ITAA Sees More Gains From BPO

New Delhi | Updated: Apr 1 2004, 05:30am hrs
In an attempt to counter outsourcing backlash in the US, the Information Technology Association of America (ITAA) has said that job losses in the US have been much more due to dotcom bubble burst as compared to job losses due to offshore outsourcing.

IITA - counterpart of Nasscom in the US - has also stated that outsourcing will result in increased cost savings, higher demand for US exports and better growth in gross domestic product (GDP).

These are the findings of a study report on The impact of offshore IT software and services outsourcing on the US Economy and the IT Industry, sponsored by ITAA and released on Tuesday in the US. The study was conducted by a research firm Global Insight.

The study points out that the total number of IT software and services jobs that have been lost since 2000 during the dotcom bubble burst is 372,000. That is 10 per cent of the IT software and services jobs in the US have disappeared since 2000 but only 2.8 per cent of the total IT software and services jobs were lost because of offshore ITO (Information Technology Outsourcing), it said.

The report further adds that during 2003-08, total cost savings from worldwide sourcing of computer software and services will grow from $6.7 billion to $20.9 billion, much of which will be reinvested in the US.

Demand for US exports increases due to global sourcing. Countries can buy more because they can sell more; the US has more to sell through increased investment in new products and services, better productivity and lower inflation. Global sourcing contributed $2.3 billion to US exports in 2003 and $9 billion by 2008, the study points out.

Spending for global sourcing of computer software and services is likely to grow at a compounded annual growth rate of almost 26 per cent, from approximately $10 billion in 2003 to $31 billion in 2008, according to a study. The worldwide sourcing contributed significantly to real US gross domestic product, adding $33.6 billion in 2003. By 2008, the real GDP will be $124.2 billion higher than it would be in an environment in which offshore IT software and services outsourcing does not occur.

The study estimated that the number of displaced IT software and services jobs due to offshore IT software and services outsourcing as of 2003 was 104,000.

This includes jobs that were eliminated by some US companies that substituted offshore resources for domestic resources and jobs that were never created as other US companies expanded their IT activities using offshoring resources without reducing their domestic resources.

The study found that raising barriers to worldwide sourcing would adversely impact US workers and US firms. If all global sourcing of software and IT services terminated completely, the impact would slow the US economy and actually reduce the number of new jobs available to American workers, it said.