SPECIAL EDITION: WORLD on the MOVE : The Impact of Technology : Around the World and Back at the Speed of Light : New communications links are bending boundaries and creating opportunities in remote locations. There are major implications for jobs and labor migration.
If you’re having trouble with a personal computer program from Santa Monica-based Quarterdeck Office Systems and you phone the customer support center, there’s a good chance your call will be routed across the Atlantic to a software technician in Ireland.
Both Quarterdeck and the Irish government are delighted with this arrangement, which allows the American firm to tap a distant labor market that simply cannot absorb all the skilled workers emerging from Irish universities. Quarterdeck chief executive Terry Myers says the benefits far outweigh the cost of the special phone link that is needed to make the operation work.
It’s an arrangement that would have been unheard of a decade ago, and it’s just one indication of how radically modern computer and communications technologies have altered the world’s economic boundaries.
Now that offices halfway around the globe from one another can communicate as if they were on the same street, the international distribution of labor may be fundamentally altered. Yet it’s not at all clear exactly what kind of long-term impact new technologies will have on job creation and labor migration.
On the one hand, new communications links appear to be creating new opportunities for both skilled and semi-skilled “information workers” in countries such as Ireland, India and the Philippines. As multinational corporations move an ever-increasing variety of operations offshore, some potential emigres in those countries may now be able to find work at home.
But the ever-accelerating integration of the global economy--both a cause and an effect of new information technologies--is also making it easier for skilled workers to ply their trade in whatever location offers the most opportunity. And in many cases, that will be the United States or Europe.
“As we move into a global economic system, we are creating bridges--for capital, for goods and for people,” says Saskia Sassen, a professor of urban planning at Columbia University whose recent book analyzes the emergence of truly “global” cities.
Although the establishment of a computer programming or data-entry operation in a developing country might create jobs there in the short term, she says, it will likely facilitate migration in the long run.
Clearly, multinational firms over the past several years have dramatically broadened the range of functions that they are willing to move to remote locations. Developing countries, once viewed strictly as sources of raw materials and cheap labor, are now seen as possible locations for anything from airline reservation centers and insurance processing operations to sophisticated computer programming laboratories and advanced, automated manufacturing facilities.
Hewlett-Packard Co., for example, has an entire department devoted to developing computer programming expertise in countries like India and China. Rather than hiring programmers directly, the company works with local “contract” programming firms to train their workers and familiarize them with Hewlett-Packard equipment.
Then, when crunch time comes on a difficult programming project, Hewlett-Packard can call on, say, HCL Computer in India to help finish the work. In addition, when those engineers are in a position to buy equipment for their own companies, they’re likely to go with Hewlett-Packard.
“India is a good place for software,” says Herb Blomquist, the Hewlett-Packard executive responsible for international contract programming. “They’ve recognized the potential for being able to export that brainpower, and they’ve marketed it very aggressively.” And the brainpower can be “exported” without the people ever leaving home.
A vibrant computer services industry is an important lure for engineers in India and other countries who often go to the United States to seek their fortunes. Over half the engineering and computer science graduate students at U.S. universities are now foreign-born, most of them from India, Taiwan, Korea and other developing countries. Many of them stay on after graduation, adding immensely to America’s technological dynamism but depriving their home countries of much-needed talent.
Some are optimistic that as technology development becomes a truly global enterprise, this trend will be reversed. “People now get their degrees and work five or 10 years abroad, but they’re starting to come back,” says Rajiva Misra, commercial consul at the Indian Consulate in San Francisco. “That is very promising.”
Indeed, anecdotal evidence suggests that countries such as Taiwan and Singapore that have succeeded in developing dynamic, high-tech industries of their own are increasingly able to lure skilled nationals back home. Yet there’s no evidence that the “brain drain” from the developing world as a whole is slowing, and a recent change in U.S. immigration rules has made it even easier for skilled expatriates to stay in America.
The impact of lower-skill information industry jobs on the flow of people is also difficult to evaluate. The big insurance companies and other financial services firms that have moved “back-office” operations--primarily data entry--to low-cost areas such as the Caribbean, Ireland, the Philippines and the American Midwest are primarily seeking low labor costs.
These types of jobs, experts say, don’t benefit local economies any more than the unskilled manufacturing jobs of yore. In fact, they may be even less valuable, because it is relatively easy for this type of operation to be moved again if labor costs increase.
“There’s a lot of data-entry work here, but we don’t consider that an area of competitive advantage,” says Washington Cycip, president of a Philippine company, SGV Group, that does programming work for American firms.
Even a low-skill, back-office operation can sometimes pave the way for more sophisticated types of work. Travelers Insurance, for example, initially established a claims-processing center in Ireland and now does some of its computer programming there as well.
An earlier generation of low-end manufacturing investments by multinational firms appears to have followed that pattern in some countries, notably Taiwan, Singapore and Hong Kong. Once considered prime locations for labor-intensive assembly operations, these countries now have sophisticated high-tech industries and large pools of domestic engineering talent. Big international companies remain a major presence, but they’re now augmented by locally owned firms that do manufacturing for hire and also participate directly in world markets.
In exploiting the new opportunities of the information-age economy, some countries are far better positioned than others. A large population of English-speakers is a big advantage, since English is the language of international business. And a good communications structure is also critical; Ireland and Singapore, to name two, have invested billions to create state-of-the-art telephone networks designed to serve international commerce.
In India, on the other hand, Datamatics Ltd. had to fight bureaucratic obstacles for years in trying to establish the necessary communications links to American Telephone & Telegraph and other global clients. And in Africa and South America, poor communications has been an important factor in discouraging foreign investment.
It’s impossible to quantify the impact of new technology on job creation and labor migration, though the number of people employed in the information industry in developing countries remains small relative to traditional industries. Still, with the continued rapid increase in overseas investments by foreign companies and the growing importance of technology in the global economy as a whole, the population of “international” information workers is bound to grow.
“Some countries are going to be able to hook into this globalization and the technological revolution, and some are really going to fall behind,” says Saskia Sassen. “The polarization between those who are hooked into the machine and those who aren’t will grow.” And that applies not only to countries, but to individual workers as well.
Foreign Labor: Two Sides to the Story
IN COUNTRIES LEFT BEHIND:
Pros * Reduced labor force relieves domestic unemployment. * Money sent home infuses cash into the domestic economy and boosts household incomes.
Cons * Leads to “brain drain” of skilled people needed for domestic development. * Wastes educational resources invested in people who take skills elsewhere. * Can destabilize domestic economy as migrant labor employment fluctuates according to foreign political and economic developments. * Disrupts family life and causes social problems in communities left by migrant workers.
IN COUNTRIES ADMITTING THE IMMIGRANTS:
Pros * Fills jobs otherwise vacant for lack of workers or lack of interest. * In some cases, foreign laborers’ willingness to work for low wages can save industries that might otherwise face closure. * Offers opportunity for cultural exchange and enrichment.
Cons * Undercuts domestic wage scales and working conditions in some cases. * Can delay modernization or innovation if migrant labor provides a cheaper alternative to major capital investment. * May fuel tension, suspicion and even violence between migrants and nationals.
