Outsourcing Gains For U.S. Economy

The outsourcing of technology jobs to low-wage countries will provide a $68.7 billion benefit to the U.S. economy in 2005, said a study released Oct. 31, challenging key assumptions about shifting work offshore. The study was commissioned by the Information Technology Association of America, a high-tech industry group and conducted by research firm Global Insight.

The report concluded that despite the loss of some jobs to low-wage countries such as India, that worldwide sourcing of IT services and software generated 257,042 net new U.S. jobs in 2005. "No one is denying that there are job losses, but the net effect is that you create more jobs than you lose" in the overall economy, said Nariman Behravesh, chief economist at Global Insight.

The benefits come from lower inflation, higher productivity and lower interest rates that increase economic activity, the report concludes. The researchers calculated this provided a net benefit to real U.S. gross domestic product would rise by 2010 to $147.4 billion compared with a situation without any offshore sourcing.

In terms of jobs, the report concluded that offshore outsourcing led to the creation of more than 419,000 jobs, more than offsetting the 162,000 technology jobs displaced by the shift. "By driving down the costs associated with computer software and services and by opening more overseas markets to U.S. competition, global sourcing sharpens our country's competitive edge at home and abroad. The result is more American jobs, higher wages and a faster growing economy overall," said ITAA president Harris Miller

Copyright Agence France-Presse, 2005

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