 David, do you want to kick us off? Yeah, sorry, I'm just... Oh, no! Hi everyone, my name is Debbie Harris and I'm a senior recruiter here at GitLab. Today we have with us Nadia Vattelidis, Aigar Grumblyd and Macintosh and Rose Tappen to talk about country conversions and international expansion. So GitLab has clean members all around the world in more than 65 countries. And within people, group and recruitment teams, we often get the question but how do you employ all these team members while also complying with local rules and regulations? So that's why we decided to record an interview and share some of those frequently asked questions with you. So first I'll kick us off with questions which are related to recruitment and onboarding and thereafter, Rose will take it over for team member specific considerations. So let's get started. Nadia and Aigar will be explaining some of the answers to our questions. So Nadia, that is certainly a lot of countries that we can hire in. Can you tell me in what main forms GitLab has team members across the world? Yeah, sure Debbie. Basically we have a bunch of different models. GitLab's got a few entities across the globe and in those entities we're able to hire employees. In other locations we use professional employer orgs and we have a bunch of those vendors and depending on the location we would then go and find an employment scalable solution through a professional employer org. Similar to locations like Russia, Ukraine, even in South Africa we have a PO and a few other locations across the globe. We also as an early stage model and when we were a startup we hired contractors. These are not traditional contractors and how the rest of the world would view them. These are through one of our Dutch entities under our GitLab ITBB entity and usually what we aim to do is convert those contractors to employees or under an employment scalable solution in the very near future. Does that answer your question? Yeah, that's great. Thank you. I just want to add from time to time we also have vendor consultants which aren't true contractors. This is an agreement through a vendor and this is usually for very short-term needs and not something we do on a very regular basis. Perfect, thank you. And I go why does GitLab convert countries to professional employer organizations or entities? Well to start with if a certain country hits a threshold of five people that are individual contractors that's usually our starting point to look at a certain country where we say well we have a certain workforce. We are apparently scaling in that country so we need to basically get a scalable employment solution in and that's usually where we go to a PEO, reach out to them, ask for a quote and start considering what we can offer our employees. And it's also to mitigate risk in terms of tax risk and employment risk to be honest. And that's the PEO part. When do we convert from PEO into entity? So there are two decisions that are generally made. Either we set up an entity or incorporate an entity due to the fact that the business requires it. So let's say in South Korea and Japan that was really requested by sales organization because it's an interesting market for GitLab to be in. Although we didn't have employees there we just went ahead and set up an entity. The other one is for instance right now in Ireland where we have more than 30 people covered by a PEO and having a PEO that costs quite a lot of money for GitLab and it basically is a cost-benefit analysis where we say what does it cost to have a PEO in place and what does it cost to manage our own entity. And yeah basically if you're with more than 25 people in a shorter country it's more beneficial in terms of cost efficiency to set up your own entity in that country. Great thank you that's really interesting. So if there are countries where GitLab indicates they can't hire I go how likely is it that it will change in the future? Where could I as a candidate monitor that change? For some countries we really cannot hire if you talk about Crimea or Syria or those countries that are basically excluded from a US perspective. Some countries we tend to pause where we hit that threshold of five or more people where we have individual contractors in. So one example current example is Singapore where we paused South Korea we paused until we have scalable employment solution in place. So it does change in the future for some countries but it really depends on which geographical location we're talking about because what I'm thinking like countries like Crimea we will never be able to hire. And for instance in terms of countries like Singapore or maybe France maybe not a really great example but I see a change there coming. So and where we where you can monitor that change we have a website of GitLab it's found in the handbook. I think it's a country hiring guidelines page where you can check which countries are non hiring countries and you can always reach out to the to the GitLab team and we have an issue country conferencing issue where you can go to and ask questions. That's great thanks Ivo. So why do we have two different compensation factors so for example 1.0 and 1.17. Nadia could you take us through that? Sure so we have actually documented this in our compensation section of the handbook as well if anyone wants to go to refer to that but ultimately in locations where we have not yet set up an employment scalable solution we offer an additional 0.17 so 17% to assist with additional costs and whether that's benefits payroll or accounting costs in