Charles Ferguson | What remote work can do for global development

A revolutionary opportunity for human development and economic growth has been emerging over the past 30 years. Modern information technology has the potential to enable large-scale remote work anywhere on the planet, and also to help countries gradually create entire technology sectors and ecosystems.

Much educational and economic activity can now be decoupled from physical location, providing opportunity to those who lack access to traditional schools or workplaces. But while this opportunity is well understood within the technology sector, it is insufficiently appreciated more broadly.

For most people in developed countries, the remote work revolution was triggered by the COVID-19 pandemic in 2020. But an even broader revolution – still in its infancy – has been gathering force since the rise of commercial internet services in the mid-1990s.

This revolution wasn’t immediately evident because, for the first 20 years of the internet revolution, technology still heavily favoured geographical co-location and concentration. Telecommunications bandwidth did not yet support high-quality videoconferencing, and computer hardware still needed to be located near its users – ‘on-prem’. Educational and business activity therefore still favoured physical proximity to universities, corporate campuses, office buildings, research and development facilities, computer systems, and even factories.

Over time, these requirements loosened. Cloud services removed the need for on-premises computer hardware and its associated costs. Faster broadband services paved the way for high-quality global videoconferencing and e-commerce systems, and enterprise SaaS (software as a service) platforms enabled remote-job searches, hiring, advertising, sales, payments, and purchasing. Mobile and satellite networks then extended internet connectivity to rural areas, where online education services allowed for remote learning of English, software engineering, and many other subjects.

Gradually, physical proximity became less important. Initially, this change was evident in the rise of Indian outsourcing industries – such as call centres and software – and in the first major start-up ecosystem to emerge outside of the United States, namely in Israel. In time, others, including Taiwan, China, the Philippines, and Ukraine, also developed outsourcing sectors, start-up ecosystems, or both. And even in countries without technology ecosystems, many smart, energetic young people around the world learnt English and coding, began working for Western companies, and started their own.

But until COVID-19, a variety of cultural and psychological barriers still prevented the full exploitation of remote work. The pandemic, however, created an immediate, urgent need for it. In the first half of 2020, the share of US white-collar personnel working remotely skyrocketed from six per cent to 65 per cent.

EXPERIENCE

Suddenly, even start-ups – which had previously considered physical proximity essential – began hiring software engineers wherever they could find them, from Argentina to Ukraine. I speak from experience. The people I hired during this period had mostly learnt English and coding online, working for managers they never met in person.

Smart, entrepreneurial individuals now can learn from almost anywhere through what has become a highly developed online infrastructure, much of it free, provided by the likes of Khan Academy, YouTube users, LinkedIn Learning (formerly Lynda.com), Udacity (now owned by Accenture), and various universities, such as MIT’s OpenCourseWare. There is now also a highly developed infrastructure for global remote work (think Stripe Atlas, Carta, Deel, AngelList), including use of stablecoins to pay remote workers even in countries with volatile or non-convertible currencies.

Such tools are helping people around the world pursue the traditional Silicon Valley career path. After learning coding, they can advance through working for a technology company, joining a start-up, founding a start-up, and eventually becoming an angel investor or venture capitalist. But this process could go much further, with potentially profound benefits for many countries’ educational, economic, and human development, and particularly for traditionally disenfranchised groups, such as the poor, women, rural communities and people lacking formal education.

To seize this opportunity, however, developing countries need to move from being merely a site for outsourced work to developing a full entrepreneurial ecosystem that includes start-ups, incubators, venture capital, and public markets.

In many cases, the principal bottleneck is policy, not money. But the most urgent policy challenges vary according to nationally specific conditions – income and poverty levels, urbanisation, telecommunications infrastructure, educational levels, discrimination against women and minorities, degree of protection afforded to incumbent industries, currency controls, immigration policy, and the legal and tax environment.

EDUCATION

As with every technological revolution, this one also brings risks. Given that traditional, in-person education is one of only a few institutions that still promote social cohesion in the internet age, its disruption could have undesirable implications. Similarly, Silicon Valley engineers already fear losing their jobs to foreign workers; such job losses, if they occur on a large scale, could have profound social and political consequences.

These are legitimate concerns. But I and many others in the technology world believe that remote work represents an opportunity for global development that dwarfs the importance of traditional development aid. Moreover, its importance is about to grow, because artificial intelligence will amplify both the problems and the opportunities.

Consider the example of learning English, currently essential since it is the global language of science, information technology, and business. Within five or 10 years, this skill may no longer be necessary, because AI will enable universal real-time translation, subtitling, and speech interpretation.

Similarly, AI will soon make it far easier to create legal documents for incorporation, hiring, and contracting, sharply reducing the real, appropriate barriers to entrepreneurship. In the process, it may also threaten the entrenched positions of incumbents that currently have a chokehold on many national economies.

Will governments seize this opportunity? If they do, will they move wisely to mitigate the dangers that the remote-work revolution poses? While some appear to be well- positioned for the moment, many others are not. They will need to move quickly to join a revolution that already has built up a powerful head of steam.

Charles Ferguson, a technology investor and policy analyst, is Director of the Oscar-winning documentary Inside Job.© Project Syndicate 2024www.project-syndicate.org