Wednesday, September 29, 2004

Daniel Drenzer wrote a piece about outsourcing in today's New York Times. Check it out here:

Here's a taste:

Now, however, we can add some actual figures to the overheated debate. The Government Accountability Office has issued its first review of the data, and one undeniable conclusion to be drawn from it is that outsourcing is not quite the job-destroying tsunami it's been made out to be. Of the 1.5 million jobs lost last year in "mass layoffs'' - that is, when 50 or more workers are let go at once - less than 1 percent were attributed to overseas relocation; that was a decline from the previous year. In 2002, only about 4 percent of the money directly invested by American companies overseas went to the developing countries that are most likely to account for outsourced jobs - and most of that money was concentrated in manufacturing.
The data did show that from 1997 to 2002, annual imports of business, technical and professional services increased by $16.3 billion. However, during that same half-decade, exports of those services increased by $20.5 billion a year. In 2002 alone, the United States ran a $27 billion trade surplus in business services, the sector in which jobs are most likely to be outsourced. The G.A.O. correctly stressed that it is impossible to compute exactly how many jobs are lost because of outsourcing, but unless its figures are off by several orders of magnitude, there's no crisis here.
Many companies moving jobs overseas have also received a bum rap. Lost in all the clamor about I.B.M.'s outsourcing plan was the company's simultaneous announcement that it would add 5,000 American jobs to its payroll. For the second quarter of this year, the company reported a 17 percent increase in earnings, allowing it to trim its outsourcing plan by a third and raise its overall hiring plans by 20 percent. The conclusion is obvious: I.B.M.'s outsourcing of some jobs helped it reduce costs, increase earnings and hire more American-based workers.

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