Globalisation is driven by the simple fact that some things are cheaper in one country than another. Some of the biggest price differences in the world concern wages and salaries, but since there is widespread political resistance to mass migration low-wage workers currently remain stuck at home. But what if workers could do work remotely?
The office of the future may be based on long-distance relationships
Richard Baldwin’s new book The Great Convergence: Information Technology and the New Globalisation argues that the next radical change in globalisation is likely to be driven by technology we already use to allows workers in one nation to undertake service tasks in another nation—tasks that today require physical presence. Two developments in particular will help makes this an everyday reality: telerobotics will globalise competition for many types of manual work, while telepresence will globalise many types of “white collar” or professional brainwork.
Telerobotics refers to a remotely controlled robot that functions as a vessel for a human on the other end. This relies on remote intelligence rather than artificial intelligence. Given how workers are expensive and robots are getting cheaper, Baldwin argues that telerobotics is likely to soon replace many manual workers.
Do not feat the robot
Robots are unlikely to completely replace in-person workers, but they could certainly be used for a huge number of tasks ranging from cleaners and gardeners to road workers and factory workers. Once robots get cheap enough, manual services jobs of many in Britain will be in direct competition with those located in other, perhaps even cheaper countries.
The language barrier, whether spoken or written, has been an important separating force for a truly global workforce throughout history, but it may soon be lowered or even dismantled. According to Baldwin, in this future scenario, IT will have melted the language barrier, in tandem with the ongoing development of computerised translation, which has already come a long way over the past decade with Google Translate and the like.
Already, a hotel cleaner in Britain, for instance, earns about £1900 per month while a worker performing the same job in Pakistan earns about £120 per month. Using a Pakistani worker to ‘drive’ a robot in London would save the hotel over £21,400 per year, which can free up the company to remunerate staff, improving their standard of living. We’re still a ways away for this, however. One of the most advanced robots, the HRP-4 from Kawada Industries, costs £246,000, for example–well out of most organisations’ price range. While it is not cost effective today, robot prices have fallen about 80 per cent since 1990 and the trend looks set to continue.
Telepresence will impact professional roles like offshoring has manual jobs
In the early days of offshoring, naysayers resistant to change failed to see its impact on the bottomline. Telepresence has the potential to do the same to rustbelt ‘white collar brain’ workers living in developed nations in the same way offshoring has done for their ‘blue collar’ contemporaries.
One thing that has shielded many jobs in developed nations from the challenges and opportunities of globalisation is the need for face-to-face interaction in brain services, like in tertiary education, accounting, legal advice, banking and so on. Of course, these sectors have seen the benefits of internet-based interactions, from massive open online courses in the education sector (MOOC) to integrated accounting and mobile banking apps. However, for intra-organisational work, virtual teams are still outpaced by face-to-face interactions, which is proven to make cooperation easier, quicker and surer than, interactions by phone, email or Skype.
Psychologists explain this by pointing the wealth of messages that come through body language and “microexpressions”—split-second facial changes lasting only a twenty-fifth of a second. Skype is not good enough to transmit these today. Today, that requires expensive systems like Cisco’s TelePresence IX5000 set (about £300,000).
Advancing technology, however, is improving the quality of voice and video to the point where speaking with someone who is on the screen is almost as good as speaking with them in person. When this technology gets cheap enough, mobile and widespread (this could be soon), companies can get almost face-to-face interaction without having expensive people grouped in expensive buildings in expensive cities. Even if in-person meeting are not completely eliminated, the labour cost savings could be enormous.
Telepresence, unlike how today’s virtual teams operate, would make it possible for developing nation professionals to work inside G7 offices without actually being there, preventing ‘brain drain’ and keeping costs low. It would also make it much easier for organisations to find and hire specialists and professionals regardless of where in the world they are.
Offshoring so far has mostly affected factory workers and call centre staff, since manufacturing and telephony can be easily transferred overseas. For service sector roles that rely heavily on in-person interaction, offshoring is near impossible.
With telepresence though, expensive workers in expensive offices in expensive cities may be a thing of the past. Within the UK, the vast North-South salary differences that exist for engineers, designers, accountants, lawyers, publishers and media people (and professors of economics, argues Baldwin!), the ability to fractionalise the business services could lead to a great deal of what might be called “virtual offshoring”, or telemigration.
For instance, a British chartered accountant with five years experience earns about £3,300 per month, which is about £2,500 more than a Kenyan chartered accountant. While there will always be a need for a few UK-qualified accountants to sign off on the books, much of the real work could be done by telecommuting accountants from nations like Kenya.
Baldwin calls this “globalisation’s third unbundling” – the ability to unbundle labour services from workers and deliver them internationally. This new, international wage competition will be a massive shock to the workers that are currently ring-fenced.
This shock to their living standards, work volumes, social standing and complacency is likely wreak significant economic, political and societal transformation, reminiscent of the impact of the industrial revolution on a technology-wary workforce.
About the book
The Great Convergence: Information Technology and the New Globalization
Harvard University Press, £22.95, Paperback, 330 pages
Published in the UK on November 24th
About the Author
Richard Baldwin is professor of international economics at the Graduate Institute, Geneva, and president of the Centre at Economic Policy Research (CERP), London. Founder and editor-in-Chief at VoxEU