Telemigration: Exploring the Links Between Technology, Work, and Migration Patterns
By Medha Kapoor
Introduction
As remote work becomes an increasingly common phenomenon, this article discusses the ways in which the integration of technological mediums in the workspace can reshape the very concept of ‘work’ in the years to come. Technological advancement has the potential to not only bridge geographical distances but also profoundly impact the dynamics between employees and employers on a global scale. We are witnessing a significant transformation in the demand and supply of skill sets required by the job market as employers now have the ability to hire individuals from remote locations. This emerging trend is what we refer to as “Telemigration.”
Richard Baldwin, in 2019, was the first to coin the term ‘Telemigration,’ referring to the phenomenon of people living in one country but (remotely) working in the offices of another country, by use of videoconferencing tools and sophisticated technological interfaces.
In 2006, Alan Blinder predicted ‘Offshoring’ to be the 4th Industrial Revolution. Each new technological revolution in work has shown a spurt in productivity with consequences for the organization and demographic composition of workers. The driving principle in the era of globalisation is this: when the cost difference across countries is larger than the trade cost, companies will tend to exploit the cost gap by buying low and selling high. In the case of the “service economy” this translates to employing migrants from countries wherein the international cost differences make it profitable to do so. Digital sophistication has opened the doors for remote work. Economically, this means opening the possibility for rich nations to find, hire, pay, manage and fire remote workers in poorer nations, without necessarily sponsoring migrant visas and green cards.
The Economics of Telemigration: Who Does it Benefit?
Telemigration as a phenomenon has been able to evolve in the global era because it is ultimately economically profitable on both sides of the service economy. It is profitable to multinational employers because it reduces infrastructural and labour-wage costs. On the other hand, it directs service sector jobs to employees in nations who would have been excluded from the labour force by sheer geographical distance. The larger the ‘available’ pool of potential employees, the more bargaining power employing companies may have to control wages, making telemigration profitable in cases where an international employee is equivalent to a domestic one performing the job. This also goes hand-in-hand with maintaining the incentive for developing nations to produce skilled workers by investing in education because an increasing number of global employment opportunities are being directed to developing nations.
While telemigration presents an opportunity for emerging market workers, some are worried about its impact on advanced economy service workers as this provision can give developing nations a chance to exploit their comparative advantage of low labour costs without having to build and export goods.
Possibilities of off-shoring, re-shoring and robotization using Artificial Intelligence are all part of potential paths that re-thinking of business strategies can take in the coming years. Developing countries, starting at the turn of the millennium, have been able to upskill their labour force and develop home-grown production infrastructure to standards at par with global requirements, while still being relatively cheaper than labour in developed nations.
This upskilling and potential for quality production at cheaper prices has given incentives to multinational corporations to move their activities from developed to developing countries, giving developing countries more work, and hence income, from global corporations. For example, Boston Consulting Group has reported that wages in China and Mexico increased by 500 per cent and 67 per cent between 2004 and 2014, respectively.
Factors That Contribute to Telemigration — Evidence from the US
The International Telecommunication Union’s 2022 figures report that 5.3 billion people, i.e. 63% of the world’s population, with 44% from the developing world are online. Remote work is likely to keep up and increase the trend of hiring globally diverse teams. Boston Consulting Group’s Henderson Institute published a report that found 95% of senior executives were keen to embrace globally diverse teams.
The World Bank’s 2023 World Development Report cites that in June 2022, 80% of the US was working part-time or full-time remotely. The report also notes that a reduction in technological barriers could lead firms to hire more “tele-migrants” from lower-wage countries, as opposed to opportunities for people who would have otherwise migrated.
Tele-work trends show that it is geographically unevenly distributed. The Uneven Geography of Remote Work analyzes incidences of remote work in between different commuting zones in the US to draw patterns between the possibility and propensity of remote work, showing a clear positive relationship between the number of jobs that could be performed remotely (as per the nature of work) and the number of jobs that were actually taken to the remote domain by companies. Additionally, as expected, commuting zones with a higher proportion of college-educated workers were more likely to have higher incidences of remote work.
The phenomenon of moving out of superstar cities to mid-size cities (with Austin, Texas topping the list) has been observed with increased flexibility brought by remote work. High living costs in superstar cities that contain offices of big corporations are acting as push factors to migrate to mid-size cities with more affordable living costs with hybrid and remote work models. This has been termed as the phenomenon of urban exodus, in light of post-covid shifts in geographic trends. Aside from the nature of the job, the level of education was also an important factor. College-educated employees were more likely to choose to and succeed in remotely performing jobs vis-à-vis employees who were not college graduates.
Challenges and Opportunities for Telemigration
But is remote migration advantageous for companies? By transferring a position in a country where labour is tenfold or less expensive, coupled with the need to invest in other expenditure that comes with maintaining office infrastructure, the cost savings are significant for a company.
Telemigrants do not require a visa if working from their home country and can be eligible for a digital nomad visa if they choose to remotely work while residing in a country other than their home country for a short period of time. The lack of requirement for giving out work visas and green cards to telemigrants falls in line with the agenda of many governments to curb migration from developing nations while still availing the benefits of less expensive labour.
