Home working/Remote working is a dream come true for many.
However, in the UK and much of the rest of the Western world, there is an
impending threat to workers' jobs outside of the economic effects of the
pandemic – local and global outsourcing, what may come to be termed as
nearshoring and offshoring.
The great remote/home working experiment that has taken
place during the pandemic has shown many hesitant companies that home working
and remote working can mean that work does not have to be done locally with
people sitting in the office.
For many jobs focused on business processes over human interaction, this presents a range of opportunities to cut costs and either outsourcing in
the near abroad or just flat-out hiring abroad seems to be a logical step in
this process.
Now, this article is not attempting to become a “Doom-Merchant”
gloomathon, however, any new trend that is big enough to have as big an effect
as the remote/home working revolution that we have seen over the last year is, of course, going to change how businesses operate, economics and ultimately produce
winners and losers.
There will be three main ways that may develop over the
coming months and years: outsourcing, offshoring and near-shoring.
Before we dive in, we must clear up the terminology around these
issues.
Terminology
Home working means a person, who works from home, for some or a
majority of their working week, but will visit the office at specific or on
ad-hoc occasions for meetings and to work for a specific number of days.
Generally, they will live near enough to commute to the office when needed at
short notice.
A remote worker is a person, who works full-time away from
their office at the location of their choosing, so long as it does not
interfere with their work.
Offshoring is the moving of jobs within a company to a foreign
international location that reduces costs, this could be for example moving back-office
functions to Poland or India from London, or moving manufacturing and
production lines to Mexico or China from America.
Outsourcing is the moving a business operational process
outside of the business to another company, at the most simple, this can be the
hiring of a bookkeeper to manage the books and at the most complex it can be
like the government handling a multibillion-pound contact to a company like Serco or
G4S for a service e.g. The Probation Service.
Outsourcing and Offshoring can and are regularly combined.
Nearshoring is the relocation of remote working jobs to
location or locations that offer the same cost reduced benefits of offshoring
whilst keeping in the same country or state.
The recent history of offshoring and outsourcing.
Terms like, outsourcing, and offshoring have been around for a
long time, generally since the 1980’s they become household terms (well in the
houses of business school lectures anyway) used generally (although) not always
with the trend for companies to move production of goods from first world to
developing nations.
Making goods cheaper to steal a march on competitors by
reducing the labour costs required to make everyday goods like TVs to Toys,
Textiles to Trumpets. This helped fuel the consumer boom of the 1990s but also
resulted in mass job losses across entire industries.
Towards the late 1980s, another concept began to spread
“outsourcing”, in which routine business processes were moved out of the
organisation to another organisation that specialized in that one business
process or a cluster of related business processes.
As the 1990s progressed these trends merged and many
functions like telephone contact centres, data entry and IT began to move
offshore to India.
Outsourcing and Offshoring are different, terms that are
used interchangeably. However, both have ridden the waves of globalisation and
the internet to become far easier to achieve and reduce costs by, essentially
increasing the competitive pool of labour.
Since the later 1990’s outsourcing and offshoring have
spread further and further down the business food chain so that now even one-person
businesses can outsource and offshore key functions of their business. Indeed services
like Fivrr, People Per Hour, Task Rabbit etc have pioneered the small
application of offshoring and outsourcing.
So, what is nearshoring?
Nearshoring is something that is very akin to Offshoring and
Outsourcing. Essentially, it is riding the technological developments to allow
businesses and potentially the public sector to outsource, or “nearshore”
workers in lower-cost regions of the country.
This will boil down to companies being able to recruit staff
right across the country. For example, instead of a company choosing to hire a
worker in London, they could hire a “nearshored” employee in a region of the
country that has reduced living costs and thus wages e.g. rural Scotland,
north-east England etc.
This will give many businesses access to a larger pool of
talent for roles that do not require presence in the office, however, it could
potentially lead to some workers having their bargaining power regarding wages
curtailed or severely reduced.
Why will increased nearshoring and outsourcing, both
locally and globally?
Economic pressure, managerial experience in dealing with and
acceptance of remote workers as legitimate teams, the impact on the bottom line
from the recession, and skill shortages will all be motivators for many businesses to
adopt some form of the above.
In all fairness, this is not going to be a simple process every managing director is not going to
However, these changes and opportunities will lead to a steady
increase in all three being applied.
So what does this mean for you?
Depending on your role, company culture, type of job you do
the this could mean a number of things.
If you are a manager or executive, you may want to start
considering how, offshoring, outsourcing or near-shoring may benefit your
business.
If you are a worker in a role that feels vulnerable, the
best thing you can do is help shape the company culture to focus on the benefits
of “home-working” over 100% remote working.
Furthermore, looking at ways to move into roles that are
less vulnerable to these threats is also important.
Essentially some trends are going to be impossible to stop,
so focus on becoming a surfer of the wave. This of course is not the type of
news that is going to help if you are having to take a pay cut or indeed lose
your job.
However, it pays to start thinking about how, if work is
changing what ways you can adjust to that change, or how you can take your next
in your career. Indeed it may be worth considering whether you might be better
off taking a pay cut and working remotely with someone hot and sunny like Swindon.
Is Nearshoring a bad or good economic development?
Depending on who you are and where you live the growth of
nearshoring is either going to be positive or negative. Potentially, if we are
going to be seeing an across-the-board growth in remote and home working, then this
could be a boon for the regions of the UK and a bit of a bust for places like
London.
However, my gut tells me that the picture will be highly
mixed with wages in some sectors being driven down further with increased
competition and others barely being affected, even enhanced by the new home/remote
working lifestyle.
Home working and remote working is going to have many
changes. Hopefully, one overall benefit is that it helps “level up” the
country, even if it knocks some of the shine of London.
***
Thank you for reading this article.
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