It has often been asserted that the US doesn’t need to worry overmuch about our position in Manufacturing, because Services are the future and that is where we will have the most competitive advantage. And, indeed, the balance of trade in services is more favorable than that in the goods-producing industries: for 2018, exports of services totaled $821 billion, whereas imports of services were only $557 billion.
However, while imports of services are today small compared with imports of goods, which for 2018 were almost $2.7 trillion, it would be a mistake to conclude that services businesses and services jobs are immune to offshoring. Indeed, for many types of services, offshoring/exporting is easier than the offshoring/importing of goods: there are no transportation issues, and, in the case of imports to the US, there are no tariffs at all.
Telemigration…the term was introduced by Richard Baldwin in his book The Globotics Upheaval…is the ability to have remote workers doing things that previously would have required their physical presence. Obviously, the ability to do this has been greatly enhanced by the availability of the Internet and other forms of high-bandwidth low-cost communications. Today, medical images and legal documents are being reviewed in low-cost-of-labor countries. Software is being developed for American companies in countries around the world. Offshoring of clerical operations has been practiced by US firms for a couple of decades, and, of course, the offshoring of customer service is common.
Baldwin also argues that telemigration will be greatly enhanced by the availability of machine translation technology, especially Google Translate. I think he may be overstating the case here–from what I’ve seen, the quality of GT translations is highly variable. Not sure how well this approach would work in facilitating the interaction that is often required among team members to create something or solve a problem, and I am sure I wouldn’t want to trust it exclusively for something like, say, translating the functional specifications for a life-critical avionics system to be programmed by non-English speakers.
But there are a lot of English-speakers in the world, and a lot of activities in which fluency in a common language is not essential.
One area in which a lot of telemigration seems to be occurring is in software development and maintenance. Here for example, is a company which acquires application software companies and offshores much of the ongoing work (which presumably includes incremental product enhancements as well as problem-fixing) to contract programmers: company’s chief recruiter asserts that the current cloud wage for a C++ programmer is $15 an hour. As the Forbes article notes, that’s what Amazon pays its warehouse workers. (Well, at least in the US–and $15/hour for a programmer in, say, India is surely worth a lot more than $15/hour in this country.) What makes this story particularly interesting is that the founder/CEO of the company was noted, in his earlier incarnation in a different software business, for paying software people very well indeed and going to great lengths to recruit them.
The use of telemigration by software product companies has not been limited to maintenance/enhancement activities: remote workers are also frequently used for new-product development as well. Russia and Eastern Europe are popular locations for this function: the labor costs are by no means the lowest available, but cheaper-than-US costs combine with the availability of people with excellent skill sets.
Telemigration as discussed above mostly involves the work of symbolic analysts…I believe the term originated with Robert Reich…in any event, he defined in terms of jobs which involve the manipulation of symbols, whether those symbols be spreadsheets, computer code, or images intended for advertising or computer games. While there has been much talk about symbolic analyst work representing the “jobs of the future”, it has been too infrequently noted that–despite all the improvements in transportation and the reduction of trade barriers–symbols can be transported globally much faster and at lower cost than can physical goods. Robert Reich is cited here as saying that symbolic analysts are likely to dodge the offshoring bullet as long as they do not get trapped into job functions that are routinized. But while managing hard-to-measure functions like creative software development may be more difficult when the people are not all in one place and fluent in a common language, current evidence and trends suggest that it is by no means impossible.
There is also a kind of services offshoring which is not about symbolic analysts but is still economically important and likely to become more so: the offshoring of maintenance of complicated physical systems. In the airline industry, a significant amount of heavy maintenance is already offshored to lower-labor-cost countries: evidently, the cost of flying the airplane to another country or continent for a periodic inspection or major equipment replacement/upgrade is outweighed by the labor cost savings.
I don’t have any particular conclusions to draw from all this, except that phenomenon of services offshoring is an important one, and, IMO, not much-discussed or well-understood. Also, more evidence that credentialism and chasing whatever is currently hot do not necessarily represent good career strategies.