Wednesday, November 02, 2005

Study on outsourcing finds net gains for US economy

The outsourcing of technology jobs to low-wage countries like India will provide a US$68.7billion benefit to the US economy in 2005, said a study, challenging key assumptions about shifting work offshore. The study, updating a report released in 2004 drawing the same conclusion, was commissioned by the Information Technology Association of America, a high-tech industry group, and conducted by research firm Global Insight. The report released yesterday 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 US 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 US gross domestic product of $68.7billion in 2005, and that this would rise by 2010 to $147.4billion 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.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development