THE FUTURE OF THE LOCALIZATION INDUSTRY | The Flexible Global Labour Force

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The pandemic has ushered in a new era of work by accelerating the use of digital mediums. This article takes insights from the Milken Institute’s Future of Work Report and ILO World Economic and Social Outlook Report 2021 to speculate technology’s increasing impact on the workplace, providing valuable information for policymakers, business leaders, workers and academia so that they can thrive globally in the post COVID-19 era.

 

Digital Dimensions

Over the last 10 years, the growth in broadband connectivity and cloud computing, in addition to advances in information and communications technologies, have proliferated economic transactions and immense exchange of information between individuals, businesses and devices. Data is the new oil of the digital economy. Related to these transformations is the proliferation of digital platforms in several sectors of the economy.

Digital Platforms Basics

Digital labour platforms can be classified into two broad categories: online web-based and location-based platforms. Our focus will be on the former. On online web based platforms, tasks or work assignments are performed online or remotely by workers. These tasks may include carrying out translation, legal, financial and patent services, design and software development on freelance and contest-based platforms; solving complex programming or data analytics problems within a designated time on competitive programming platforms; or completing short-term tasks, such as annotating images, moderating content, or transcribing a video on microtask platforms. Businesses use online web-based platforms for three broad reasons: to streamline recruitment processes; to reduce costs and improve efficiency; and to access knowledge and seek innovation.

Pandemic Pandemonium

Every major global event has impacted how international organizations and governments realign their business outlook. The COVID-19 pandemic is no different and has actually amplified the reaction, as commented by Tom Seymour, CEO of PwC Australia and Richard Oldfield of Global Markets Leader, PwC UK. In a PWC article Seymour and Oldfield with reference to multinationals mention that in response, organizations must modify both their strategies and their tactics.

Since March 2020, the COVID‑19 pandemic has led to an increase in remote-working arrangements, further reinforcing the growth and impact of the digital economy. Digital labour platforms are a unique part of the digital economy. They facilitate individuals or business clients to workers so they develop a website or translate a document, among many other activities and assignments without coming to a physical office. By connecting businesses and clients to workers, they are transforming labour processes, with major implications for the future of work.
In a global world, the mix of the vital resources of recruiting the right people who can work with information becomes more intertwined and essential.

Rise in Remote Working

According to the Milken Institute the pandemic has had an immense impact on inequality while the lower income bracket segments being worse hit as economy-wide digitalization further widens existing skill gaps. The report which surveyed 1,000 managers and employees by technology consulting firm Infosys included the following key finding:

  • A greater shift toward remote working and hiring, with a greater focus on inclusion and diversity (however, lower-wage respondents saw fewer opportunities);
  • A Net satisfaction with remote work and productivity, notwithstanding higher workloads and the loss of social interactions with colleagues;
  • Greater trust in employees during remote work, though with increased surveillance;
  • Growth in employee skills training concentrated on working remotely, which most employees found useful (although, lower-wage employees felt more responsible for training themselves).

Therefore, the new localization of recruitment may lie with the international labour pool who have the right skills to work beyond national boundaries through digital connectivity.

Digital Beneficiaries

The incorporation of digital labour platforms has the potential to provide prospective workers, including women, people with disabilities, young people and migrant workers, with income-generating opportunities. In developing countries in particular, these platforms are regarded as a promising source of work opportunities, leading many governments to invest in digital infrastructure and skills. Businesses also profit, as they can use these platforms to access a global and local workforce to improve efficiency and enhance productivity, and enjoy wider market reach. The flexibility and better pay compared to other available jobs are the key motivating factors for shifting to a digital global platform. It also is and can become the primary source of income for many others.

ILO World Economic and Social Outlook 2021

The report incorporates the findings of ILO surveys conducted among some 12,000 workers in 100 countries around the world working on freelance, contest-based, competitive programming and microtask platforms, as well as, on interviews conducted with representatives of 70 businesses of different types, 16 platform companies and 14 platform worker associations around the world in multiple sectors.

