[September 19, 2004]

Offshore Teleservice Opportunities in Developing Countries

BY RICHARD ZIELINSKI

By cutting long distance communications cost to near-zero, fiber optics have broken down the economic and the technical barriers to trade in services worldwide. In terms of cost, quality and efficiency, we are in the midst of a telecommunications revolution. The effects of this revolution are being felt in every sector, from migration, investment, real estate and education, to trading, governance and law.  

These technological innovations have opened global labor markets to new opportunities of integration that is emerging as one of the most important economic developments of our time.   The effect of the Internet on employment opportunities in many developing countries has already been massive. The ability to instantly share data files has opened countries up to new opportunities for service employment. Today software engineers in China sell their products worldwide. Loan analysts in India pour over credit histories of U.S. clients and e-mail their findings back to U.S. banks. Investment firms are moving $90,000-a-year research jobs from New York to India because there is no information in Manhattan that can�t be instantly shared with New Deli over a company intranet. Legal services, designing, computer programming�all of these tasks and more have been outsourced to the benefit of both the sending and the receiving countries. Between 1989 and 2000, services exports grew at 10.7 percent per year, exceeding the growth rates of manufacturing exports.

Until recently, services that were both produced and consumed at the same time were thought to be protected from outsourcing. Some, like haircuts, are, but VoIP is rewriting that rule for other positions. The employment skills needed for teleservice jobs call for creativity, accuracy, critical thinking, politeness and charisma. For most Northern consumers, using outsourced call center services will be their most intimate experience with the forces of globalization. 

As opposed to data transferring jobs, like writing software and computer programming, real-time teleservice jobs are centered on education, mediation, personal counseling, health services, marketing, sales, customer service and the like. Expanding North-South wage differentials are driving companies to continue this trend, constantly pushing limits. The future of this phenomenon is restricted only by the imagination and the creative abilities of entrepreneurs worldwide. 

Already in the dynamic economies of North America and Western Europe, we see the performance and sale of high-skill professions across great distances in the areas of telemedicine and tele-education. This is a very exciting concept, and it clearly illustrates how high-skill service jobs can be traded online. It is a significant development for LDCs, as well, because they are equipped to take on some of these higher-skilled jobs and respond to global demands. Today mostly lower-skilled jobs are outsourced, but the range of higher-skilled jobs is widening all the time. Consider the following possibilities ranked according to skill level.

LOW-MEDIUM-SKILLED WORK

Many jobs that are not traditionally done over the phone will shift to become teleservice jobs. For example, the Internet has completely transformed the tasks of the travel agent. In pre-internet days they were essential coordinators, but now many customers buy tickets and book reservations online themselves. The travel services industry has had to respond and restructure, resulting in a more focused and competitive trade. Even with the Internet, sometimes customers need to discuss their options with knowledgeable agents. There isn�t anything, however, that a travel agent in a distant country can�t do for a client that an agent down the street can do (other than shake his or her hand). Both will have access to the same information, and both can specialize in niche markets. Astute companies will even have you speaking with travel agents in the region to which you are traveling.

Service providers need to completely rethink how essential for them it is for physical proximity to deliver everyday services. In the case of the travel agent, physical proximity is not essential. Travel agents need to talk to their clients in real time, but the interaction is information based and completely exportable. If we look closely, many jobs are like this, and the implications could be dramatic. The Boston Consulting Group, speaking generally about the service industry, estimates that anywhere between 30 and 40 percent of service jobs could potentially be performed in LDCs. Indeed, many jobs that you might think could not be exported are, in fact, prime candidates. 

MEDIUM-HIGH-SKILLED WORK

Teaching, for example, is not an area where developed countries have sole comparative advantage. For instance, language learning offers considerable opportunities for LDCs to service the global market. Language learning is most effective in a conversational context, as opposed to subjects more easily learned out of a book. The best way to learn a new language is to engage with native speakers. For most people this is also not an option because private tutors are too expensive, native speakers do not live in their vicinity, or both. Personal sessions over televideo would be an excellent substitute or practice tool for any language student. For the first time ever, the zero cost of distance voice communication, as well as video communication, makes this an economically viable business.

Rather than pay a personal tutor $25 an hour to meet and practice Spanish, it would be easier for consumers to stay at home and pay $4 an hour to learn from a teacher in Peru over a videophone. The entire process online would be cheaper, more efficient than and almost as effective as the alternative. Companies could set up Web sites that allow learners to schedule multiple appointments with the same tutor, and the session could incorporate multimedia tools, such as drawing, music and text. As it is such a cheap option, it doesn�t have to replace language classes but rather supplement them, offering expanded opportunities for one-to-one practice.

Language learning shows us that there are areas in which people in developing countries can teach citizens in the North. Tele-education offers us the chance to learn across borders in fun and interesting ways.

HIGH-SKILLED WORK

As we move up the skills set we can see how developing countries can contribute in distinctive ways to their own employment in teleservices. One of the most exciting areas where they can participate is in health services. There are many ways that telemedicine is transforming health care in the U.S., but also consider how doctors from the developing world can participate in telemedicine.

Counseling and psychiatric services are obvious candidates. This is a highly skilled profession in which doctors listen to patients describe their problems and try to help them understand and solve those problems. It is a difficult and time-consuming task that can take months, even years, of work to properly treat a patient. It is also a job that could be performed over a televideo connection. The prices of psychiatric services in the U.S. are substantial, in large part due to the dearth of trained psychologists. With these high wages and soaring depression rates among the general population, many people suffer without ever having the luxury of professional treatment. This is an area where a country like India, with its large English-speaking and educated population, could fill a significant market niche.

Telepsychiatry is not, obviously, as ideal as sitting in a doctor�s office and discussing your problems, but the alternative for most patients is to see no doctor at all. Meanwhile, governments all across Europe and North America are struggling to support health regimes saddled with huge mental health bills. When we look at it in this light, the ability for this kind of trade to produce mutual benefits is obvious. Offering psychiatric services via televideo has actually been in use for years, originally practiced by the U.S. prison system as a way to circumvent the high costs and risks associated with moving prisoners (as doctors often refuse to work inside the prison). Australia has been a leader in this trade, offering telepsychiatry to its widely dispersed rural populations with surprising results. Jim Briggs, director of the Telemedicine Information Service at the University of Portsmouth, explained how some doctors have noticed that the detachment produced by technical production actually helps patients to feel more comfortable in opening up. 

Nursing is also a profession that is starting to move online. Many hospitals are encouraging patients to take home with them monitoring equipment that they can then plug into the wall, sending their vital signs directly to the nurse�s computer so that the nurse can monitor them from afar. The nurse and the patient can then communicate in real time if they need to discuss the significance of the readings. This system saves rooms in hospitals, time for nurses and money for patients, and it has been proven to be as effective as the alternative. Offshoring these tasks would be an excellent solution to the vast shortage of nurses that the aging populations of Europe and the U.S. currently face.

These are only a few of the possible roles that citizens in developing countries can fill.  There are certainly more options that are available now and in the future. It takes a deep understanding of cutting edge technologies and an imaginative mind to create new business ideas and to transform them into reality. Fortunately, many people around the world are doing just that, and it is this entrepreneurial spirit that has emerged as the engine of global economic growth.