Offshore data processing
This article by Andrew Bibby, in a slightly different form, was first published in Teleworker magazine (UK), Dec 97/Jan 98
With effortless ease, teleworking has the ability to vault across international borders. Computer communication doesn't stop at frontiers, and increasingly work doesn't either. A world which has already seen manufacturing become a global industry must now, thanks to IT and telecoms technology, get used also to the globalisation of the service sector.
It is happening already. Call centres in Britain and Ireland routinely handle incoming calls arriving from continental Europe, with staff primed to answer each call in the appropriate language. Conversely, out-of-hours calls from Britain to some companies may be picked up by call centre staff in north America.
But it is in the area of data and information processing where the international distribution of work has become most developed. Relatively low-status work, including data entry and text entry, has moved away from higher-wage areas such as north America and Europe and has gravitated towards 'offshore' centres such as the Philippines and the Caribbean islands, where labour costs (and often labour conditions) are not so high.
Appropriately enough, islands seem to play a particular role in offshore data processing. Caribbean islands are well-placed in terms of geographical and time-zone proximity to north America, with Barbados and Jamaica the most important centres for this sort of work. There are also small operations in, for example, Trinidad, Grenada, St Kitts and the Dominican Republic. (On the mainland, Mexico is also developing a data processing industry). Elsewhere in the world, Mauritius, Madagascar, Sri Lanka, Malaysia and in particular the Philippines are among countries with data processing sectors.
The Philippines was ranked first in a 1992 study funded by the World Bank, which reported that it had found 2,000 keystations producing over 100 billion keystrokes a year there. "From data entry services, companies have extended their facilities and manpower capability to include transcription, character substitution, validation, report generation and computer´ processing," it added. It was in the Philippines that, among other things, the computerised catalogue for France's new national library in Paris was compiled.
The main economic factor driving work offshore has been the lower overheads, and especially the lower labour costs. A recent report for an international trade union organisation gave detailed wage rates for data entry work in eight Caribbean countries, comparing them with rates for similar work in the USA. Whilst US workers were typically earning $7-$8 an hour, staff in Barbados received $2.00-$2.88, workers in Grenada $1.26-2.10, St Lucians $1.10 and Jamaicans $0.80-$1.00. Whilst the exact rates quoted may no longer be accurate, the essential message is easy to deduce.
What's more, in recent years mainland China where wage costs can be even lower has begun to challenge the traditional offshore information processing centres. The Californian-based Digital Imaging company, for example, has shifted much of its basic keyboard inputting work to its centre near Beijing away from its unit in Barbados, claiming that Barbados is no longer competitive for low-status keyboarding work. The arrangement in China is for the same text to be input separately by two or even three workers, and then automatically compared for errors. (Quality control remains in Barbados.)
So does the offshore information processing industry hold any interest for those of us in the British Isles concerned about teleworking? The industry in fact predates the development of electronic communications: early centres in the Caribbean in the mid-1960s used cargo ships to bring in the raw materials for processing, back in the days when mainframe computers had to be fed with punchcards. However as would be expected these days offshore companies are now increasingly using telecoms links, especially satellite links, to send and receive data. This means that, if your definition of the term 'telework' combines the two elements of remote working and the use of information and communications technologies, then most offshore information processing falls firmly within the telework category.
Perhaps more to the point, much of the work which is being tempted offshore is the sort of work which telecottages and local enterprise organisations in Britain and Ireland have identified as potential employment opportunities for us, too. This was a point which rapidly became clear to me when, in the summer of 1997, I visited a number of information processing companies in Barbados, many of them clustering around the Harbour industrial area of the island's capital Bridgetown.
To take one example: the pioneering Western Isles ICT Advisory Service recently announced its success in encouraging Oxford University Press to outsource specialist text mark-up work to teleworkers in the Hebrides, clearly an innovative approach to the economic development of a geographically remote part of the British Isles. But the Western Isles has´ competition: OUP and several other British publishers are already outsourcing very similar work to Offshore Keyboarding, Digital Imaging's subsidiary in Barbados.
Or another example: also in Bridgetown, I watched Barbadian women working for the locally owned company CAST Information Processing inputting 'resume' (CV) information for clients of US employment agencies. The work was almost identical to that which I had seen workers at the Kite telecentre in Co Fermanagh undertaking a few years ago. Interestingly, CAST clearly meets even a rigorous definition of telework: as well as using staff in its Bridgetown centre, the company also puts out work to home-based teleworking sub-contractors.
Information processing has been identified by the Barbados government, and by its Barbados Investment & Development Corporation (BIDC), as of a growing strategic importance for the island economy. Currently about 2% of the workforce, about 3,000 people, are employed in the sector. The vast majority employed are women.
However there is considerable variety in the sort of work being undertaken. The largest company, Caribbean Data Services, was originally set up by American Airlines to process the data from the airline's used tickets, but has since diversified and now also undertakes accounting work and the processing of insurance claims. CDS employs well over 1000 staff. Canadian-based insurer ManuLife also handles insurance claims from its base in Bridgetown.
NDL, a subsidiary of the US database marketing firm R L Polk, has had a series of centres in Barbados for many years. It recently relocated its staff to a new building on the outskirts of Bridgetown, where three hundred employees process the marketing information voluntarily supplied by American consumers when returning guarantee cards for electrical and other goods.
Digital Imaging's Offshore Keyboarding subsidiary also has about 300 staff. As well as the mark-up work for publishers already mentioned, the company also processes the delivery records of the FedEx and UPS courier services and is involved in database development work, converting paper-based records into digital form. According to the company's senior vice president Shane Lynagh, this latter area of work has almost limitless possibilities for growth, as organisations increasingly decide to digitise their past archives of paper records.
The BIDC itself offers the following list of business activities carried out by its information processing companies: "payroll accounting, computer aided design, pre-press activities, insurance claims processing (including adjudication), database development, market and consumer surveys, archiving, in-bound telemarketing, document indexing and abstracting, basic´ data entry and more recently software development". This last category is being undertaken by a US-Indian software venture Total Technology Solutions Ltd, which is trying to replicate in the Caribbean some of the success which the Indian software industry in centres such as Bangalore and Bombay has been enjoying in recent years. TTSL's impressive office suite in the Harbour area of Bridgetown could be anywhere in the world, and indeed the company has set out to build a deliberately multi╗racial workforce. Software developers from Britain and Ireland are currently being recruited, mainly via the company's Web site.
The Barbados government and the BIDC are aware that very low-skilled work will be migrating away from the island to countries such as China, and that the future lies as far as possible in attracting the high-skilled end of the information processing sector, or in other words companies like TTSL. As the BIDC's chief executive office Lawson Nurse points out, "Barbados is not a cheap labour destination in which to do business". He goes on, "Given the current level of our development and the niche markets which we have secured, I would say that our closest competitor today is probably the Republic of Ireland".
Whilst this comparison may be partly designed to be provocative, it is
nonetheless a timely reminder for Ireland and indeed Britain too that work
is increasingly footloose. The work which will remain, here as in Barbados,
will be high-value and high-skilled. A lot of people around the world are
looking to find that work, and retain it.