setting up a company to invoice GitLab if that's a requirement in your location or if that is if there's additional expenses to run a company in general. The 1.0 is for employment costs we are sorry for the employment factor which basically means that the person is is working for us full time we potentially have benefits linked to that and that's why we we offer two different percentages does that make sense? Yes it does that's great thanks very much so so then what happens Nadia to the 17 contract factor once the country's converted but was it originally included in my compensation? That's a great question sorry I just closed some doors having kids at home and basically we we we do a full analysis on every single country before we just make decisions based on we whether we're going straight to an employment factor or not and one of those decisions is based on the benefits in a country in some locations the state benefits are exceptionally high and awesome and great but in third world countries or other countries across the world benefits are necessary and so we've got to see what we can replace that 17% and what's viable keep in mind we also incur quite a large cost by hiring through a PEO so addition to that 17% we do take in consideration as I mentioned earlier payroll costs and for that reason we then analyze you know what percentage are we going to drop the person's compensation or the country's compensation by and that can vary again depending on the country depending on the benefits depending on the on the obviously analysis the benefits and as well as the people special sorry the total rewards and the people specialist team then conducts okay okay that's really good I suppose another question that comes up if I'm part of the sales team and I receive a variable bonus as part of my comp would a country conversion impact that would it say affect my OTE split from my understanding it won't impact the actual percentage of the split there could be an impact on the base salary depending on the country we converting and depending on the benefits we're offering but it won't impact the actual split so for instance if it's a 70 30 or a 50 50 split it should not impact the percentage of the split does that help answer that question for sales yeah cool variable pay great yeah so yeah we can see what a great job the team is doing with the many country conversions and there are a lot on the list and and the entity creation tracking issue that you can see on the website so I realized it varies according to the country but how long does the process take and briefly what is involved well thanks for stating that we are doing a great job to start with so how long does a process take in general it takes for instance payroll it takes payroll three months to from the kickoff of a country until payroll go live date and we tend to and it's really it really depends per country but I think a three month window is something we can bear in mind when talking about one country conversion but for instance you need to get wet signatures if you want to incorporate an entity and getting wet signatures is quite a challenge at kitlab especially now during covid but I think three months is more or less the the other term and what is involved in terms of stakeholders I already mentioned payroll but we have of course people ops payroll we have tax we have legal we have finance we have controlling external stakeholders like payroll consultants we have tax consultants we have legal consultants and last but not least we have basically a third party supporting on setting up the the corporation in that specific country if it concerns the incorporation of an entity so there's a lot yeah a lot of stakeholder management taking place if it comes down to country conversions wow yes it certainly is and it's very complex by the sound of it lots of things to think about lots of balls to juggle in the air um and especially at the moment so I go how do you prioritize or decide which countries go next then um well we just had a had a fantastic exercise as far as I'm concerned I think it's fantastic or what we did is draft a decision matrix where we combine certain factors and mark certain countries as as red orange and green so green other countries where we don't need to prioritize yet orange basically the risk is is is higher in terms of exposure for kitlab and the employees and red is of course we need to take action right away so and that really helps us in making a decision where we say okay this country needs a conversion this country needs an entity and these countries we just put this aside until we have more time to focus on those also currently as a team deciding if we can share this on an issue to the entire get lab I don't think this will be externally shared because there's compensation data on there there's not per team member data but there is country specific like overall com data and I think we will seek approval to see if we can share that with the entire get lab because it's a it's a really awesome risk matrix to as ever mentioned and this was equals idea and the people specialist along with the data team was able to implement it but it would certainly give great insights into why are we converting it's why did we convert India before Philippines or whatever the case may be if that makes sense yeah that's great that's really good information thank you thank you both so I'm going to hand over to Rose now who will take us through some of the IQs we see from current team members rose yes thank you Debbie and also thank you Nadia and English