Adding Fuel to the Outsourcing Fire

The Information Technology Association Of America has just released the results of a study they commissioned from an economic consulting firm called Global Insights. The punch line of the analysis:

This major study conclusively demonstrat[es] that worldwide sourcing of computer software and services increases the number of U.S. jobs, improves real wages for American workers, and by pushing the U.S. economy to perform at a higher level, has many other economic benefits.

Of course, keep in mind that this was the result that the ITAA had hoped for when they commissioned the study, so one must look very carefully at the assumptions made and models used by Global Insight to arrive at their estimates. Unfortunately, it’s a little hard for me to form an opinion about them without having the full report to read, which costs $350. (Though if someone wants to send me a copy, I’d be happy to take a whack at it!) However, from the executive summary it seems that their results are driven by pretty standard and uncontroversial economic effects — namely, higher productivity and lower prices in the US that are the result of offshore outsourcing.

My initial conclusion? This report by no means provides us with a final or definitive answer — but it does provide some ammunition for those who point out that there are benefits as well as costs to offshore outsourcing, and that, on an economy-wide basis, those benefits may even outweigh the costs.


UPDATE: Last sentence modified slightly in response to a reader’s comments. Thanks for the input.