Before the COVID-19 pandemic, the double cost-cutting paradigm of outsourcing and offshoring typically applied to the supporting and low-skilled labour force: call centres and business process outsourcing in Bangalore and Lahore operating for companies in Boston and London, for example. However, for high-skilled workers – such as lawyers, economists and journalists – physical presence still mattered. But during pandemic lockdowns, professionals stayed at and worked from home.
To some extent at least, this new professional work order seems to be here to stay. A 2022 survey of a representative sample of workers in the United States found that 87% would choose to work remotely, should they be given the opportunity. Highly educated white-collar workers in particular have a growing appetite for working from places other than the office. Meanwhile, there is some concern about anywhere jobs: high-skilled work that could, in theory, be delivered from anywhere around the world. Governments fear an exodus of digital professional work and talent to offshore destinations. The creative, innovative and software-savvy work of graphic designers and digital content creators is thought to be the ‘most anywhere’ of all. In the ivory towers of science, the most delocalised teams, co-working from diverse locations, appear to be the most productive.
Does this mean professional work will go the same way as low-skilled labour? Will graphic designers and business consultants also be outsourced and offshored? If professional work could be done from anywhere, where would it flow to? Following the logic of past outsourcing and offshoring, most anywhere jobs should start to be found where labour costs are lowest.
Lessons from the online gig economy
One of the fastest growing and most globally connected parts of the labour market is the online gig economy, which tells us something about how remote labour markets could develop. Online labour or ‘gig’ (project-based work) is facilitated by a digital marketplace via which services are exchanged around the world, through platforms like Fiverr and Upwork. Consultants from Nairobi might draft marketing campaigns for firms in New York, while graphic designers from Bangalore can design logos for buyers in Berlin.
In theory, this online-mediated work should follow the low-cost logic of outsourcing and offshoring because the online labour market is inherently digital and little regulated. However, we examined 1.8 million gigs offered in from more than 100 countries between 2013 and 2020 and found that professional work doesn’t follow this logic. On a global scale, the forces of supply and demand, of low-wage levels and labour-cost arbitrage kick in. Much of the online professional work is demanded by clients on the US east and west coasts, in Western Europe and in Australia, while many of the online workers come from Eastern Europe, South Asia and the Philippines. But we also found that work migrates towards the city.
Capital cities alone accounted for one third of all online workers that we monitored, both in Global North and South countries. In OECD countries, an individual working on online gig projects is 3.3 times more likely to be from the capital region than from any other part of the country. For Global South countries, online gig economy workers are 15 times more likely to be in the capital region.
This contradicts the logic of cutting costs, in which borderless work should flow to rural regions where wages are low. One could argue that low-skill gigs will accumulate in the digital sweatshops of the suburbs but, in fact, they don’t. Project wages are significantly higher in cities than in the countryside. On average, workers in the capital earn 24% more in OECD countries (35% in the Global South). Online gig workers in Berlin make 21% more than digital hasslers in Brandenburg, freelancers in London earn 22% more than in Wales, and Parisian project wages are 40% higher than in Normandy.
Skills are paramount for understanding this global urbanisation of remote work. The gravitational forces of the metropolis attract the most high-skilled (and thereby costly) talent. Job opportunities, higher income, better access to healthcare and generally higher levels of life satisfaction make cities attractive places to work and live in. This is one reason why the World Economic Forum projects that in the next decade, nearly half of all global GDP growth will come from about 400 cities. For work, urbanisation seems to be a much stronger force than digitalisation, showing that just because a job can be done from anywhere, it does not mean that it will go everywhere.
Rural versus urban
In the context of increasing online and remote work, what does the shift to cities mean for less-affluent rural regions that could be deserted of talent? And what will this change bring to cities, already struggling with limited affordability of housing and childcare, and deteriorating infrastructure?
Urbanisation will most likely continue to accelerate. New concepts to improve and make life liveable in the mega cities, and to make cities more resilient and sustainable, are needed urgently. This can include greened rooftops, community networks or use of AI to improve the planning of infrastructure. But what about the rural regions? Fortunately, digital work outside the city is possible and, eventually, profitable.
Some rural areas 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: good internet infrastructure, a strong local economy with a focus on the 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 programmes. 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 Areas outside the city should also provide the perks the city offers in terms of cultural affluence, health and access to childcare. Unless rural areas are attractive places to live, as well as to work, they will not attract the anywhere jobs.