Dr Fabian Stephany
Departmental Research Lecturer
Fabian is a Departmental Research Lecturer in AI & Work at the Oxford Internet Institute.
Remote work is here to stay. But while many of us could work from “anywhere”, the urbanisation of digital work continues. Cities are becoming the mega-hubs for online-mediated work. But what will this change bring to our cities and the rural regions that are left behind?
“The new electronic independence re-creates the world in the image of a global village”.
This was perhaps the most visionary assertion of the digital age when in 1962 the Canadian media theorist Marshall McLuhan coined the historical term. Foreseeing the dense interconnectedness in the world wide web of digital devices, McLuhan envisioned a world in which geographical borders would no longer be physical boundaries for individuals or firms. In that same year – 1962 – the IT outsourcing company called Electronic Data Systems was established in Dallas, Texas. With a revolutionary business model which later became known as IT outsourcing, it helped US companies, like its later parent firm General Motors, to save billions of dollars, thereby outperforming their competitors.
With the rise of information and communication technologies, the long history of outsourcing had entered a new stage as it began to merge with offshoring: For digital business operations, not only could production processes be performed by an outside supplier, this supplier could also be located in a different part of the country, if not the world, where labour might be even cheaper. This is where McLuhan’s vision, the internet’s original promise of the borderless digital space and the economic zest of cutting production costs meet: The globalised digital economy.
During the 60 years after McLuhan’s vision of a shrinking globe, much of the supporting and low-skilled labour force has become subject to the double cost cutting paradigm of outsourcing and offshoring. This is shown as call centres and Business Process Outsourcing in Bangalore and Lahore began to operate for companies in Boston and London. However, for high skilled workers like lawyers, journalists, and architects, space still mattered. It was until the rise of the virus – one that would infect humans rather than computers – for this to change. Due to travel restrictions, store closures, containment policies, professionals stayed and worked from home.
Now that the viral veil of the pandemic has lifted, we begin to ask ourselves whether the new professional work order is here to stay. In a 2022 survey among a representative sample of the US workforce, 87% of all respondents report that they work remotely, when given the offer. The study shows a growing appetite in particular of highly educated white collar workers to work from other places than their office. Warnings of the “Anywhere Jobs”, a new breed of high-skilled work that could, in theory, be delivered from anywhere around the world emerge, as governments fear a mass exodus of professional work and talent to offshoring destinations. In particular the creative and innovative type of work of graphic designers and software developers are thought to be the “most anywhere” of all. And even in the ivory towers of science, as a recent study shows, the most delocalised teams co-working from diverse locations appear to be the most productive ones.
So, will professional work face the same fate as low-skilled labour? After virtual assistants and digital clerks, will sports journalists and business consultants be outsourced and offshored, too? Let us think this through. If professional work could be done from anywhere, where would it flow to? Following the logics of the past, of outsourcing and offshoring, then we should start to find most of the Anywhere Jobs in places where labour costs are lowest. To investigate this claim, my colleagues and I examined one of the fastest growing and globally connected parts of the labour market: the online gig economy. Online labour or “gig” (project-based work) economy is a digital marketplace in which services are exchanged around the world, mediated via platforms like Fiverr or Upwork. In project bites accounts from Nairobi brush up balance sheets for firms in New York while graphic designers from Bangalore stylise startup logos for buyers in Berlin.
In theory, this online-mediated work should fully subordinate to the logics of outsourcing and offshoring, as the online labour market is inherently digital and seldomly regulated. However, we examined 1.8 million jobs from more than 100 countries between 2013 and 2020 and found that professional work is not anywhere. Work is not borderless. Indeed, on a global scale, we recognise that the forces of supply and demand, of low wage levels and labour cost arbitrage kick in. Much of the online work is demanded by clients on the US East and West Coast, Western Europe, and Australia, while many of the online workers come from Eastern Europe, South Asia, and the Philippines. But once we dive deeper into the flows of the global online labour market, we find something astonishing, yet familiar: work migrates towards the city.
Around 30 percent of all online projects that we monitored, both in Global North and South countries, are completed in the capital region of a country. In fact, per capita, in the OECD chances are 3.3 times higher to find an individual who worked online from the capital than from any other place in the rest of the country. For Global South countries, the probability of finding online work in the capital region is 15 (!) times higher. This contradicts the logic of cutting costs, in which work, if transacted borderless, should flow to the rural regions where wages levels are low. One could argue that it is the low-skill gigs that accumulate in the digital sweatshops of the suburbs but, in fact, it is not. Project wages are significantly higher in the city than in the countryside. On average, workers in the capital earn 24 percent more in OECD countries (35 percent in the “Global South”). Online gig workers in Berlin make 21 percent more than digital hasslers in Brandenburg, freelancers in London earn 22 percent more than in Wales, and Parisian project wages are 40 percent high as they are in Normandy.
One feature that is paramount for understanding this global urbanisation of remote work is skills. The gravitational forces of the metropolis attract the most highly skilled (and thereby costly) talent. A recent survey among city workers reveals that it is job opportunities, higher income, better access to healthcare, and generally high life satisfaction that make cities attractive places to work and live in. This is one of the reasons why the World Economic Forum projects that in the next decade, nearly half of all global GDP growth will come from around 400 cities. For work, urbanisation seems to be a much stronger force than digitalisation. We show that just because a job can be done from anywhere, it does not mean that it will go everywhere.
But if even the most borderless work flocks to the metropolis, what does this mean for less affluent rural regions that soon could be deserted of talent? And what will this change bring to our cities, where living conditions are already diminishing due to the limited affordability of housing or childcare and deteriorating infrastructure?
In his 2019 book “The Future of Capitalism”, the Oxford economist Paul Collier sketches a grim picture of the great divergence between broken provincial cities, like his hometown Sheffield, depleted of work in the aftermath of the 1970s outsourcing of the steel industry, and the booming metropolis of London on the other hand where staggering wages attract talent from all over the world but suffering from social inequality and weak societal cohesion. Collier calls for a revitalization of local economies by attracting new industry projects to regions that were once world-known for their heavy industry. The mega factories run by Elon Musk or the Amazon’s warehouses might bring back some of the work that had left the country eastwards over the last decades.
However, for the digital age, it might take more than that. Urbanisation will continue and even accelerate. New concepts to improve and maintain life liveable in the mega cities and to make them more resilient and sustainable are urgently needed, such as greened rooftops, community networks or using AI to improve the planning of infrastructure. But what about the rural regions? Fortunately, our study also shows that digital work outside the city is possible and, eventually, profitable.
Some rural regions manage to actively participate in the online job market. These are primarily areas near major cities in Western Europe and North America with characteristics similar to the megacities: A good internet infrastructure, a strong local economy with a focus on ICT sectors, a highly qualified workforce and specialised training opportunities. These findings show that remote work can become a tool to empower rural areas. To achieve this, remote work must be included in comprehensive business promotion and labour market development programs. Disadvantaged regions must be provided with reliable and high-quality Internet access. Investments must be made in infrastructure and local training opportunities must be supported as well as providing the perks that the city offers in terms of cultural affluence, health or childcare. Because without making the countryside an attractive place to live and not only to work, for the rural regions, the Anywhere Jobs are nowhere near.
This blog was originally published in German on the Alexander Von Humboldt Institute for Internet and Society website.