An important question raised by the provision of remote working is whether a domestic remote worker in a developed country is interchangeable with an international telemigrant residing in a low-wage country. Richard Baldwin and Jonathan Dingel have introduced the ‘CAGE’ model to assess metaphorical distance in assessing whether a telemigrant can replace a domestic remote worker and the choice of country for a particular task. ‘CAGE’ stands for cultural, administrative, geographic and economic factors creating “distance” between service economy telemigrants and the corporation’s clientele or customers residing in the corporation’s country.
Their analysis sheds light on the counterintuitive finding that distance matters more in the case of trade in services than trade in physical objects. Taking into consideration time-zone differences, differences in legal institutions, colonial links and culture and dialect, even telemigrants who may be native English speakers are not always perfect substitutes for domestic remote workers. While Baldwin and Dingel acknowledge the trend of increased offshoring from high-wage to low-wage nations, they also recognize that many jobs that can be performed remotely require soft skills that make domestic and foreign workers imperfect substitutes.
Artificial Intelligence’s Impact on the Skill-Set in Demand
Alan Turing famously said that the difference between a human brain and a computer is one in degree and not in principle. In 1950, he foretold a time when humans would no longer be able to distinguish between interacting with a human and a digital machine — terming this as the ‘Turing Test’. One would believe that 21st-century AI has the potential to pass the Turing Test, holding the capacity to replace mental tasks, unlike previous waves of mechanization which only replaced physical tasks. However, experts feel it is too early to determine whether the advent of AI will be labour-augmenting or labour-saving.
A 2018 ILO research paper on the ‘Economics of Artificial Intelligence’ points out the potential for AI applications to raise the demand for interpersonal, less technical occupations in the coming years, which will quell some of the concerns regarding AI further widening inequality. AI may also present a challenge for developing nations by driving up informality if jobs currently employing labour get replaced by higher productivity technological solutions. ILO points out that there will be a need for policy formulations that aim at evenly distributing the shared benefits from an AI-based spurt in productivity, as historically, increased educational attainment has led to the creation of skill-biased technology.
The history of automation dates to the first and second industrial revolutions in the 19th and 20th centuries which was mechanistic and created a demand for low, unskilled labour and the “scientific organization of work”. The third industrial revolution is considered to be the advent of computers from the 1970s onwards. This technological revolution created the demand for medium and high-skilled workers, pointing to the skill-biased nature of its technology.
Similarly, the question to be asked over an impending technological revolution driven by AI would be its impact on the demand for low-skill vs high-skill labour force. The United Nations Conference on Trade and Development (UNCTAD, 2016) predicted that the historical labour cost advantage of low-income countries might be eroded by robots if they become cheap and easily substitutable for labour.
It needs to be noted that telemigration largely impacts the nature of white-collar work, not blue-collar work. However, with provisions for white-collar work in many sectors to go remote, it is possible that in the future, developed nations may prefer to sponsor visas for requirements of blue-collar and pink-collar workers involved in caregiving and white-collar professions where current digital sophistication cannot replace human physical presence.
Possibilities for telemigration coupled with the onset of AI, like previous waves of industrial revolutions, are likely to impact the nature of work. However, it is unlikely to make a whole class of high-skill or low-skill workers redundant. While AI has given birth to the looming anxiety of it having the potential to replace both mental (white-collar) and physical (blue-collar) labour, at the point of reaching such technological sophistication it is likely to create new classes of jobs such as to manage AI prompts or create new-found importance for jobs where interpersonal human interaction is more desired than needed.
Learnings for India
Telemigration, which has also been called the fourth industrial revolution by some, is predicted to be an opportunity for India. At present, India has roughly 1.2 million flexi workers and this is projected to touch 6 million in 2 years.
Depending on how large companies adopt these new dynamics, it is estimated that by the end of the next decade, 80% of the workforce in India will be working on flexible contracts. Recruitment processes are also changing — freelance specialists already use popular platforms to sell their talents and services to multiple employers. Non-core, but critical functions will likely be increasingly outsourced and technology platforms will facilitate the growth of large supply chains for talent.
Economists feel there is a need to let telemigration reach a state of boom in India before governments decide whether taxation policy should be lenient or stringent towards it. If learnings from the US case study are to be applied to intra-India remote work, the coming decades may just witness a small wave of reverse migration of white-collar workers who can remotely perform jobs, from metro cities with high living costs to tier-2 cities which may become their hometowns.
Conclusion — Telemigration and the Future of Global Work
Globally, the extent to which provisions for telmigrants will impact the demand for international in-person migrant labour will depend on a supply-demand price dynamic. If technological resources become cheaper than the in-person presence of international migrants without significantly hampering service quality, then technological sophistication may have the potential to replace some in-person jobs currently done by international migrants. However, this could result in a growing pool of available labour, as technology mitigates distance across geographical barriers, leading to the availability of more labour for lower wages than before.
In this global world of work, different degrees of equilibrium may continuously be sought rather than one fixed outcome for work in the future, thereby affecting migration and settlement patterns to facilitate the same. Ultimately, any revolution in the nature and organization of work in this global context is bound to have a profound impact on geographic settlement and migration patterns.
Medha Kapoor is an intern at India Migration Now.
Editorial Support by Pooja Bhatia.
