India to host 15 percent of U.S. tech jobs: Jobs - News Trends

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This story was printed from ZDNet Australia.
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India to host 15 percent of U.S. tech jobs

By Ed Frauenheim, CNET News.com
December 20, 2004
URL: http://www.zdnet.com.au/jobs/news_trends/soa/India-to-host-15-percent-of-U-S-tech-jobs/0,130056653,139174715,00.htm

Over the next six years, 15 percent of information technology jobs required by U.S. companies will be done in India, a new report predicts.

But while some U.S.-based jobs might move overseas, offshore outsourcing can help the economy as a whole, according to the report, from AMR Research. The analysis firm on Wednesday said its research shows that companies reinvest 60 percent of cost savings attributed to outsourcing in IT or business unit projects. AMR projects that by 2010, savings from offshore outsourcing will spark an added US$30 billion per year in new investments from U.S. companies.

"Outsourcing to India will aid the U.S. economy if the savings from outsourcing continue to be reinvested in new strategic projects," the firm said in its report.

Sending high-skilled work such as technology tasks to lower-wage locations, such as India, has emerged as a hot-button issue. Defenders of offshore outsourcing say it ultimately benefits the U.S. economy and its workers. Critics claim that the practice eliminates high-paying jobs and threatens the nation's long-term technological leadership.

Comprehensive information about the scale and impact of what's sometimes called offshoring has been lacking, but Congress recently passed a bill that would set aside US$2 million to study the issue.

The new AMR report estimates that the Indian IT labour force will be larger than 3 million by 2010, and half of the workers will be performing jobs for U.S. companies.

Companies that effectively outsource to India can reduce the cost of data centre operations, help desk support and other nonstrategic activities by 40 percent to 50 percent, AMR said.

With average IT labour costs in the United States approaching US$80,000 per worker per year, "a worker in India represents a US$36,000 savings per year, and 1.5 million workers represent US$54 billion in savings each year," AMR said.