Outsourcing Helps U.S. Economy, Says Trade Group - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Outsourcing Helps U.S. Economy, Says Trade Group

The practice added a net 257,042 U.S. jobs this year, according to the study, in stark contrast with the reports over the past few years that criticize global outsourcing as detrimental to the economy.

MANHASSET, N.Y. — Global outsourcing of U.S software and IT services has benefitted the domestic economy by improving wages, encouraging investment and spending, and ultimately by increasing the number of jobs, according to a study by the Information Technology Association of America.

The ITAA study, conducted by Global Insight, an economic analysis, forecasting, and financial information company, painted a positive picture of global outsourcing of U.S. technology jobs—a stark contrast to a number of reports over the past few years which criticize global outsourcing as detrimental to the economy.

"Global sourcing not the end of U.S. IT industry—it is good for the U.S.," said Harris Miller, president of ITAA, during a conference call and webcast announcing the study’s findings Monday (Oct. 31). "It is still an issue that confuses a lot of people, leads to a lot of hyperbole."

The study concluded that global outsourcing generated a net increase of U.S. jobs in 2005 of 257,042, and is expected to create a net number of 337,625 new jobs by 2010.

Global Insight chief economist Nariman Behravesh conceded that global outsourcing does result in job losses and is initially difficult on those displaced, particularly in IT. However, he added that almost three-quarters of the 111,828 IT jobs lost between March 2001 and Sept. 2003 were due to factors other than outsourcing, including the telecom and dot-com busts.

"There is a lag between the time workers get let go and the time they’re rehired," said Behravesh during the call. "In time, offshoring creates more jobs than it destroys."

Behravesh added that the U.S. economy benefits from global outsourcing because they help increase the U.S. Gross Domestic Product by $68.7 million in 2005. By 2010, he expects outsourcing to increase GDP by $147.4 million.

For corporations, Behravesh said outsourcing helps them lower costs and improves profits, which he added are often reinvested in new products and services. Consumers benefit because outsourcing helps lower software and service costs, encouraging them to spend more.

Both Behravesh and Miller called for increased emphasis on education and retraining to help workers displaced by global outsourcing, with government assistance. They also called for higher support of basic research and development and encouraged deployment of a more diverse workforce with higher numbers of female and minority workers.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Slideshows
IT Careers: 10 Industries with Job Openings Right Now
Cynthia Harvey, Freelance Journalist, InformationWeek,  5/27/2020
Commentary
How 5G Rollout May Benefit Businesses More than Consumers
Joao-Pierre S. Ruth, Senior Writer,  5/21/2020
News
IT Leadership in Education: Getting Online School Right
Jessica Davis, Senior Editor, Enterprise Apps,  5/20/2020
Register for InformationWeek Newsletters
Video
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll