Advanced information and communications technology is providing significant new business and employment opportunities in regional Australia, according to a new study commissioned by the Rural Industries Research and Development Corporation (RIRDC).

Known as eWork, the new information technology offers important implications for employment in areas previously seen as too remote from markets for business services. Associate Professor Peter Standen, at the School of Management at Edith Cowan University and Dr Jan Sinclair-Jones, from the Faculty of Media, Society and Culture at Curtin University undertook the study.

It looked into business services that can be delivered electronically from distant offices. They investigated factors affecting decisions to use workforces in such areas  and considered the implications for communities, workers and governments.

The research draws on survey data and analyses case studies and information from available literature. It recommends creating policy to address the development of existing and new eWork industries in regional and rural areas. Although less significant than in the private sector, the role of public sector agencies in developing eWork has shown leadership in employment practice.

For example, the Australian Public Service introduced the world’s first home-based work industrial award and a number of State agencies including the NSW Road Traffic Authority and WA Department of Transport introduced home-based telework programs in the 1990s.Internationally, telework and telecentre programs in the United States have been targeted towards regional development or urban re-development to reduce Traffic congestion.

The eWork services studied involved sales (telemarketing and mobile sales work);customer service, including providing information, counselling and advice; data processing typing and other forms of data input; software development, maintenance and support; accounting and other financial services; human resource management, training and management support; and editorial, design and creative functions, including research and development.Regional authorities in Australia are interested in the extent to which the increasing mobility of service work can benefit areas outside the metropolitan capitals.

This research reports on the extent of eWork in regional Australia, the factors encouraging managers to use eWorkers in regional areas, and the consequences of this new form of work for local communities.

 eWork in Australian business establishments.

Weighted figures, % of establishments of that size; Sample sizes small 699, medium 248, large 84 establishments.
 

While the most publicly acknowledged form of eWork in Australia is the call centre, they are a statistically minor part of the eWork phenomenon. The results show that 19 per cent of surveyed business establishments use eOutsourcing and four per cent use electronically-linked remote offices. But only 13 per cent of these examples of eWork involve call centres.

The work shows eOutsourcing and remote offices are used to deliver a wide range of services beyond the customer services and telesales functions found in call centres. Analysis of the reasons user respondents gave for choosing an eOutsource supplier showed that technical expertise was the most common response, followed by long standing relationship and good reputation, for both regional and capital city respondents. Physical proximity and the possibility of face-to-face meetings were not mentioned at all by capital city users, and only slightly by regional ones. Proximity to parts of the using organisation was also not important for either regional or capital city users.

The Study
A literature survey examined the eWork issues, with a follow-up telephone survey of more than 1000 employers, examination of case studies on managerial decision-making, and interviews with regional development officers around Australia.

The literature survey showed that the growth of eWork comes from corporate strategies to use new technologies to reduce costs. This is done by centralising or rationalising existing workforces, accessing new remote workforces having greater expertise or lower costs, or expanding the firm's reach into remote markets.

Government regulations, and public perceptions about the desirability of remote employment, also influenced managers’ decisions on the location of eWork.

With eWork constantly evolving since it began in the 1970s, the focus changed as new communications technologies became available, from home-based telework to back offices, first in suburban areas and later in rural areas, and then to call centres. Call centres and back offices then developed into shared processing centres covering a range of financial and internal or customer services.

Interviews revealed that call centres received considerable attention as vehicles for regional employment growth. Managers and regional development officials said call centres provided significant jobs in some larger centres, and are increasingly used across a range of sites in regional Australia.

Managers valued regional call centre sites for their lower turnover, cheaper labour costs (in some cases), better work performance and lower site costs. There also is evidence that call centres are attracted to regional areas by government incentives, and by public pressure on large firms and public sector agencies to increase regional employment.   Australia also offers cheaper operating costs, with office rental and telecommunications rates lower than most regional centres, including Singapore and Hong Kong. Of the 130 or so call centres servicing the whole region, around 110 are now located in Australia.   Some officials were concerned that “offshoring” and concentration of multiple sites into large central facilities would make regional locations unattractive in the near future, and a few councils had lost interest in this industry. As well, population size presents strong limits to the call centre workforce in many regional areas.

Savings in labour costs for labour-intensive eService industries estimated at 40 per cent or more in developing countries such as India, Malaysia or the Philippines compared to Europe or North America are very relevant. Australia competes with these nations in some areas, notably in call centre services.

Generally less-skilled Australian jobs are likely to move to cheaper offshore locations and rapid economic, technical and educational development in some Asian countries may soon exacerbate this trend. But Australia can compete for medium and higher cost eWork because of its multi-lingual workforce, high education levels and high levels of technology adoption. An authority recently commented that the main attraction for foreign companies is Australia’s multilingual work force. Despite being an English-speaking country, one in every 20 Australians was born in Asia, and at least 150 languages are spoken by the nation’s 20 million people.

Australia also has a strong ‘teleculture’ and ‘e-culture’ based on the use of telephones and the internet for both consumer-to-business and business-to-business transactions. This is not uniform across services, with some high-skill areas being aggressively developed in parts of Asia. India, and increasingly China, have rapidly acquired world-class expertise in software development and IT-enabled services, while retaining cost advantages over Australian firms.

Important too is the value of the Australian dollar. Favourable exchange rates may tip the balance towards our strong education system assets, broadly spread cultural capital, advanced expertise in the service professions, good ICT infrastructure and strong e-cultures.

Classification of business services by cost.

