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Offshoring creating more jobs in US

More IT jobs are available today than during the dotcom boom, says a study.

india Updated: Feb 27, 2006 16:14 IST

Information technology jobs will continue to grow in the US because of globalisation and offshoring, according to a new report.

Belying the common belief that shifting IT jobs to countries like India is a threat to workers in the US, the report states that IT job opportunities will grow in America.

The cost savings achieved by outsourcing will help fuel new business opportunities.

This, in turn, will result in creating new jobs at those organisations, according to a study by Association for Computing Machinery (ACM), a professional development organisation that includes academic, government and industry officials from the information technology field.

The study, entitled "Globalisation and Offshoring of Software" cites estimates that between two to three per cent of IT jobs will be lost annually to lower-wage developing countries through offshoring.

But, the study also said that the US IT sector's overall growth should outpace that loss of jobs, expanding opportunities for those trained in fields such as software architecture, product design, project management and IT consulting.

Citing US Bureau of Labour Statistics (BLS) data, the study points out that despite a significant increase in offshoring in the past five years, more IT jobs are available today in the US than at the height of the dotcom boom.

In fact, IT employment in the US in 2004 was 17 per cent higher than in 1999, and IT jobs are predicted to be among the fastest-growing occupations over the next decade.

And even with greater globalisation, the report notes that the lower wage scales in India and China are not pushing down pay for US IT workers.

Citing information from the US Bureau of Labour Statistics, the report said IT workers have seen steady gains in average annual wages for different fields in the sector of between two to five per cent a year.

Giving an example of the deeply interconnected software industries of the US and India, the report points out that India benefits from generating new revenue and creating high-value jobs.

The US, on the other hand, benefits from having US-based corporations achieve better financial performance as a result of cost savings associated with offshoring some jobs and investing increased profits in growing business opportunities that create new jobs.

The study is also critical of market research reports projecting widespread job losses to offshoring.

"The objectivity and quality of other data sources, especially the data in reports from consulting firms and trade associations, is open to question, as these organisations may be serving their own agendas. Projections are always more suspect than data on current employment levels," it said.

The study notes that globalisation trends in the software industry have been fuelled by rapid advances in information technology as well as government action and economic factors.

"We changed the world," said Moshe Y Vardi, co-chair of the study group, and director of Computer and Information Technology Institute at Rice University, "and now it is changing us."

The study cites the wide availability of low-cost, high-bandwidth telecommunications, standardised software platforms and applications, digitalisation of work processes as well as education and national policies as key driving factors.