Tuesday, July 05, 2005

Offshore IT outsourcing helps economy

In the latest salvo in a debate over sending tech work overseas, a report sponsored by an industry group concludes that the practice is good for the U.S. economy and its workers.

Offshore outsourcing of software and information technology services tasks not only is boosting the U.S. gross domestic product but also helping to generate U.S. jobs, including positions in the IT sector. This report is sponsored by ITAA trade group which has members like tech giants IBM, Electronic Data Systems and Accenture.

While offshore IT software and services outsourcing has displaced and will continue to displace workers in IT software and services occupations, increased economic activity creates a wide range of new jobs--both IT and non-IT," the report states.

"As the benefits compound over time, the U.S. economy operates more efficiently, achieves a higher level of output, creates more than twice the number of jobs than are displaced, and increases the average real wage."

The cost savings and use of offshore resources "lower inflation, increase productivity, and lower interest rates. This boosts business and consumer spending and increases economic activity," the report states.

The study says the benefits of offshore software outsourcing and IT outsourcing added $33.6 billion to real gross domestic product in the United States last year. By 2008, real GDP is expected to be $124.2 billion higher than it would be in an environment in which offshore IT software and services outsourcing does not happen, according to the report.

Shipping software and IT services work abroad leads to higher real wages for U.S. workers through lower inflation and higher productivity, according to the study. Real wages were 0.13 percent higher in 2003 and are expected to be 0.44 percent higher in 2008, the study states

Source: CNETnews.com

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