Case Study report claims Outsourcing benefits the US economy in the long and short run
According to The Mackinac Centre for Public Policy, a non-partisan research and educational institute: "foreign outsourcing allows US companies to dramatically cut the cost of certain information technology services."
In their recently released report, the American research institute said "As a result, US companies become more competitive in what they do best, their core competencies. Better and more affordable services become available for consumers and taxpayers. Outsourcing allows companies to operate on an around-the-clock, 24/7 production cycle, further adding to productivity."
Speaking of the political benefits reaped from outsourcing, the report says: "As the United States seeks to win friends and influence events in South Asia and elsewhere, it would be hard to find a more naturally pro-American enclave than the Indian high-tech sector."
The case study report, "Outsourcing Benefits Michigan Economy and Taxpayers", says while most of the jobs outsourced from the US are on the lower end of the pay and status scale here, they are "among the best jobs available in India and other developing countries".
The report released this month credits outsourcing for enabling thousands of college graduates in cities like Bangalore, Kolkata and New Delhi to "reap the fruits of middle-class life" that Americans take for granted.
It adds that it would be "terribly short-sighted" to disrupt America's "growing, mutually beneficial trade and security relationship with the world's most populous democracy to save a relatively small number of jobs that are not among the more well-paying in the US".
As the rhetoric over job losses due to outsourcing heightens ahead of the November presidential elections in the US, the report says, "it appears that job losses catch the attention of politicians only if they can be blamed on a foreign bogeyman". It points out that "far more Americans lose their jobs to technology, domestic competition, and changing consumer tastes than to foreign outsourcing or other forms of international competition. Think of all the former typists, telephone operators, and bank tellers whose work has been replaced by computers and other machines".
The Mackinac Centre explains that the recent job losses in IT have not been driven mainly by foreign outsourcing, adding that, "instead of blaming IT providers in India, displaced high-tech workers should blame the bursting of the dotcom and telecom bubbles in 2000, the subsequent plunge in the Nasdaq, the recession and decline of business investment in 2001, the Sep 11 terrorist attacks and the uncertainty that followed, corporate scandals, and slow growth abroad".
The report says the most frustrating part of the outsourcing debate is the lack of definite numbers. It adds that the "best estimates from the industry are that perhaps 300,000 to 400,000 jobs previously performed in the US are now done overseas through contractors".
The Mackinac Centre quotes a recent update of the 2002 study by Forrester Research, which predicts that "the number of US jobs outsourced abroad will increase from an estimated cumulative total of 315,000 in 2003 to 3.4 million by 2015. That would mean an average of257,000 additional jobs outsourced each year". However, the centre describes these losses as "just a few drops in the big bucket of a $11 trillion economy that employs 138 million people and creates and destroys millions of jobs every month".
It emphasises that if "the US, its companies and its workers are to remain leaders in the global economy, offshoring must remain a tool available to our corporations".
As the rhetoric over job losses due to outsourcing heightens ahead of the November presidential elections in the US, the report says, "it appears that job losses catch the attention of politicians only if they can be blamed on a foreign bogeyman".
It points out that "far more Americans lose their jobs to technology, domestic competition, and changing consumer tastes than to foreign outsourcing or other forms of international competition. Think of all the former typists, telephone operators, and bank tellers whose work has been replaced by computers and other machines".
The Mackinac Centre explains that the recent job losses in IT have not been driven mainly by foreign outsourcing, adding that, "instead of blaming IT providers in India, displaced high-tech workers should blame the bursting of the dotcom and telecom bubbles in 2000, the subsequent plunge in the Nasdaq, the recession and decline of business investment in 2001, the Sep 11 terrorist attacks and the uncertainty that followed, corporate scandals, and slow growth abroad".
The report says the most frustrating part of the outsourcing debate is the lack of definite numbers. It adds that the "best estimates from the industry are that perhaps 300,000 to 400,000 jobs previously performed in the US are now done overseas through contractors".
The Mackinac Centre quotes a recent update of the 2002 study by Forrester Research, which predicts that "the number of US jobs outsourced abroad will increase from an estimated cumulative total of 315,000 in 2003 to 3.4 million by 2015. That would mean an average of 257,000 additional jobs outsourced each year".
However, the centre describes these losses as "just a few drops in the big bucket of a $11 trillion economy that employs 138 million people and creates and destroys millions of jobs every month".
It emphasises that if "the US, its companies and its workers are to remain leaders in the global economy, offshoring must remain a tool available to our corporations".
Is this a Win-Win situation or a Bad Deal for formerly employed tech support employees?
In their recently released report, the American research institute said "As a result, US companies become more competitive in what they do best, their core competencies. Better and more affordable services become available for consumers and taxpayers. Outsourcing allows companies to operate on an around-the-clock, 24/7 production cycle, further adding to productivity."
Speaking of the political benefits reaped from outsourcing, the report says: "As the United States seeks to win friends and influence events in South Asia and elsewhere, it would be hard to find a more naturally pro-American enclave than the Indian high-tech sector."
The case study report, "Outsourcing Benefits Michigan Economy and Taxpayers", says while most of the jobs outsourced from the US are on the lower end of the pay and status scale here, they are "among the best jobs available in India and other developing countries".
The report released this month credits outsourcing for enabling thousands of college graduates in cities like Bangalore, Kolkata and New Delhi to "reap the fruits of middle-class life" that Americans take for granted.
It adds that it would be "terribly short-sighted" to disrupt America's "growing, mutually beneficial trade and security relationship with the world's most populous democracy to save a relatively small number of jobs that are not among the more well-paying in the US".