for this has been super informative for me as well so as Debbie mentioned I'm going to take you to some of the frequently asked questions by team members right because like team members are impacted and there are so many stakeholders internal to get lab so I do I do have some questions some were already answered so I'm just going to go through and and see what else what's what what more information I can get from you and so I think there already has been a great explanation about like why we convert certain and certain countries right but when these convert like when we have decided we're now going to go for this country what is approximately like the timeline or when are team members involved or informed about this decision right away to be honest I think that that's I have to give thanks to to the people of the organization so Nadia and her team they did a great job in basically in the past when I joined up was a year ago it feels like ages but that there wasn't really a clear communication towards the team that was in fact affected by this country conversion and right now it's just like okay decision is made we are going to convert that country and basically within 24 hours either Ross or Helen or whoever was taking control of that country sends an email starts an issue copies every every manager involved I think that's that's that's a fantastic way of basically getting everybody involved from from day one and when we get the basically when we get the quotes from the POS then we have an AMA session with the team that is affected to gather their feedback to be honest and that also helps us in efficient decision making and and of course kid lab is all about feedback so we need to yeah have the team involved that's currently yeah not having sleepless nights but I can understand that they yeah it can be overwhelming being appointed as a second next country to be converted yeah exactly and it's really great that that we have the communication flow going but also that team members really have the opportunity to give feedback right I saw a lot of issues where we converting that seamlessly the members can get feedback there and and this is maybe a bit of a an answered question already but if I if a country converts like which team members are impacted generally yeah all the all the people in that country that's one thing and their managers um of course they are family as well but um just I'm not mentioning a certain location but sometimes people have situations where you really feel sorry for their situation and you're just you know it's not like you're bringing bad news but in some countries they're heavily impacted in terms of their their net income position and it doesn't keep me up at night I can still sleep but those are the not not the most fun conversations to be in so yeah that's an answer your question people I could I actually want to add like I think joining joining GitLab as any team member what's super important to note is if we hire you as a GitLab ITBV contractor or if we have in the future we will converge you and I think coming into the environment with that in mind will definitely take away the feeling of being vulnerable ultimately like one we want to be on the right side of the labour law and we cannot continue hiring people on a contracting basis in a lot of countries across the world and and not you know and legally ensure that we're compliant so if we think about things like IPO or just being on the right side of labour law in in 68 different or 65 different countries and that is something to keep in mind once you hired and so I think if yeah moving forward we've also indicated to the recruiting team we've also updated the handbook to make it very clear that if you are selected as an ITBV contractor or GitLab we will convert you and we have an okay RM case as well to convert every single country in the world and we're working hard and fast to to reach those locations so as empathetic as we are it is a it is something that we have to do to ensure that we're on the right side of the law long-term yeah that makes total total sense and of course it's some some situations are difficult or complex and I also hear the whole process is pretty complex so I can imagine this is well it's just a big chunk of work for for everybody involved and then maybe a bit more on the compensation side right we also get like compensation questions with the conversion already a great explanation of the 17 percent but if I look at when we are converting or in general like our compensation benchmarks for example reevaluated for specific countries depends on so many different factors so if we're converting in in times like February every year or March or April that's very close to an evaluation that's just taking place during the comp review the annual comp review so chances are very low of having an additional evaluation if it happens later during the year that would really be based on feedback from team members even if one team member shares that there seems to be misalignment the total rewards team will go above and behind to make sure that the location factors are accurate and that you know either we need a reevaluation or not and it also it's really based on the feedback that we receive from team members so it's important that we get that feedback from the start that if there's any concerns that they feel that they are being unfairly paid or that it's under the the the location factor of what it should be then a reevaluation will take place and that has happened for locations but in other locations evaluation just