Its Flawed And Could Hurt US

Washington | Updated: Mar 26 2004, 05:30am hrs
The impact of outsourcing on US unemployment has been grossly exaggerated, according to a study that said US authorities should improve supply-side initiatives before penalising companies that ship jobs overseas.

Productivity gains, the 2000 dotcom bust, and weak US and international economies were much more important factors in the job losses of the past three years than the much ballyhooed phenomenon of offshoring, according to the trade group that represents the US high-tech sector.

The American Electronics Association (AEA) did not provide figures to back up its analysis: researchers noted that there is no hard data on the number of jobs that have been relocated to India, China, and other countries by corporations seeking cheaper labour and lower overheads. But they argued that election-year hysteria had obscured the facts, and that projections that as many as 3.3 million service jobs would go overseas by 2015 were both flawed and misleading.

The AEA, which represents industry titans such as Microsoft Corp, Intel Corp, Cisco Systems and Motorola Inc, cautioned against the protectionist sentiment that is sweeping through state legislatures across the country.

Protectionist legislation may result in retaliation, jeopardising $171 billion in high-tech exports and large surpluses of high-tech services sold overseas, the study released on Wednesday said. Indeed, for many high-tech companies, the majority of their revenues are at risk.