These comments illustrate the dynamic and competitive nature of the medium-cost services market. It may be that high-cost services, although presently less-developed as an export market, offer a better long-term advantage. One analysis of the market for expert eServices highlights Australia’s ‘exceptional record’ in creative, scientific, technical and cultural innovation and problem solving as a key asset.

Trend is growth in eOutsourcing Today, eWork is characterised by the convergence of technology providers and service providers, with, for example, IT firms supplying services as diverse as logistics, accounting and human resource management. Each of these developments is an example of new technologies reducing costs or allowing access to new markets. A major trend in eWork today is rapid growth of eOutsourcing. From its origins in software development and accounting and financial services, eOutsourcing is now spreading across the full range of business services. Australian and international survey results show eOutsourcing is used by far more business establishments than call centres, and regional policy makers may benefit from examining its potential in regional areas. Regional establishments use eOutsourcing as much as metropolitan ones, indicating knowledge of relevant business practices and technologies.

However, supply of eServices lags behind supply of traditional outsource services in regional areas, particularly in the three most populous states. This may indicate opportunities for new regional businesses.

Opportunities for eOutsourcing exist in accounting and software services, which are the two services most represented in regional areas, and in creative and design services, a field currently under-represented in regional areas. Opportunities to develop workforce skills and new businesses in these areas are more likely to be found in larger regional centres.

eServices supplied by regional and metropolitan establishments.

Weighted figures, % of instances of eOutsourcing used by metropolitan and regional establishments; Sample: 193 metropolitan instances, 69 regional instances.
 

Regional business development is encouraged by results showing eOutsource providers in Australia are predominantly small to medium enterprises (SMEs), and that there also is a considerable market for services amongst SMEs, including those in regional areas. Smaller regional firms would not be out of place in this market, and do not have to attract the attention of larger metropolitan or national businesses that may already have extensive national or international supply networks.

Several high profile attempts at stimulating rural employment using telework in other countries provide lessons for Australia. Unfortunately most have either failed to survive long term or being new cannot be properly evaluated. In the US, initiatives have included the Telework!VA program in Virginia.

This aims to reduce highway Traffic, real estate pressures and parking costs by reimbursing companies up to $3,500 per employee for the cost of telecommuting-related equipment and services. The state of Maryland offers free professional telework consulting services to Maryland employers, and provides a $500 tax credit. Recently proposed rural telework legislation aims to establish partnerships with the private sector to develop jobs in rural America. The Farm Bill directed the U.S. Department of Agriculture to provide $US30 million a year from 2002 through 2006 for a package that includes $25 million a year in matching funds to organisations placing workers in high-paying jobs in rural areas.

These competitive grants would enable organisations to implement telework projects to train, connect and broker employment in the private sector. Eligible organisations include educational institutions, non-profit firms and American Indian tribes. Grant recipients must be located in rural areas with projects locally developed and implemented. Grants will be leveraged with private, local and state resources.

The Farm Bill funding also includes $5 million a year to establish a National Rural Telework Institute to conduct research and development, perform outreach to rural communities and employers, share best practice, and establish market-driven rural telework pilot projects and joint ventures with the private sector. The Institute will seek to increase jobs in rural areas.

Conclusion
The survey results showed in contrast to widespread perceptions, that remote offices are mostly located in metropolitan sites where they deliver customer services to local customers. However, remote offices can be used to deliver all the business services studied here. They are found in regional areas of most states, although concentrated in NSW and Victoria. But remote offices appear to offer quite limited opportunities for regional employment. Telework and Telecentres are statistically minor forms of eWork.

They appear to provide little opportunity for large-scale regional employment. In most cases, firms are reluctant to allow more than a few trusted workers to work from home or a telecentre. However, there are notable experiments in using telework to employ rural workers in Australia. Some experiments may be of interest to local authorities in areas where skilled workers can be attracted by lifestyle advantages and/or proximity to a large city. New technologies do not eliminate the role of distance in managerial decisions on siting eService facilities.

Such decisions are influenced by many of the factors operating in the ‘old economy’, including the need for face-to-face meetings and networking to develop business relationships, proximity to large cities where support services might be available, and managers’ knowledge of how to conduct business in different regions and countries. In more knowledge-intensive service industries, access to education and opportunities for informal learning are important. Regional Australia may benefit from policy initiatives to promote call centres providing the longevity and quality of jobs are assessed, the flow-ons monitored and incentives do not overly distort the market.

Public opinion about the desirability of these jobs is also clearly significant in Australia at present. However, this study has shown that eWork offers a range of options beyond call centres and policy makers should examine opportunities in higher-skilled services, particularly for the larger regional centres or those close to metropolitan cities. Developing a sufficient pool of skilled workers in areas such as accounting or software would be a significant challenge for other areas. eWork is a rapidly evolving phenomenon and regional development may be assisted by creation of a research centre focussed on monitoring trends in Australia and elsewhere, disseminating information to industry and government bodies, and providing resources for managers interested in locating regional eWork opportunities.

Researcher Contact Details
Associate Professor
Peter StandenSchool of Management,
Edith Cowan University,
100 Joondalup Drive WA 6027
Phone: 08 6304 5283 Fax: 08 9400 5840Email: p.standen@ecu.edu.au

Dr Jan Sinclair-Jones
Faculty of Media,
Society and Culture,
Curtin University,
GPO Box U1987PERTH 6845
Phone: 08 9266 7044 Fax: 08 9266 3166 Email: j.Sinclair-jones@curtin.edu.au


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