Survey turns outsourcing notion on its head
Survey turns outsourcing notion on its head
Contrary to popular belief, a major survey into offshore outsourcing disputes the notion that sourcing software and services overseas harms the local economy, and claims that the reverse is true – at least for the United States.
Controversy has dogged the IT outsourcing industry in recent months, both here in Australia and in other Western economies, with many observers claiming that the increasing amount of IT jobs being outsourced to countries such as India would have a detrimental effect on the domestic economy. However, a survey released by the Information Technology Association of America (ITAA) on the impact of offshore IT software and services outsourcing on the U.S. economy and the IT industry indicates that worldwide sourcing of computer software and services actually increases the number of U.S. jobs, improves wages for American workers, and by pushing the U.S. economy to perform at a higher level, has many other economic benefits.
"We have long held the position that global sourcing creates more jobs and higher real wages for American workers," said ITAA President Harris N. Miller. "Now we have the data that prove it. Far from being an economic tsunami that washes away domestic IT employment as some believe, global sourcing helps companies become more productive and competitive. The savings produced through worldwide sourcing are invested in new products and services, in new market expansion, and, most importantly, in creating new jobs and increasing real wages for American workers. This research replaces fear with sound economic analysis, allowing for an informed approach to the global marketplace."
Among the findings were that worldwide sourcing boosted the U.S. GDP (Gross Domestic Product) by US$33.6 billion in 2003, and that worldwide sourcing of IT services and software had a knock on effect of generating an additional 90,000 jobs domestically.
But Global Insight, the economic analysis, forecasting and financial information company commissioned to carry out the survey, did acknowledge that while the software and services area will see the creation of 516,000 jobs over the next five years in an environment with global sourcing but only 490,000 without it, of these 516,000 new jobs, 272,000 will go offshore and 244,000 will remain onshore. So while the U.S. IT workforce will continue to grow, a large proportion of the total jobs created will go overseas.
Global Insight Chief Economist Nariman Behravesh believed that while using offshore resources "reduces costs, dampens inflation, lowers interest rates, increases spending, and creates additional jobs, the challenge is to help displaced workers transition to other productive activities."
Among the recommendations made in the report to help facilitate this were to make IT and other service sector workers eligible for government assistance when their jobs are displaced by foreign operations, and to consider offering assistance to service workers similar to that offered manufacturing workers, in a variety of forms, including skills training (and compensation during the training period), job search and relocation allowances, and in appropriate circumstances, transportation, childcare and healthcare assistance.
Related Article: