initiatives, and you lose momentum. Carry too much R&D or legacy cost without revenue into a downturn, and you won’t have the resources left to capitalize on opportunities when the recovery begins.

During past downturns, many companies conducted mass layoffs, cut budgets extensively, and waited for signs of recovery before starting to scale back up. However, today’s turbulence is a new kind of correction, with no guarantee of a workforce waiting for your paychecks to put them back in the game. In the next economy, despite the attempts of monetary policy to cool the labor market, there will not be a surplus of highly skilled professionals on the sidelines waiting for a salary and a nice view from their cubicles. After this correction, the game will be in the hands of the talent—and companies that allow them to work remotely will be their preference.

Death of the status quo

At Toptal, we manage a network of expertly vetted remote talent and communicate with literally thousands of workers around the globe every week. What I understand from them is this: The most talented workers are not coming back to the office—ever. They are leveraging their scarcity and embracing personal entrepreneurship. What’s more, salary is no longer the leading draw for workers. In today’s talent economy, flexibility and autonomy reign—they’re factors that are equivalent to dictators with full impunity. Try to stop them, and you will be crushed.

In light of this, the traditional assumption that companies can simply turn on and off the labor spigot to survive revenue droughts is no longer valid. The writing is on the wall: There will be a shortfall of 30 million people to fill global job vacancies by 2030.

Already, roles for millions of software developers, IT security experts, and health care professionals remain empty, dragging down the performance of our corporations and driving up the cost of labor. Everywhere, people are paying more and getting less, an unsatisfying trend for business leaders and consumers alike. The old ways of working cannot meet the demands of the future. The next economy will have several new rules. 

Trust the outcomes

As we scaled Toptal’s business model from a platform to disrupt the global freelance market to the world’s largest fully distributed workforce (without an office), we have had a front row seat at seeing the next economy form.

At this point, the efficiencies of remote work have been experienced by every business sector. Add borderless hiring to the equation, and companies can both cut costs and continue to invest in innovations to fuel their businesses through the coming valley and back to the top of the mountain.

Remote and borderless talent drives efficiencies and innovation during all times, recession or bull market. Companies that embrace borderless hiring and cultivate a truly meritocratic mindset without outmoded geographic constraints are winning their industries and proving that working in a fully remote environment is simply superior. They’re also providing opportunities that go well beyond traditional diversity and inclusion programs and measures, underscoring that this is not just good for business—remote and borderless companies are good for society in ways traditional companies can’t even come close to offering.

The future of work is a place without the old-fashioned corporate artifacts and regional gatekeeping that led to the inefficiencies and inequities of the past. It’s a true meritocracy where the best ideas and the best outcomes win. Where talent wins.

Taso Du Val is cofounder and CEO at Toptal. Toptal is a partner of Fortune Global Forum and Davos dinner series.

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