Print

Mail

wiki links

Report promotes long-term benefits of job outsourcing

Outsourcing white-collar jobs to low-wage countries such as India and China has thrown some Americans out of work, but a new report predicts that the trend will ultimately lower inflation, create jobs and boost productivity in the US.

The Information Technology Association of America, in a survey set for release yesterday, acknowledges that the migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs so far, nearly 3 percent of the positions in the US tech industry.

Software engineers have been particularly hard hit. Researchers at Global Insight Inc, which prepared the report for the ITAA, predicted that demand for US software engineers would shrink through 2008.

But ITAA leaders emphasized that outsourcing has damaged the job market far less than the dot-com meltdown of early 2000, when Internet startups, telecom companies and other companies eliminated as many as 268,000 positions.

"The myth is that we've started this long decline into the midnight of the technology work force," ITAA president Harris Miller said. "This report shows that, assuming the recovery continues, the number of IT jobs will actually increase."

Indian programmers earn roughly one-sixth the US$60,000 US average, and Chinese engineers earn even less.

Outsourcing dramatically reduces labor costs, allowing companies to sell goods ranging from software to tax-preparation services at lower costs or higher profit margins. Greater profits theoretically allow companies to buy new equipment, build laboratories and conduct scientific experiments -- even in expensive Silicon Valley and other US tech hubs.

Savings from outsourcing allowed companies to create 90,000 new jobs last year, with more than one in 10 of them in Silicon Valley or elsewhere in California, researchers said. The report predicts that in 2008, outsourcing will create 317,000 jobs -- 34,000 in California.
This story has been viewed 3002 times.