Jobs that can be done anywhere may end up overseas
Corporate embrace of remote work may encourage employers to do more hiring in lower-cost regions, including other countries, according to a U.K. study.
Full-time remote work jobs are desirable for job seekers who want to avoid lengthy commutes and expensive dry cleaning bills. But according to a new report, these "anywhere jobs" are at risk of moving to regions that pay less.
Certain types of work, especially in technology, have been moving offshore for decades. But the experience of working remotely during the pandemic has put more jobs at risk, according to a study released Wednesday by the U.K.-based Tony Blair Institute for Global Change, named after the country's former prime minister.
The report, "Anywhere Jobs: Reshaping the Geography of Work," analyzed the U.K.'s job market risks. The pandemic "has begun to loosen the binds that previously tied a job to a specific geography," it stated.
The report found that 18% of the jobs in the U.K. are "anywhere jobs," or white-collar, well-paid occupations. In particular, it found that 5.9 million jobs in IT, financial and professional services in London and the South East region were at risk for being outsourced or offshored.
The report's concern about the loss of jobs in the U.K. applies to the U.S. as well, but with a twist, said Jeegar Kakkad, the lead author of the report and the institute's head of productivity and innovation.
What's different is America's "vast size and the differences in wages within the U.S., for example, between the Bay Area and rural Alabama," Kakkad said. With the embrace of working from home, businesses can now hire remote workers in lower-cost regions, he said.
For instance, the median wage for a developer in Los Angeles is nearly $120,000. In Montgomery, Ala., the median salary for that same job is $88,500, or about $31,000 less, according to the Foreign Labor Certification Data Center, a government source for prevailing wage data.
Employers cut costs with 'anywhere jobs'
Firms may move jobs overseas to cut costs and recruit from larger talent pools, the report found.
Coding centers in Bangladesh, Ukraine and elsewhere "see this shift toward mass remote working as an opportunity" to gain work from firms in developed economies, Kakkad said.
So while the country's size and its regional disparities "[give] the U.S. a bit of a cushion against anywhere jobs being offshored, they do need to be aware of international competition for remote work," Kakkad said.
Remote work and the "talent shortage" in IT and engineering are "unleashing a new wave of offshoring," said Peter Bendor-Samuel, founder and CEO of the Everest Group, an outsourcing research firm in Dallas.
But Bendor-Samuel also said that the rush to offshore labor may not last.
Businesses need to have IT and engineering talent nearby or at least in the same time zone to drive better alignment and productivity, Bendor-Samuel said. Everest's research shows the proximity of workers delivers large productivity gains that far outweigh the cost savings of offshoring, he said.
The trend to move work offshore may weaken and somewhat reverse "if and when the talent shortage abates," Bendor-Samuel said. Moreover, the remote work expansion of hiring onshore in the U.S. "will act to constrain this trend," he added.
Patrick Thibodeau covers HCM and ERP technologies. He's worked for more than two decades as an enterprise IT reporter.