I work for a small distributed company (~600 employees) that compensates everyone based on their location. I live in NYC and receive a pretty solid salary given my experience / region. When I was hired, HR made it clear that if I move around or relocate, my salary will be adjusted based on the living costs. The company has roots in Argentina, and about 30% of our engineers live there. We are all paid enough to live comfortably wherever we are located, but I imagine that the engineers in Argentina are making significantly less than the ones in SF. Hiring globally is extremely complex, and colleagues I have spoken to who live in countries where we do not have a physical presence (office location) incorporate an entity and contract with a Caribbean firm that the company contracts through. Day to day those folks are operating as normal permanent employees.