Jobs in the ‘ECO’ age part1: outsourced & offshored?

business-video-conferencing-ariel-skelley-blend-images-gettyA friend was commenting on how her employer, a major ‘blue-chip’ employer, was transforming the workplace.  The shift in emphasis is  to less work needing to take place in the office, and more provision for people to work from home.  The direction it is heading is for people only to attend the office for scheduled meetings.  Why waste that commuting time just to sit and do the same work you can do from home?   But if you can work from home, with today’s technology, home could be anywhere.  It could be in another city or even another country.  Globalisation results in jobs moving to the most cost efficient location on the globe.   We know what happened when employers realised Call Centres and IT departments could be remote. Will this be repeat for the entire office.  Will even wall st eventually be run from Mumbai?   Or will the changes in the workplace actually save our jobs?

This post is  a journey.  Looking at current trends, analysing individual real world experiences and thinking through to where the trends are heading.  There are several significant changes taking place, and the logical conclusion will change where future office jobs are located. In cities, most non-office jobs actually naturally follow on from the location of office jobs, so the impact is on almost all of society.   What will happen will determine future lifestyle choices, sense of community, real estate prices and where people decide to live.

Analysis and conclusions:

  • What is happening already?
  • ‘Random Case Studies’: individual experiences
  • The Problem
  • Solutions
  • to be continued and conclusion to follow

What is happening already?

A quick search on ‘teleworking trends’ reveal useful statistical data. Statistical data from (among others) ‘GlobalWorkplaceAnalytics.com‘ and reporter analysis from articles like
It’s Unclearly Defined, but Telecommuting Is Fast on the rise” by Alina Tugend (NY Times), and “Telecommuting Is The Future of Work” by Meghan Biro (Forbes) confirm there is a real change here, and if the trend continues the impact will be profound.
From these sources, about 50% of roles in the US are suggested as suitable for teleworking.  This trend affects work at between 30 to 45 percent of large employers with current ‘mostly work from home’ employees at around 5% of the workforce (excluding  self employed workers) and doubling every ten years.

‘Random Case Studies’:  Individual Experiences.

I am simply looking at some real world cases here.  No statistics of how many people match the profiles, but this certainly helps to determine what profiles may be out there.

1. Working From home

My first example is the discussion that started this post, and is mentioned in the introduction.  This person works from home both days, but still lives in the most expensive city in the country and makes use of extremely expensive office real estate when in the office.  However the long commute is at least halved by travelling less than half of working days and the hot desk work environment makes use of this to reduce the office cost for the company.

2. Relocation.

Another friend at the end of last year relocated to a relatively regional town from the major business centre of Sydney, while retaining her role in a Sydney based business.  She was prepared to now fly to travel to the office for meetings.  Relocating the family to, what from many perspectives, is a location offering a better lifestyle and at a lower cost.

3. The Needless  Commute

My next discussion provided a different insight.  This person also works in a bank, and works in a team where no other member of their team is in located in their same city.  All meetings for this person must be teleconferences, and for his part could equally be done his from home as the office.  In fact in this case, all his work could be from home and his employer does support working, yet he spends over an hour per day travelling to an office.  Why?  Partly because working from home is a culture shift and he has not overcome that culture shift, and partly because their are still hurdles.  The first hurdle is that his office computer set-up is multi monitor and something he does not have replicated at home. But the other hurdle is that even though the people in the office are not in his team, it is still a social experience at the office.

The Problem

Major cities have a competitiveness problem, but employment continues to migrate to the very location that makes business uncompetitive.  The trend in most western countries in recent decades is for ’employment centres’ (New York, London, Paris, Los Angeles, Sydney etc) to be the destination of a population shift. The population at these centres keeps expanding, and well beyond national population growth. This results in the cost of living in these centres rises beyond national averages, as does the cost of housing and resulting commute times.  Wages are however higher in these centres to compensate, but lifestyle suffers, and time spent commuting is growing to saturation point.  As this trend continues, organisations in these same countries continue to become less competitive.  This then becomes a problem of national competitiveness.

Most businesses in these countries (as they are mostly based in such centres) ,have higher than national average employment costs, high office rent and stressed employees who spend a far from desirable percentage of their time commuting.  This is not the formulae for a competitive business.  In an increasingly global environment for business competitiveness, these very centres exacerbate cost differentials with locating business units offshore in other countries. This creating maximum pressure to move jobs to low cost offshore centres, and that pressure continues to grow.

Solutions: Offshore Jobs vs Alternatives

Businesses are locked into continuous improvement in terms of efficiency.  The continued concentration of the population in major cities with spiralling costs forces organisations to either become less and less competitive or find alternatives to this trend. The possible alternatives are listed here.

Offshore Competition.

In an increasingly global marketplace, developed countries are on a path of sectors of industries and  entire industries migrating off shore to lower cost locations.  If the trend simply continues the economic outlook for what once were rich countries is to say the least concerning.  If a sector cannot find a way to increase efficiency, the industry loses to foreign competitors.

One of the major industries sectors to move first was manufacturing.  Then many of the design processes.  While the migration started with what was considered the most menial tasks, that has only been the first step.

Take a product like the iPhone as an example.  Manufacturing of technology products had already reached a point where the US was simply not considered as a viable location for manufacturing for a US based product with the US as a major market.   First it was simple assembly of products that moved offshore.  Next it was component design and then for many products the entire product is designed offshore and the next step becomes the company designing and manufacturing emerging as a brand.  At that point the entire industry has moved.

The major competitor products for the iPhone come from a Korean based company.  Companies like Motorola have simply fallen by the wayside.  Chinese companies not Huawei  are starting to emerge as the new competitors.

Offshore Staff

The stats stated that 50% of US jobs are suitable for teleworking. The very same technologies that are making working at home practical, are also making sending entire business units offshore practical. With costs at major growing cities escalating, off shore operations become increasingly attractive. There are two ways to ‘offshore’, outsourcing and simply having off-shore teams.  Outsourcing has very often given way to low cost, high skill environments moving to support offshore teams.  This is a complex topic.

Reversing the Cycle: teleworking.

If a percentage of workers are working remotely at any given time office space can be reduced.  Reducing commute time through reducing days commuting reduces congestion and returns time to workers.   The current trend to increase tele working can produce the efficiencies industries need and more than offset the continual cost increases from the current trend of the entire population migrating to the mega-cities.

Solving the Problem: remote communities.

The long term solution is to make a country as efficient as possible by allowing tele-workers to actually live in remote locations. There are several hurdles to overcome, but this is the only viable long term solution.  A solution to this problem is what is required to be a competitive country in the global market place.

to be continued…

 

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