Guy's Economics and the Internet Blog

Teleworking and offshoring

It was reported in the Business News section of the Radio 4 Today programme last week that there are now nearly two and a half million teleworkers in the UK - this is about 8% of those in employment. The figures come from the Office for National Statistics and the Labour Force Survey. Yolanda Ruiz and Annette Walling have written in more detail about the figures in the latest edition of Labour Market Trends. You might also like to consult an earlier article, also published in Labour Market Trends, by Ulrike Hotopp of the Department of Trade and Industry.

The Labour Force Survey started collecting data on homeworking and teleworking back in 1997 and since then there have been some big increases. For many of them this is only possible because of improvements in ICT and in particular, broadband access to the Internet. Let's look at the numbers and check on the definitions.

Homeworkers are people who work mainly in their own home, or in various places but using their home as base. The number of homeworkers has gone up from about 2.4 million in 1997 to around 3.1 million in 2005. Most of these workers make use of a telephone and a computer in their work (2.4 million, up from less than a million in 1997). These people are described as teleworkers. Those who say that they could not work from home without both a telephone and a computer are labelled TC teleworkers. Their numbers have gone up from just over 700 thousnad in 1997 to nearly 2.1 million this year . Not surprisingly there are large differences between industries and occupations with the majority of teleworkers coming from the service sector and being described as having managerial, professional, associate professional and technical occupations. Two-thirds of teleworkers are men. This can be largely explained by the fact that most teleworkers are self-employed and most self-employed workers are men.

The earlier paper by Hotopp included international comparisons, noting that in 1999 the UK had just above the average proportion of teleworkers for the ten EU countries that have been recently surveyed; Finland had the highest proportion with over 16% of those in employment. There is evidence to show that there is an even higher proportion of workers engaged in teleworking in the US. Hotropp cites a 2001 study by the International Telework Association and Council (ITAC) which reported that there were around 28 million teleworkers in the US (about 21% of the labour force).Some more recent figures, available from The Telework Coalition (Telcoa) puts the number of homeworkers in the US at 44.4 million in 2004 (7.5% up from 2003). The number of teleworkers is reported to be 24.1 million (just over 18% of employed adult Americans).

Whatever the exact numbers right now they are sure to rise in the future as more people have access to broadband connections, laptops and Internet enable mobile phones and as the range of jobs that are compatible with teleworking expands. It is certainly an attractive option both for the workers themselves and for the companies that employ them. The Telcoa web page reports a study of senior executives which shows that allowing telecommuting and flexible working schedules is second only to salary as the biggest attraction for them in seeking new jobs. There is some evidence that teleworking can improve productivity too as people are better motivated and less inclined to take time off or leave the company. Business also benefits by cutting office space and other expenses. According to a study by AT&T in 2003 AT&T saves nearly $150,000,000 a year from teleworking.

In some cases companies have chosen to outsource some of these jobs, which can reduce costs even further. And if such jobs can be undertaken anywhere in the world with telephone and Internet connections jobs may be shifted offshore. A study by McKinsey in 2003 found that about 1.5 million service sector jobs had been moved from the US and other developed countries to countries in the developing world. The projected number for 2008 is 4.1 million. Jobs moved include call centres, help desks and customer services, data entry and billing, software writing and even financial analysis. But the risks may be exaggerated in the public mind. A survey of around 5000 firms in the US conducted by Ventoro in 2004 (reported in Jim Landers recent piece for CRM Buyer) found that 53% of firms felt that they would either lose money or save nothing by moving jobs offshore. Dell says that their strategy is "allshoring" not offshoring. As a global company they require bases in all their main geographical market areas, including Canada as well as the Phillippines.

Sources

• Ulrike Hotopp. Teleworking in the UK. Labour Market Trends, Vol 110 No 6, June 2002, 311-318. Available online
  
• Yolanda Ruiz and Annette Walling. Home-based working using communication technologies. Labour Market Trends, Vol 113 No 10, 417-426. Available online
  
• Steve Quinn. Telecommuting: a win-win situation. CRM Buyer 10th July 2005. Available online
  
• Jim Landers. Exodus of jobs overseas may be overstated. CRM Buyer 22nd September 2005. Available online
  

posted by Guy @ 6:30 PM