Lancet Worldwide Outsourcing News

OFFSHORE OUTSOURCING:  AN OBSERVATION

The impression in the public mind about offshore IT outsourcing in particular, and any offshore outsourcing in general, has unfortunately devolved to the point where it is considered as a trend responsible for killing jobs in North America. Consequently, for many, offshore outsourcing is a practice which is morally reprehensible and just another exhibition of raw corporate greed. While initially there may have been, at first blush, grounds for such a perception, this evaluation of offshore outsourcing is largely due to misinformation about the whole issue. Much of the bleak view has roots in the initial impact of offshoring, where the alarming growth of a trend and visible disappearance of some local jobs, in certain sectors, was the reason to indict offshore outsourcing as a drag on the American economy and a detriment to the labor force.

But lately, growing evidence suggests job losses are not only minimal, but are compensated for in different ways. The sensational prediction by Forrester Research that speculated a net loss of 3.3 million service jobs from 2000 to 2015 is obviously an exaggerated prediction. In reality, thus far outsourcing has had little net impact on job losses. An Information Technology Association of America (ITAA) finding indicates a job loss of only 2.8 percent due to offshore outsourcing and this too is mitigated by growth in the American economy and employment ranks

In truth, the litmus test that vindicates offshore outsourcing is the evidence of a healthy American economy with substantial employment growth. There are now 2.03 million additional people in the labor force even since the end of 2001. The current American employment rate is 5.6 percent—not at all bad.  In addition, it is now being discovered that offshore outsourcing has latent advantages to the economy of America resulting in creation of more jobs and economic benefits.
 
However, it may be true that offshore outsourcing in its nascent state when it started as the big and growing trend in America was responsible for immediate loss of jobs. But the way the current practices and global interaction is evolving in the offshore marketplace, we see a new emerging pattern. Some new patterns never seen before such as the novel phenomenon of reverse offshoring are welcome indicators of mutual benefits available to the world economy. All this bodes well for the future where it expected that offshoring will bring in more dividends to the economic well being of America and it is not a one way street where developing countries are selfishly stealing jobs and money. read more

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