The report gives some important statistics on the opportunities provided by the digital economy for remote workers. The past decade has seen a fivefold increase in the number of digital labour platforms, which are concentrated in a few countries. The number of online web-based and location based(taxi and delivery) platforms rose from 142 in 2010 to over 777 in 2020.
A significant portion of these platforms are clustered in just a few locations, including the United States of America (29 percent), India (8 per cent) and the United Kingdomof Great Britain and Northern Ireland (5 percent). About 96 percent of the investment in digital labour platforms is concentrated in Asia (US$56 billion), North America (US$46 billion) and Europe (US$12 billion), compared to 4 per cent in Latin America, Africa and the Arab States (US$4 billion). Digital labour platforms globally generated revenue of at least US$52 billion in 2019.

The new localization of recruitment may lie with the international labour pool who have the right skills to work beyond national boundaries through digital connectivity.

 

Digital Labour Economics

The ILO report found that on online web-based platforms, labour supply exceeds demand, placing downward pressure on income. Tracking labour supply and demand on major online web-based platforms since 2017, the Online Labour Observatory found that there has been an increase in both demand and supply for freelance and microtask work. Since the COVID‑19 outbreak, the labour supply on platforms has risen significantly, while the demand for work has decreased and shifted towards tasks related predominantly to software development and technology. The demand for work on the five major online web-based platforms largely originates from developed countries, while the labour supply originates predominantly from developing countries. The evidence indicates that on some digital labour platforms there is excess labour supply, which leads to greater competition among workers for task assignment and puts downward pressure on the price of the tasks to be performed. The global distributions of investment in digital labour platforms and platform revenues are geographically disproportionate.

Startup and BPO Spotlight

The ILO publication mentions that many digital start-ups have emerged around the world, particularly in the field of artificial intelligence (AI), to meet the demands of automated work processes and analytics. As AI technology is still far from fully automating work, such start-ups rely heavily on digital labour platforms and the human intelligence of platform workers, who are dispersed globally, to complete tasks and train machine-learning algorithms through a “human-in-the-loop” process. The business process outsourcing (BPO) industry, for example, is experiencing a transformation wherein customer demands are now being met through digital means instead of the provision of voice-based services, and the customer journey from beginning to end is managed using digital tools.

Employee Monitoring

Work processes and performance management can be judged via algorithmic management of workers and the platform business model as stated in the ILO publication. Platforms can supply a variety of software and hardware tools to facilitate the work process, monitor workers and enable communication between the client and the platform worker. These include monitoring of workers on location-based platforms using the GPS, and tools that automatically capture screenshots or keyboard strokes on online web-based platforms. Moreover, algorithms assess, evaluate and rate platform worker performance and behavior using a number of metrics, such as client reviews and customer feedback.

Challenges for Change

According to the ILO Report, workers in developing countries tend to earn less than their counterparts in developed countries; on freelance platforms, for instance, they earn 60 per cent less, even after controlling for basic characteristics and types of tasks performed. Governments and non-state actors are in many cases regulating digital labour platforms, but these initiatives vary considerably. Countries face challenges in enforcing regulations, particularly with regard to online web-based platforms, where the platforms, clients and workers are located in different jurisdictions.

Success Strategies

Based on the findings The Milken Institute and ILO reports the following select strategies can be recommended

  • Accelerating regional growth through public investments that broaden access to local sectors with high potential;
  • Financing access to education and skills training, including for underprivileged populations;
  • Strengthening business-education partnerships, including just-in-time
  • Learning, agile curricula, and flexible time commitment; and
  • Regular and outcomes-based evaluation of initiatives, to continually identify areas for improvement.
  • Ensuring fair competition and creating an enabling
  • Ensuring fair termination processes for platform workers;
  • Ensuring that platform workers are able to access
  • The courts of the jurisdiction in which they are located if they so choose;
  • Providing for wage protection, fair payments and working time standards;

CEOs cannot assume that HR strategies of the past will ensure the same results in the future. They have to take a more selective approach to growth: they should invest globally in people based on the quality, based on their relevant skills so that they can compete and thrive in a dynamically integrated international pool of workers.

Distances no longer matter as skills will be the decisive factor for competitive human resource recruitment in the localized age of globalized workforce beyond the pandemic.

The Writer is the CEO of MCFG and the Executive Director of Global Chamber © Dhaka. He can be reached at maimun@globalchamber.org

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