On-shored, near-shored and outsourced…

Will the march of teleworking enhance the quality of white-collar jobs?

Employing teleworkers is sometimes a workaround rather than a labour cost-saving exercise for business. Take Estonia, for example – the European posterchild of digitalisation, with a population of slightly below two million. Digital talent is in short supply in the biggest of countries, let alone in a tiny pool like this. So for Estonians with an entrepreneurial spirit it makes sense to improve their chances and recruit from a global pool of hundreds of millions. They can pick and choose among digital collaborative tools, messaging apps and time-tracking systems to eliminate physical distance. Meanwhile, team-building retreats organised on an annual basis can give face-to-face boosts to the digital team spirit.

A more localised version of teleworking as a necessity comes from the US. As a result of President Trump’s ban on immigration from several Muslim-majority countries in 2017, and his hostility to and eventual suspension of temporary work visas this June, Silicon Valley has set its eyes on Toronto as a near-shoring destination.

What makes Toronto an ideal choice is how the city has reinvented itself as a tech hub that currently has a local tech workforce of 400,000. Figures show that one million Torontonians have a STEM degree, with 40,000 new stem graduates joining their ranks every year. The city’s appeal for big tech is further enhanced by its ethnic diversity and Canada’s Express Entry Visa programme.

But this September, as remote working is becoming a permanent arrangement for more and more tech companies, news of aligning salaries with lower cost-of-living expenses outside Silicon Valley hit the headlines. Although it may sound somewhat tongue-in-cheek when big tech pitches these pay cuts as necessary steps to ensure equal pay for different work locations, we’ve heard a lot about stellar rental costs and food prices in the San Francisco Bay area. And indeed, figures show that those who, for example, make a 60-mile commute twice a day from Salida, Colorado to Fremont on the San Francisco Bay may reduce their cost of living by as much as 80 per cent (the same figure for Toronto is only a modest 14 per cent).

Is remote office technology a friend or a foe of white collar workers in the long run?

The same digital tools that make remote team-work viable have also led to the rise of platforms which connect businesses with distant freelancing professionals. On these platforms, as Richard Baldwin, author of The Globotics Upheaval explains, copy-editors from Bangkok, web designers from Belarus and their like sell their reliable services at a fraction of the usual cost. Recruitment and delivery of the job by the contractor, as well as payment for it, take place on the platform. Screenshots taken from the contractor’s computer while they carry out the task will serve as proof that the hours they bill for are genuine, and ending the contract is as simple as pushing a cancel button.

Baldwin argues that the “telemigrants” of these platforms will create unprecedented international competition for stable middle-class jobs in the US and Europe – especially when natural language processing (NLP) will have removed language barriers. He envisages an on-demand economy, where a small number of top-skill core employees are complemented by an entourage of global freelancers at discounted rates.

But it’s hard to tell whether the use of freelancers from countries with lower labour costs will eventually reach critical mass. Everyone who has ever tried to sort out a bad internet connection with customer service on the other side of the globe can testify to how the customer experience can be compromised by outsourcing practices. And even if the discounted freelancer has The Hitchiker’s Guide To The Galaxy’s Babel Fish in their ear, translating between any two languages in real time, cultural contexts and the gaps between them will remain.

And there are also some important social and economic implications to reckon with. There seems to be a consensus now that today’s political turmoil in the UK and the US can be traced back to blue-collar workers feeling left behind and disenfranchised by globalisation, and the same could happen to white-collar professionals if telemigration becomes mainstream.

The macroeconomic consequences of outsourcing can also be seen now more clearly. The Made Smarter group of British industrial experts, for example, believe that the UK’s efficiency puzzle can be partly explained by the outsourcing bonanza of the preceding decades. On a flexible British labour market there was less need for long-term thinking and much less was invested in training and upskilling, which are key to having a modern, digitally apt workforce.

Desperate times call for desperate measures, and we’ve been learning that the hard way during the pandemic. For many businesses in this crisis, cutting costs is synonymous with trying to scrape through the lean times. But in the long run, easing the current workforce into a full-on digital age and aligning university and vocational training with the shifting demand of the labour market needs to have priority. Frugal short-termism and the former paradigm of racing to the bottom only tears the social fabric further apart rather than repairing it.

© Business Reporter 2020