Study Says Outsourcing Created U.S. Jobs

A study released March 30 contradicts the prevailing theory that IT outsourcing has cost U.S. jobs. It indicates that 90,000 jobs were created in the United States as a consequence of moving high-tech work offshore.

The study by the economic research firm Global Insight Inc. for the Information Technology Association of America (ITAA), a high-tech trade group, comes amid a searing political debate on outsourcing and the sluggish U.S. labor market. The study echoed other surveys that show a sharp rise in moving high-tech service jobs overseas. It projected offshore spending for computer software and services is expected to grow at a compound annual rate of almost 26% from some $10 billion in 2003 to $31 billion in 2008. The savings from the use of offshore resources are estimated to grow from $6.7 billion to $20.9 billion, the report said.

On the issue of jobs, the study suggested that there is a net gain in the U.S. even as many functions are moved offshore. "While global IT software and service outsourcing displaces some IT workers, total employment in the United States increases as the benefits ripple through the economy," the report said.

While 104,000 jobs in the sector were moved offshore last year, the study found that "the incremental economic activity that follows offshore IT outsourcing created over 90,000 net new jobs in 2003 and is expected to create 317,000 net new jobs in 2008."

The findings also flew in the face of critics who say moving jobs offshore cuts wages for U.S. workers. "Offshore IT software and services outsourcing actually increases average real wages of U.S. workers," the study indicated. "With lower inflation and higher productivity, real wages were 0.13% higher in 2003 and are expected to be 0.44% higher in 2008."

Global Insight also said that demand for U.S. exports is expected to increase as a result of lower prices of U.S. goods and services and higher incomes in the offshore outsourcing destinations.

ITAA members include Dell Inc., Hewlett-Packard Co. and IBM Corp.

Copyright Agence France-Presse, 2005

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