There's an e-asy solution to our shortage of skills

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The Independent Online

The fight for skills intensifies. All developed countries report a skills shortage, particularly in IT, and here in the UK we are changing our immigration practices to make it easier for skilled workers to come here.

The fight for skills intensifies. All developed countries report a skills shortage, particularly in IT, and here in the UK we are changing our immigration practices to make it easier for skilled workers to come here.

But there is another way of meeting skill shortages, particularly in IT. Instead of importing the people, why not import their skills online? The communications revolution has created the problem of a skills shortage, but it has also created a solution: virtual workers, perhaps on the other side of the world.

If virtual workers, why not virtual managers too? Here the culprit is the global expansion of large corporations, which are finding it increasingly difficult to persuade managers to take up the conventional two- to three- year foreign postings. But again the new communications technologies (plus improved air travel) provide a fix: managers that can perform at least part of their tasks over the wires.

How do you hire your virtual specialists on the other side of the world? Many companies are setting up overseas offices to carry out clerical and accountancy functions: British Airways handling part of its accounting system in Bombay, for example. But this requires a big commitment of management resource. For smaller companies wanting to get one-off tasks fulfilled, hiring full-timers overseas is not a practical option. They would be better to hire freelancers nearer home.

Why not freelancers overseas? In theory that might seem an attractive option but in practice it is hard to accomplish. How does a company in California find the right freelancer? Answer: on the grapevine. But that does not work very well across borders. If the right people for a particular job are in, say, Hungary. How on earth do you find them - and how do they know they will get paid? Technology can deliver the product, but it does not cope with the little practical details.

Until now. A company called eLance (www.elance.com) was started a couple of years ago in California to create an online marketplace for freelance services. It is now expanding globally, with offices in the UK, Germany and Australia. The scale is still small - in the past year it has done about $30m (19.8m) of business - but with McKinsey predicting a market for outsourced services of $700bn by 2003, it is not hard to see the potential.

At the moment, more than half of the business placed via eLance is within America: only 40 per cent is cross border. So for that part of the business, it is merely providing a more efficient way of matching buyers and sellers of freelance services. That is a worthwhile function. As more and more work is outsourced expect it to soar. Most of this business, by the way, is company to company rather than individual to company. Only about 20 per cent of the providers of services are individuals, and many of the buyers are large corporations.

But this pattern of work, however helpful to the national economy, does not help offset the global skills shortage in the sense that it is not reallocating skills across national boundaries.

But the 40 per cent that is across borders does directly address that problem. It seems that the main pattern of work is freelancers in Europe and Asia selling services onto the American market. Lower pay expectations and high craft skills seem to give a comparative advantage: jobs like getting logos designed in Italy or web pages done in New Zealand.

The time zone differences help too, for a job can be put out in the evening in the US, be done in Europe or Asia and be ready the next morning.

Elance is trying to cope with the inherent difficulties of organising freelance work. Aside from providing the marketplace, it seeks to maintain quality, facilitate payments and organise ratings. It is also organising a special premium tier of providers, where it guarantees the quality of the work done.

If elancing is one solution to the skills shortage, e-management is a potential solution to the difficulties companies have of staffing their international offices. A new report by PricewaterhouseCoopers, "Managing a Virtual World", looks at several ways in which companies are coping with managing foreign offices. Certainly long-term foreign assignments have become less popular partly because of the needs of a partner in a dual-income family and partly because sending children to boarding schools has gone out of fashion. Three particular categories of assignment stand out as top growth points: short-term assignments; commuter management and virtual management.

The first two are self-explanatory: sending people out for six months rather than three years, and having people commute weekly to their foreign office, rather than live in the new location. For placements in continental Europe the latter is particularly attractive as you can fly anywhere in just a couple of hours.

But the fastest growth area is virtual assignments. Here someone may go out to the foreign office every few days but for much of the time he or she will run the business from a distance, using the new communications technologies to do so. All these methods merge into each other: both short-term assignments and commuting make more sense if the person can also stay in touch back home by using the new technologies. And virtual management makes more sense when managers can also jump on a plane and be on site at a day's notice.

These forms of management also fit into the new pattern of control that companies are increasingly adopting. Whereas a decade ago management was very much a continuous process, requiring continuity of staffing, now things change so fast that it is more likely to be start-ups and fire-fighting. Top management goes in to set something up, or it goes in to sort something out. It doesn't hang around if it doesn't need to.

And that ultimately reflects the greatest skill shortage of all. Using the new communications technologies to marshal the world's freelancers is great. But using it to use top management talent is greater still.

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