BANGALORE: The US will face a domestic labor shortfall of 5.6 million by 2010 due to an aging population, which can potentially cost the US economy $2 trillion if appropriate measures are not taken well in time. Forecasts for the US indicate an annual GDP growth of 3.20 per cent, which will lead to an increased demand for labor.

"Offshoring keeps US businesses competitive, creates new markets for US goods and services, and fills the shortfall in services labor that the US is expected to face in the next seven years," said Marc Vollenweider, CEO, Evalueserve.

Evaluserve, commissioned by Nasscom, has done a study on ‘The Impact of Global Sourcing on the US Economy, 2003 – 2010.’ The report highlights how the US economy will see significant benefits from global sourcing.

Kiran Karnik, President, Nasscom, said, "The report was commissioned to help understand the impact of information technology and increased globalization on the US economy. A comprehensive analysis of economic parameters such as GDP, productivity and income levels was carried out to arrive at the projections."

"The study clearly shows the necessity of offshore activity to support the growth of the US economy," added Vollenweider. The report also found that "

According to the study, for every $100 of call-center work offshored by US firms, $143 is invested back into the US economy in the form of repatriated profits, increased sales of telecom equipment and cost-savings. Similarly, the amount invested back into the US economy (for every $100 of work) is $133 for IT services, and $142 for high-end knowledge services like equity research, underwriting, tax preparation and risk management.

This is also projected to have a short-term impact on the US labor force. About 1.3 million jobs will move offshore between 2003-2010, impacting about 1 million US workers. Of these, about 0.7 million (0.4 per cent of the labor force) will be unemployed for a short duration. Over 8 million jobs are reallocated every quarter in the US economy and hence, the reallocation process will not be a strain for those who are temporarily unemployed.

About 0.3 million workers (0.2 per cent of the workforce) will be unemployed for more than 3 months due to offshoring. This segment will require re-training and redeployment.

Offshoring of IT services has enabled US workers move to specialized and creative roles while moving process oriented programming to offshore locations. The proportion of specialists in the US IT workforce increased from 38 percent in 1983 to 74 percent in 2002.

According to Nasscom, Evalueserve interviewed worldwide economists and offshoring experts to produce the 80-page report. Additional information was gathered from statistics and forecasts available with the US Congressional Budget Office (CBO) and the US Bureau of Labor Statistics.