Offshore outsourcing ‘creates more jobs than it destroys’

31 March 2004 Sending IT tasks ‘offshore’ to countries such as India created almost twice as many jobs as it eliminated last year, a new survey has found.


The Information Technology Association of America (ITAA), which represents more than 300 technology suppliers, says that around 104,000 IT jobs in the US were sent offshore in 2003.

But this fall was more than offset by 190,000 new jobs created by what it calls “the incremental economic activity that follows offshore IT outsourcing.”

The ITAA said the extra jobs were in both IT and non-IT related fields.

The association’s report estimates that US businesses will make savings of $20.9 billion by 2008, up from $6.7 billion in 2003, as a result of ‘offshoring’. US gross domestic product will also increase by an extra $124.2 billion, or about 1%.

The ITAA said the evidence indicated that exporting jobs in such activities as computer services, back-office IT functions and software development to countries such as India and China was benefiting the US economy as a whole.

Offshore outsourcing, it found, seemed to have made US companies more competitive, and thus better able to expand, by lowering their cost base and freeing up resources for potentially more lucrative endeavours.

The ITAA’s conclusion echoes that of Nasscom, an Indian IT industry association, which believes that offshore outsourcing will have a positive effect on the UK jobs market.

Nasscom recently pulled together economic data from a variety of sources, including the UK government’s own employment estimates, to conclude that 270,000 jobs would move offshore by 2010, including around 80,000 IT services jobs and about 130,000 business process outsourcing jobs.

But Nasscom said that, if the UK economy were to grow as predicted, there would still be a jobs shortage of around 750,000 by 2010 that realistically could only be offset by offshore outsourcing and immigration.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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