happened due to comp reviews so I think it's quite situational and depending on the time of the year yeah indeed makes sense good um then um I think also with converting it could happen that your pay frequency changes right I think with different types of pay frequencies but also with conversion like how do we see that often that the pay frequency changes or is that always standard thing or like how how does it work? Ultimately our githlab ITBB contractors invoices githlab monthly and so in most cases your pay will remain monthly but if there's a mandatory requirement in the country to change that then we will have to comply to the mandatory compliance in that location and it also depends on the PEO so depending on you know on their advice to us to say the standard for ex-location is you know 12 months or bi-weekly or whatever the case might be we also need to be compliant of that and the payroll team will look into information like that and do an analysis and and see how that aligns with their best practices if it's an entity we will use local council and githlab's local council to make those decisions as well and to get like mandatory requirements versus like that's just a suggestion so we can't actually suggestions for those things we need to ensure that we compliance based on what's the standard for that location yeah yeah exactly good and I think earlier Igor mentioned that um your team I think Nadia loops in um managers too like if I'm a manager and somebody in my team is converting or there's a country conversion happening for somebody in my team like what can I do or what should I do? I think we're trying to create awareness by communicating that the manager needs to keep in mind that this is a business requirement and we would really like managers to um to to get on board with convert conversions on a larger scale and if there's any concerns or questions they have or misunderstanding about why we're converting a country I'd highly recommend that they reach out to us immediately they can either reply on that straight to the person that sent the email directly or they can reach out to any of the people specialist team or really anyone an international expansion which includes social rewards Igor Oveya myself the entire people specialist team um or even payroll so if they have very specific concerns or questions they can reach out to us directly with that but I think one thing to keep in mind for all managers is that all countries where they have someone in the team that isn't a githlab ITBV contractor will convert at some point so that's important to keep in mind even during hiring um and to not perhaps not over commit that they can remain a contractor because that's not something we can offer at this time does that help on so is there anything else you have in mind for managers? I for me no maybe Igor I don't know nothing too awesome good I think we're entering my last question and this might be a bit of a difficult one because sometimes on ITBV contractors we offer the opportunity to not be paid in local currency right if people convert to for example githlab entity is it still possible to to be paid in another currency than the local currency? Yeah that's really it's a simple question but it's a difficult answer basically if you have an entity it is subject to local regulations and if you want to basically basically report revenue or report any kind of things in US dollar you have to apply for approval for that and it's it's we need to get a US dollar bank account we need to take into account the fact that we have to keep US dollar reserves and that costs a lot of money to be honest so it's not that githlab can't pay in usd currency but it's just a choice across the board if you have an entity you have to think locally and if because these entities generate revenue they get cash in in local currency and there's cash if you want to pay out the US dollar you need to convert that cash into US dollar that costs money you need to and there's an effects result in that and overall it's a cost decision not to do it because it costs githlab too much to keep those reserves. I want to add for our PEOs 95% will tell us that you cannot pay in another currency than local and the reason for that is it's a local company that is paying those team members and so that's also been a mandatory requirement to pay in local currency we have the exception of three or four locations currently with githlab that are hired through a PEO as contractors and that was due to the fact that in those locations so I'll use one example Poland it's socially acceptable to be a contractor and we went that route to both from the feedback from the the team members in the location but also the feedback from local council including our PEO and in those instances we were able to offer a fluctuated like a different currencies or a different way of paying but that's hard and far to find and again it's it's really dependent on the country plus the way first those folks were hired and so usually there's like a five percent exception but if if it's if it's a local company it's really hard to do that if even if it's not a githlab entity but a PEO. I see I see thanks for thanks for for finding the information I think I'm gonna hand it over back to Debbie. Yeah thank you that was really good very interesting and thanks for all anyone out there joining the call anyone who needs more information we encourage you to go to our website and githlab.com and our handbook which has loads of other information so appreciate it thank you thanks everyone bye thanks