Study: Offshore outsourcing boosts domestic employment, wages

Sending U.S. computer software and services jobs overseas increases domestic jobs and wages, according to a study published today by the Information Technology Association of America, an Arlington, Va., trade group.

Global Insight Inc., a Waltham, Mass.-based economic forecasting company, conducted the study for ITAA.

The study found that offshore outsourcing will create:

  • 516,000 jobs in software and IT services over the next five years, with 272,000 going offshore and 244,000 being created in the United States

  • An increase in U.S. wages of 0.13 percent in 2003, climbing to 0.44 percent in 2008

  • An increase of $124.2 billion to the U.S. gross domestic product by 2008

  • $20.9 billion in cost savings from offshore outsourcing of software and IT services by 2008, much of which will be reinvested in the United States.


According to ITAA, 10 percent of U.S. IT software and services jobs have been lost since 2000, but only 2.8 percent of those jobs have been lost because of offshore outsourcing. Most jobs were lost because of the dot-com and telecom busts, the economic recession and productivity gains, the study said.

Nevertheless, ITAA President Harris Miller said, "We cannot ignore displaced U.S. workers. Their pain is real."

Miller said workers laid off because of offshore outsourcing should get government help, such as relocation assistance and job training, along with compensation during the training period.

He also said the federal government should continue to urge other nations to remove barriers to U.S. exports and open their services markets to foreign competition. The government should not enact barriers to offshore outsourcing, because doing so would slow the U.S. economy and cut the number of new domestic jobs, Miller said.

"We have long held the position that global sourcing creates more jobs and higher real wages for American workers," Miller said. "Now we have the data that prove it."

The executive summary (10 page PDF) of the study is available at www.itaa.org.

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