The report from Nasscom (National Association of Software and Services Companies), said that global sourcing will provide US companies with cost-savings and increased flexibility that will keep them competitive in the global arena.
The 80-page report, titled "The Impact of Global Sourcing on the US Economy, 2003 - 2010", predicts that the U.S. will experience an annual GDP growth of 3.20 percent, which will lead to an increased demand for labour.
But the country will see a domestic labour shortage of 5.6 million by 2010, because of an aging population and slow population growth. This could cost the country's economy up to US$2 trillion if it is not addressed in time, according to the report.
The report was written by research firm Evalueserve Inc, which interviewed economists and offshoring experts worldwide, and looked at statistics and forecasts from the US Congressional Budget Office (CBO) and the US Bureau of Labour Statistics.
Evalueserve CEO Marc Vollenweider was quoted in the Nasscom press statement as saying that the results were "compelling".
According to the report, the U.S. can fend off the crisis by global sourcing in the form of immigration, temporary workers and offshoring.
"The study clearly shows the necessity of offshore activity to support the growth of the U.S. economy. The report also found that offshoring keeps U.S. businesses competitive, creates new markets for US goods and services, and fills the shortfall in services labour that the US is expected to face in the next seven years," said the Nasscom statement.
The offshoring of IT services, the report argues, has allowed US workers to tackle specialised and creative work, while more run-of-the-mill tasks have been pushed abroad. The proportion of specialists in the U.S. IT workforce, it notes, increased from 38 percent in 1983 to 74 percent last year.
The report admits that there will be a short-term impact on the U.S. employment market as 1.3 million jobs move offshore in the next seven years. About 1 million workers in the country will be affected, but 70 percent of these will be only temporarily out of work, says the report.
As more than 8 million jobs are reallocated every quarter in the US economy, the reallocation process should not be a strain. The remaining 300,000 workers will require retraining, suggested the report.
Amid growing worker resentment towards offshoring in the U.S., last month saw street protests in California, with demonstrators decrying the loss of U.S. jobs as more firms relocate software and other IT work to lower-cost countries like India. Forrester Research estimated that the number of U.S. computer jobs moving overseas will grow from about 27,000 in 2000 to more than 472,000 by 2015.
U.S. corporations' desire to drive the shareholder values at the expense of U.S. jobs is coming with a hefty price tag. William Hawkins, senior fellow at the U.S. Business and Industry Council, says, "If you're substituting foreign employees (outsourcing overseas) for American workers to satisfy the American market, then the repercussions are fewer good job opportunities for Americans [and] lower income for Americans. This translates, of course, into slower economic growth in the country as a whole."
Companies are ultimately forfeiting long-term prosperity for some short-term gains, and U.S. trade policy has been their greatest accomplice. The U.S. current-account deficit of goods and services, the broadest measure of foreign trade, stood at an astonishing $503 billion in 2002. Half of the imports into the United States come because of decisions made by American corporations.
Higher cost of American labor should be compared considering the factors given under laws of our real democratic republic versus abundant opportunities under brutal laws and practices of the foreign governments such as India and China made available to their masses to produce cheap labor.
There will be no real comparison per se for US businesses to shift jobs overseas just based on low cost alone. A new US Agency must be created (like EPA) to monitor the conditions, and practical implementations of democratic rules and values by overseas governments around which labor is produced.
n The new US Agency must impose rules and regulations for US businesses to follow or penalize them for defaults and deficiencies.
n US Businesses must be allowed to deal with overseas businesses bases on credit points managed by Agency.
n US Agency must co-ordinate with in imposing and implementing rules through
UNO’s IMF to which US is a major fund contributor.
n US should part with American jobs with overseas countries such as India, China etc only if overseas countries match economic values and dimensions to their masses under practical democratic governments as by offered to US citizens !!!
That would be a fair justice to the American labor to compete and prosper. Given the equal opportunities and circumstances, American labor have potential to compete and beat the overseas labor very successfully.
Some points to compare and judge why our costs are achieved high and cheap at humiliating Himalayan level low in overseas countries particularly in India:
US Federal Government does not incur cost for higher education (rather charges interest on students’ loans whatever it can grant and rest of the cost of education is met by students at credit card interest rates). Federal Government of India subsidizes the cost of post higher secondary education paying direct to colleges and universities through its general Federal Grants Commission. Students simply seek admission in colleges and universities at nominal fees (entire cost of education for bachelors degree is achieved at least 10 times cheaper to US).
Majority of students who receive Pell Grant in US are minority and poor students whereas majority of the higher education seeking student in India belong to Hindu majority whereas it is beyond reach for below average-level-income group citizens and minorities. An utter injustice contrary to democratic principles.
US Federal Government does incur cost of social security and healthcare, and States pay unemployment insurances to unemployed masses whereas Federal Government of India does not spend on social security or its States pay unemployment insurance to its masses nor does it incurs health care to elderly and needy.
Majority of India’s population consists of Hindus who are good earners but minorities and others live below poverty levels. Majority do not pay no Federal taxes (no tracking of income, no social security numbers issued to its citizens and residents to track W2 etc). Loose implementation of rules, guess, oppression and corruption