As the rhetoric over job losses due to outsourcing heightens ahead of the November presidential elections in the US, the report says, "it appears that job losses catch the attention of politicians only if they can be blamed on a foreign bogeyman". It points out that "far more Americans lose their jobs to technology, domestic competition, and changing consumer tastes than to foreign outsourcing or other forms of international competition. Think of all the former typists, telephone operators, and bank tellers whose work has been replaced by computers and other machines".
The Mackinac Centre explains that the recent job losses in IT have not been driven mainly by foreign outsourcing, adding that, "instead of blaming IT providers in India, displaced high-tech workers should blame the bursting of the dotcom and telecom bubbles in 2000, the subsequent plunge in the Nasdaq, the recession and decline of business investment in 2001, the Sep 11 terrorist attacks and the uncertainty that followed, corporate scandals, and slow growth abroad".
The report says the most frustrating part of the outsourcing debate is the lack of definite numbers. It adds that the "best estimates from the industry are that perhaps 300,000 to 400,000 jobs previously performed in the US are now done overseas through contractors".
The Mackinac Centre quotes a recent update of the 2002 study by Forrester Research, which predicts that "the number of US jobs outsourced abroad will increase from an estimated cumulative total of 315,000 in 2003 to 3.4 million by 2015. That would mean an average of257,000 additional jobs outsourced each year". However, the centre describes these losses as "just a few drops in the big bucket of a $11 trillion economy that employs 138 million people and creates and destroys millions of jobs every month".
It emphasises that if "the US, its companies and its workers are to remain leaders in the global economy, offshoring must remain a tool available to our corporations".
As the rhetoric over job losses due to outsourcing heightens ahead of the November presidential elections in the US, the report says, "it appears that job losses catch the attention of politicians only if they can be blamed on a foreign bogeyman".
It points out that "far more Americans lose their jobs to technology, domestic competition, and changing consumer tastes than to foreign outsourcing or other forms of international competition. Think of all the former typists, telephone operators, and bank tellers whose work has been replaced by computers and other machines".
The Mackinac Centre explains that the recent job losses in IT have not been driven mainly by foreign outsourcing, adding that, "instead of blaming IT providers in India, displaced high-tech workers should blame the bursting of the dotcom and telecom bubbles in 2000, the subsequent plunge in the Nasdaq, the recession and decline of business investment in 2001, the Sep 11 terrorist attacks and the uncertainty that followed, corporate scandals, and slow growth abroad".
The report says the most frustrating part of the outsourcing debate is the lack of definite numbers. It adds that the "best estimates from the industry are that perhaps 300,000 to 400,000 jobs previously performed in the US are now done overseas through contractors".
The Mackinac Centre quotes a recent update of the 2002 study by Forrester Research, which predicts that "the number of US jobs outsourced abroad will increase from an estimated cumulative total of 315,000 in 2003 to 3.4 million by 2015. That would mean an average of 257,000 additional jobs outsourced each year".
However, the centre describes these losses as "just a few drops in the big bucket of a $11 trillion economy that employs 138 million people and creates and destroys millions of jobs every month".
It emphasises that if "the US, its companies and its workers are to remain leaders in the global economy, offshoring must remain a tool available to our corporations".
Is this a Win-Win situation or a Bad Deal for formerly employed tech support employees?
posted by PABlo Bley aka Paul Alan Bley at 11:38 AM
4 Comments:
I find it funny when antisocial politics of republicans protecting big business at last bumps into its own irrationality. Sooner or later each big guy favoring pro corporate politicians will suddenly find himself ousted because his corporation has found a more cost saving worker. Outsourcing is a natural way to make the life of other people better, so, generally speaking, it is important to keep things in perspective. Unless of course you are a republican who voted for W. Bush. A guy who steals American jobs. :)
Make life better for whom? Not for the American workers who have their jobs displaced. Not even, as some would argue, does it benefit the company that hires the outsourcing firm.
The only people it benefits are the Indian (et al) developers, and much more so than them, the companies that hire them. That altruism is swell and all, but not likely the intended goal of American (or European) companies.
I'm an Italian and from my point of view. We (Italian and European) have to stop using US Software, as much as we can. Stop wasting money in M$ product and start using European Linux distribution like SuSe. Stop buying software from company that outsource the call center. For a lot of software I have to call in Holland and to speak with people who don't know italian. Other company produce software without localization, while the most of open source product have manuals and documentation in my language. We can leverage on open source software to free Europe from US software dictatorship. Stop wasting money in US closed source software for all Public Administration (and this is the way a lot of European countries are going). We have to start thinking like French who translate every tech english word. Maybe we have to stop using SUN products too. But are we sure this is the right way to go? Are we sure this is not a jump in the past? Maybe we have to think about software and support quality not about engineers and software nationality. For absurd, USA is the country who have more to loose in this old medioeval battle. Remember that M$ monopoly is the USA monopoly too.
Despite the growing protests against all of the offshore outsourcing, all of the statistics show that companies in the U.S. are exporting jobs at a much faster pace than they ever have before.
By doing my own research on the web, I just found out that the predictions by Forrester Research (referred to on this website, in another article) have been bypassed by over 40%. They said that by the end of next year, 588,000 service jobs will be exported. This didn't even include manufacturing jobs. Now they are revising the numbers, saying that by the end of next year 830,000 service jobs, will have moved offshore (which represents over $36.7 billion in wages).
In addition to all of that, Forrester is forecasting that in the next 10 years, 3.4 million service jobs will have shifted overseas. This represents 6.4% of the employment in the sector and $151.2 billion in lost wages.
According to their website, Forrester bases these conclusions by obtaining information from 1,800 questionnaires, 500 interviews and 300 briefings with businesses in the United States and India. They have concluded that the range of jobs moving offshore will also change in the next decade, broadening far beyond today's offshore outsourcing, which is led by technology services, but most especially call centers.
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