Offshoring boosts US employment

WASHINGTON: The shift of U.S. high-tech jobs to cheaper foreign markets, while controversial, actually boosted overall U.S. employment last year and the benefits will grow over time, a study from an industry group that supports outsourcing said.

The study predicted 317,000 extra U.S. jobs will be created by 2008 due to offshore outsourcing, contradicting widespread hand-wringing in America over the shift of coveted white-collar information technology jobs from America to countries like India and China.

The Information Technology Association of America (ITAA) commissioned the Global Insight research group and Nobel economist Lawrence Klein to conduct the study.

"We have long held the position that global sourcing creates more jobs and higher real wages for American workers. Now we have the data that prove it," ITAA president Harris Miller said.

"Far from being an economic tsunami that washes away domestic IT employment as some believe, global sourcing helps companies become more productive and competitive," he said.

According to the study, while 104,000 jobs were lost because of offshore outsourcing between 2000 and 2003 -- some 35,000 a year -- more than 90,000 U.S. jobs were created last year due to the cost savings reaped by employers who sent IT work overseas.

Many analysts have said estimates of how many jobs have been lost from outsourcing in recent years are impossible since it is difficult to know whether workers were laid off because of outsourcing or from unrelated factors like the recession.

But the ITAA study calculated the job impact of outsourcing by dividing the amount of money that would have been spent in the United States if the work had not been outsourced by the average cost per worker of shifting that work.

The resulting 104,000 loss of jobs is a fraction of the more than 2.2 million jobs lost since January 2001.

Still, the study acknowledged there will be about 50,000 fewer workers in publishing, software and communications in 2008 than if jobs were not being shifted overseas, though it predicted employment in the sector will still increase.

The ITAA said the loss of those IT jobs is more than offset by job creation in other sectors because the cost savings of outsourcing will dampen inflation and boost productivity -- which in turn will increase overall spending and economic growth.

(C) Reuters