India to US: outsourcing good for us, good for you

Reuters via Excite News ^ | Thursday October 9, 9:44 AM EDT | Terry Friel

[leadpencil1]

NEW DELHI, Oct 9 (Reuters) - India's leading services industry body, battling a U.S. backlash threatening its outsourcing boom, on Thursday released a study showing that moving jobs offshore stokes growth in the United States.

"The benefits realised through offshoring are significant and are required to support the growth and competitiveness of the U.S. economy," said the study, commissioned by India's National Association of Software and Service Companies (NASSCOM).

"Protectionist measures aimed at protecting U.S. jobs would result in slower economic growth and slower labour demand growth. They would achieve the exact opposite of their intended aim," it said.

With a huge pool of cheap, educated and English-speaking workers, India has become a hot destination for global companies seeking to cut costs by "offshoring" work, especially in the information technology and services sectors, to save money.

But the dramatic loss of jobs in the United States -- an estimated 1.3 million will move offshore by the end of the decade, half to India -- has sparked anger.

Faced with an electoral backlash, some U.S. states have legislated to ban government agencies from moving tech services overseas and unions are fighting what they see as an alarming trend.

But the NASSCOM study by New York-based business research consultancy Evalueserve said a combination of skilled immigration and "offshoring" of jobs was vital to head off a looming labour shortfall of 5.6 million by 2010 that would undermine the U.S. economy.

"If this shortfall is not met, the U.S. will experience a cumulative loss in output of up to $2 trillion," it said.

But the United States is slashing the number of special visas for highly qualified workers to 85,000 from 195,000.

Evalueserve head Marc Vollenweider told reporters only about 0.2 percent of American workers lose their jobs and remain unemployed for more than three months because of outsourcing.

Multinationals such as American Express Co (AXP), General Motors Corp (GM) and Cisco Systems Inc (CSCO) now base various functions in India, including payrolls administration, mortgage processing, equities analysis and customer call centres.

This is creating a jobs and investment boom in the world's second most populous nation.

Vollenweider said for every 100 jobs moved to outsourcing centres such as India or South Africa, 15 were created in the United States to manage them and for every $100 spent on offshore work, about $140 was reinvested in the U.S. economy.

This estimated reinvestment included the effect of outsourcing on expanding and creating new markets for U.S. firms, such as deals for infrastructure projects in outsourcing centres.

[leadpencil1]

..... head off a looming labour shortfall of 5.6 million by 2010 that would undermine the U.S. economy.

Economist can't even forecast tomorrow's jobless claims! 2010!

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[dirtboy]

Vollenweider said for every 100 jobs moved to outsourcing centres such as India or South Africa, 15 were created in the United States to manage them

Yeah, that's a really favorable ratio for American workers...

[contessa machiaveli]

hogwash! it's bad for the US especially if you're one of the
unemployed.
there will be a loss of tax revenue which means the rest of us who are employed will be called upon to make up the shortfall.

[Bikers4Bush]

Sure it is. And reports issued by those who benefit most are always reliable.

[TopQuark]

Possibly not. But its great for American consumers and American investors, such as your retired mother and father.

[Bikers4Bush]

No kidding, what kind of math are they doing over there?

[Bikers4Bush]

How is it good for either when the investors have to pay higher taxes because of unemployment and retired mothers and fathers have kids moving back in with them?

Please enlighten me.

[Egon]

Resistance is futile. You will be assimilated.

[BlackbirdSST]

Don't believe your lying eyes, believe what we are telling you! Blackbird.

[Egon]

No kidding, what kind of math are they doing over there?

Math probably done by the one or two of their engineers that weren't able to take someone's job over here. They're spending their time doing make-work projects "on the bench".

[LibertyAndJusticeForAll]

If this is the same logic employed by Indian programmers, then the corporations outsourcing to India deserve every line of garbage code that they write.

[theDentist]

"...a study showing that moving jobs offshore stokes growth in the United States."

Moving jobs offshore stokes unemployment in the United States. Going from IT to asking "You want fries with that?" is NOT as beneficial as they have forecast.

[narby]

But the United States is slashing the number of special visas for highly qualified workers to 85,000 from 195,000.

So, let me get this straight. We lower the number of english speaking trained people we allow to move here (cause trained people do things that require legal status), while we allow unlimited millions of untrained people who bring their spanish Tijana culture with them to flood across the Rio Grande.

Sure, that's a way to keep a first world culture. /sarcasim

[TopQuark]

From 1960s and through 1990s, there was a shortage of IT labor that, as any shortage, has resulted in higher prices (salaries). The prices of goods that used IT labor were higher because of that, since the companies had to offset their lobor expenses. We all paid these higher prices and subsidized workers in that industry.

The shortage is over, and the salaries are coming to more reasonable levels. The prices of services are lower because of that, and we all benefit when buying them.

You and your parents, who probably have at least some of their savings in stocks, benefit from higher stock prices, which reflect better profits of the companies that are able to buy cheaper. Simple, really.

[ChromeDome]

bump for BS

[numberonepal]

I'm sure my former staff of 15 developers will be sooooo glad to hear this. We were all fired in the Winter of 2000 due to "outsourcing" to an Indian firm of coders. 13 of the 15 are still unemployed developers. I throw them feelance work when I can, but can't provide benefits. Heck, even I can't afford insurance for myself.

Of the other 2 that did get jobs, one waits tables and the other is a donut baker.

Also, no one EVER tells you how much money is wasted on the time differences and customer disapproval for lag times. This is a very large service problem that these bean counters never even consider.

[Orangedog]

"The benefits realised through offshoring are significant and are required to support the growth and competitiveness of the U.S. economy," said the study, commissioned by India's National Association of Software and Service Companies (NASSCOM).

Yes, all you fat, lazy IT workers and engineers...there are lots of jobs at Walmart and Manpower that need to be filled, so quit carping about having to sell your house...you were overpaid to start with! And if you can't live on $6 an hour you only have yourself to blame for studying math and science instead of going to law school. Now shut up and smile as you greet the Walmart shoppers! [/sarcasm]

[Bikers4Bush]

Considering that the strength of an economy is most directly affected by the number of people employed (or unemployed as the case may be) your view does not take into account the fact that as jobs are sent over seas and more people are unemployed that the stock market will take hits and stock prices will actually fall putting our mothers and fathers in a less financially stable environment.

However the folks who own the overseas companies that our jobs have been outsourced to will be fat city and their economies will be booming. Only problem is we wouldn't be permitted to move there to work and won't be able to afford to invest in their companies since our stocks will be worthless. Assuming of course that they allow us to invest in their companies.