Exchange Anxiety: Digital Divide

Software company execs talk about how trade wars impact their business.

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The digital economy is notorious for bypassing geographical borders. Information can flow across cables, and software engineers can work together in different countries and time zones.

But the instability surrounding trade and immigration has myriad impacts.

“We’re in a worldwide economy. Communication and trust are essential,” says Luke Kanies, founder of the Portland software services firm Puppet. “Will the software be safe? Will it spy on me? Will it still be around tomorrow?” 

Puppet depends on a global workforce for its offices around the world, including Singapore, Sydney and London.

“Trade wars never help,” Kanies says. “The question is can we bring great people here? It should go back to being super simple for people to get here for education. We should staple a green card to an education visa, especially when people are getting Ph.D.s in science.”

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The uncertainty hovering over trade and immigration poses headaches for Mat Ellis, founder and CEO of Portland-based Cloudability, which helps businesses manage the data stored in the cloud.

“Whenever there is uncertainty, that causes bigger risk. And uncertainty means things happen slower,” he says. “It’s like a tax on the whole economy.” 

Protectionist policies do nothing to help his business. “We have overseas customers buying local software rather than American,” says Ellis. “It makes it harder to compete with countries that aren’t having these kinds of issues.”

Unosquare’s Michael Barrett isn’t waiting around for trade negotiators to determine his fate.

The software services company is based in Oregon, with an unusual setup. It has only 10 employees in the U.S.— virtually the entire workforce is overseas, with 370 in Mexico and 35 in Belfast, Northern Ireland.

Nonetheless, it’s a U.S. company paying U.S. taxes and is on track to earn $30 million in revenue this year.

Barrett’s strategy in an uncertain global trade environment is simple: Hedge your bets by spreading the risk.

“Right now we’ve got a footprint in the U.S., the U.K. and Mexico,” he says. “Our customers are in the U.S. and they want engineers who speak English, so we’re looking at other nations with a pool of English-speaking workers: South Africa, New Zealand, Australia.”

A version of this article appears in the April issue of Oregon Business.  Click here to subscribe.