ITAA Study Pushes for Outsourcing

The Information Technology Association of America report states that sending jobs overseas will create hundreds of thousands of new jobs througout the U.S. economy.

A study released Monday by the Information Technology Association of America contends that sending IT jobs overseas will result in the creation of 337,000 new jobs throughout the U.S. economy by 2010.

The estimates in the 2005 Global Sourcing Study, prepared by Global Insight Inc., are meant to deflect ongoing criticism that the tech industry is hurting the American economy and workers by seeking cheaper labor abroad.

The Washington Alliance of Technology Workers, a chapter of the Communications Workers of America, is fighting for new laws to protect IT worker at both the federal and state levels.

Legislation to limit offshore outsourcing is under consideration in more than 30 states, according to the alliance.

"There are job losses—nobody is denying that there are job losses," said Nariman Behravish, chief economist at Global Sourcing. "In time, off-shoring creates more jobs than it destroys."

While IT jobs are lost through outsourcing, more jobs are created because costs are lower to IT companies, allowing them to spend money on other things, which in turn results in lower prices, lower interest rates and higher spending throughout the economy, spurring job creation, the study maintains.

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Increased competitiveness by U.S. companies and expanded markets for their goods abroad will benefit the country overall, the argument goes.

"By offshoring, were tending to produce more for less," Behravish said. "That in and of itself is a productivity enhancement."

According to the study, the U.S. software and IT industry spent $9.8 billion in 2003.

Behravish said that he expects the growth to slow over the next few years but then accelerate after 2008 and reach $38.2 billion in 2010.

Additionally, demand for software will increase as its price drops as a result of outsourcing, he said.

The prognosis isnt quite as rosy for hardware, however, which Behravish said will become less attractive as software becomes more cost-effective.

Acknowledging the pain experience by American IT workers whose jobs are sent overseas, Harris Miller, president of ITAA, said several policy challenges remain.

"There is dislocation," Miller said. "But we are finding that new jobs are replacing the old jobs."

The trade association is pressing for support similar to that offered through trade adjustment assistance for manufacturing workers who lost jobs.

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