More Jobs For All Except IT

By CIO Update Staff

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A new study by Global Insight and the Information Technology Association of America (ITAA) found the global sourcing of computer software and services, while displacing some IT workers, actually benefits the economy and increases the number of U.S.-based jobs overall.

According to study, The Impact of Offshore IT Software and Services Outsourcing on the U.S. Economy and the IT Industry, the U.S. economy has much to gain from global sourcing and an environment of free trade, open markets and robust competition. Benefits include job creation, higher real wages, higher real GDP growth, contained inflation and expanded exports resulting in increased economic activity.

"The benefits of free trade clearly provide a boost to the US economy," stated Dr. Nariman Behravesh, an economist and one of the study's authors. "Using offshore resources reduces costs, dampens inflation, lowers interest rates, increases spending and creates additional jobs. The challenge is to help displaced workers transition to other productive activities."

The Global Insight research team was led by Chief Economist Behravesh, who is recognized as one of the world's most accurate economic forecasters. Nobel Prize winning Economist Dr. Lawrence R. Klein made significant contributions to the study.

Increased Offshoring Expected

U.S. spending for offshore outsourcing of computer software and services is expected to grow at a compound annual rate of almost 26%, increasing from approximately $10 billion in 2003 to $31 billion in 2008.During the same period, total savings from the use of offshore resources will grow from $6.7 billion to $20.9 billion. Using offshore resources lowers costs and boosts productivity, the study concluded. As a result, inflation is lower, interest rates are lower, and economic activity is higher.

This increased economic activity creates a wide range of new jobs, both in IT and other industries. And, while there are some dislocations that affect both industries and regions, the overall economy adjusts so that offshore IT outsourcing actually creates new jobs.

New Jobs

According to the study, over 90,000 net new jobs were created in the U.S. through 2003. The number of net new jobs is projected to grow by 317,000 in 2008. The impact on U.S. jobs does vary by industry sector, with the major beneficiaries for the next five years being construction, transportation and utilities, education and health services, wholesale trade, and financial services.

"We have long held the position that worldwide sourcing creates more jobs and higher real wages for American workers," said ITAA President Harris Miller. "Now we have the data that prove it. This research replaces fear with sound economic analysis, allowing for an informed approach to the global marketplace."

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