Why a Seattle tax software company sees its future growing significantly in Durham

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Avalara, a Seattle tax software provider that helps companies navigate compliance around sales tax, increasingly sees its future growth heading Durham’s way.

With a location overlooking the Durham Bulls Athletic Park’s outfield, Avalara has had a presence in the Triangle since it acquired Raleigh-based Tax Technology Services in 2013.

At first, the company’s offices here housed sales teams and customer support, but the company says it has come to realize the local talent pool can support more high-tech roles.

Amit Mathradas, president and chief operating officer of Avalara, said Durham could become its largest office, something that wasn’t conceivable when it first moved here.

“Durham was really set up to be a lower-cost center for us … [and] compared to Seattle it was more cost effective,” Mathradas said, noting most of the roles were in low-tech functions.

“But what we realized very quickly,” he said, “is that Durham has a really robust talent pool that can attract and expand into a bunch of other functions given the universities and other tech companies blossoming there.”

The Durham office now has around 400 employees, after it added more than 100 jobs in just the past year. A lot of the growth has been in engineering, security and IT, though sales still plays a large role.

Mathradas said the office, in terms of the diversity of positions there, looks more like the headquarters in Seattle than it ever has.

But more than that, he added, the company believes the Triangle will take on a large share of the company’s employee growth in the coming years, as its global workforce grows from around 2,500 currently.

In five years, Mathradas expects the headcount to be closer to 5,000. Avalara also has offices across the U.S., as well as in India, Brazil and England.

“It would not surprise me if Durham is larger than the Seattle office in the next two to three years,” Mathradas said. “It is already on that trajectory. … It will probably over time, from a people perspective, be our largest global footprint.”

Soon the company will likely have to begin looking for additional real estate around the downtown Durham core, he added.

The company’s current growth is fueled by several factors.

One is a Supreme Court ruling from 2018 that effectively closed a loophole that allowed internet retailers to avoid paying sales taxes in states where they had no physical presence. That meant a lot of online transactions were being done tax free.

But with that loophole closed, states have become more aggressive in taxing online retail, creating more complex tax compliance obligations for all sorts of companies. This has created more opportunities for Avalara, whose software helps companies automate a lot of that collection and accounting.

“In 2020, states are putting wood behind the collection of these [taxes],” Mathradas said. “It has propelled more merchants, especially with e-commerce,” to look for solutions. Avalara, he said, is now collecting and remitting a billion dollars a month to the states in sales taxes from companies.

The other area driving growth for Avalara is global e-commerce sales.

E-commerce across international borders is projected to account for more than 15% of the world’s online retail market by 2022, according to an IDC report that Avalara likes to cite.

It has become “super easy to sell globally,” Mathradas said, “whether it is merchants in China and Europe selling to the U.S., or merchants from the U.S. selling out into the globe. That is adding a completely new dynamic in terms of taxes.”

At this point, Avalara’s global business is still less than 20% of its overall business.

However, it’s growing quickly.

“If you ask me what I am really pushing my teams to do,” Mathradas said, “it’s how fast can we grow globally.”

Source: News & Observer