More on the outsourcing myth

[Update: A commenter tells me that the Boston Herald is unreliable and has its own agenda (sorry, didn't know), so I wanted to offer other sources for the same story here and here and here. The co-author of the study is Nobel Prize-winning economist Dr. Lawrence R. Klein, founder of Wharton Econometric Forecasting Associates. This is not just a Boston Herald story.]

I hope word spreads that the outsourcing threat is a myth, and that more IT jobs in India and China will not spell doom for America’s IT workforce. From the Boston Herald today:

Outsourcing white-collar jobs to low-wage countries such as India and China has thrown some Americans out of work, but a new report predicts that the trend will ultimately lower inflation, create jobs and boost productivity in the United States.

The Information Technology Association of America, in a survey set for release Tuesday, acknowledges that the migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs so far, nearly 3 percent of the positions in the U.S. tech industry.

Software engineers have been particularly hard hit. Researchers at Global Insight Inc., which prepared the report for the ITAA, predicted that demand for U.S. software engineers would shrink through 2008.

But ITAA leaders emphasized that outsourcing has damaged the job market far less than the dot-com meltdown of early 2000, when Internet startups, telecom companies and other companies eliminated as many as 268,000 positions.

“The myth is that we’ve started this long decline into the midnight of the technology work force,” ITAA president Harris Miller said. “This report shows that, assuming the recovery continues, the number of IT jobs will actually increase.”

I hope the Dems decide not to make this a centerpiece for their platform. It’s way too wobbly an issue.

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Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.

The Discussion: 16 Comments

Only a myth to you since you just spent 5 years in China without news. Read before you rant, the entire IT industry in the USA is in danger of being lost to India.

The indian software guy only pays $30 a month for his house so he can afford to work for $500 a month. To compete a total collapse of the USA housing market is required.

Did you know, India does not honor patent laws? Imagine how they handle privacy issues. Did Bank Of America consider their customers privacy before outsourcing their IT to india???

March 31, 2004 @ 6:15 pm | Comment

And if you are going to quote the ITAA’s comments in the article you should also quote who they are.

Such legislation would be “protectionist” and “unwise,” according to the ITAA, whose 500 members include Microsoft Corp., Hewlett-Packard Corp. and Amazon.com.

The very companies making a killing with this!

March 31, 2004 @ 6:22 pm | Comment

I know who the ITAA is, but you’re right I should have said something about who they are. But I’m not ranting; I’ve read the same or equivalent in many sources. Do you think we should adopt protectionist measures to protect American jobs? Globalization, for all its evils, is here to stay and the positives probably outweigh its negatives. Those programmers in China and India need jobs as badly as our own. For decades, factory jobs have moved to Mexico and Thailand and China. Maybe we’re hearing a big wave of protest because IT people thought they were protected by divine decree. Sorry, this is the price we have to pay to enjoy low inflation and affordable products.

March 31, 2004 @ 7:02 pm | Comment

heh heh… You cited an article from the Boston Herald. It’s a former Murdoch tabloid, that even Murdoch couldn’t see value in and dumped. The paper has so few journalistic scruples that they recently hired Mike Barnicle, who was previously dumped by the Boston Globe for constantly inventing stories for his metro column.

March 31, 2004 @ 7:21 pm | Comment

Thats because you have never been unemployed, short on the mortgage money, and foreclosed.

Protectionist? Try to outsource jobs in China or India. They will not allow it.

March 31, 2004 @ 8:06 pm | Comment

Darling, I’m unemployed right now, and worrying about my mortgage. Not foreclosed, granted. But certainly nervous.

March 31, 2004 @ 8:19 pm | Comment

Asia: ‘Me landline’s carked it’: Or when outsourcing goes wrong

A bit of humour to lighten the tone. Like the UK and US, Australian companies have outsourced call centre functions offshore. In this send up of a call to Telstra, an aggrieved customer in Warragamba tries to convey his complaint…

March 31, 2004 @ 8:25 pm | Comment

Tom, thanks for telling me about the Boston Herald — have been away and didn’t know. Please see my update to the post.

March 31, 2004 @ 8:27 pm | Comment

Terry,
This isn’t controversial, it’s econ 101: comparative advantage. Explained in the URL linking to my name.

March 31, 2004 @ 10:15 pm | Comment

Dan Drezner’s had several posts on this topic over the past couple weeks. All of it worth reading, if you’re interested in the subject.

March 31, 2004 @ 10:34 pm | Comment

Outsourcing wouldn’t be so much of a problem if laid-off American workers didn’t also have to worry about maintaining their health insurance and/or exhausting their unemployment benefits. It’s hard enough going on unemployment (which for most of people, especially IT people, pays a small fraction of their previous income) — but thanks to our paternalistic, quasi-feudal, employer-centered health insurance system, laid-off workers who want to keep their insurance have to cough up several hundred dollars a month for COBRA coverage.

If Bush really wanted to seize the high ground on this issue, he’d propose extending federal unemployment benefits and subsidizing COBRA payments, at least partially. But of course that’s something that he is ideologically incapable of doing.

April 1, 2004 @ 1:51 am | Comment

Richard, I didn’t think that this was strictly a Boston Herald story.

My commentary on this is that during the dot com boom this same group of companies was lobbying Congress to drastically increase the number of H1B visas that were available. So a lot of the jobs that were lost during the dot bomb meltdown were Indians living in the US at the whim of their employer.

April 2, 2004 @ 3:31 am | Comment

Since as a hired hack you normally worked for such “trade groups” like ITAA and the NRA you must have missed todays Asian WSJ page 8 where 2 GOP (yes, GOP) congressman announced they had started investigations in this too!

Quoted one, This is not going to be made in a democrats only issue!

April 3, 2004 @ 1:04 am | Comment

To the last anonymous poster, I’m not sure whom you’re addressing, but I guess it’s me. I never worked for either of those groups, and it would be tough for me to read the Asian Wall Street Journal, as I live in Arizona now.

About this becoming an issue for the GOP as well — no surprise. It is an issue. But it’s nowhere near the magnitude of problem as some politicians are making it out to be.

April 3, 2004 @ 10:06 am | Comment

On May 11, 2004, John Kerry failed to show up to vote in the senate to extend unemployment benefits to hundreds of thousands of people out of work because of President Bush’s foolish economic, tax and trade policies. This bill failed to pass by ONLY ONE VOTE! – John Kerry’s. Moneybags Johnny couldn’t make it because he was much too busy campaigning in Kentucky – a state with terribly high unemployment.

Senator Kerry spends more time politicking and making jokes about how nice his hair is than he does actually taking care of his senatorial duties. The man has missed 75% of the votes and has cost his state millions upon millions of dollars. Now he wants to do the same for the nation.

Bush is a decisive idiot who is financially ruining this country but Mr. Kerry is a shameless liar who falsely prides himself on his superior intellect. So what are we going to do with these two gentlemen?

Personally, I’m voting for a 3rd party candidate. A third party candidate won’t get elected but a protest vote is very important nonetheless. Voting for a third party candidate could have far more impact than supporting status quo politicians.

Don’t throw your vote away by voting for either the selfish gigolo multimillionaire Kerry or the monkey-brained Mt. Bush.

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