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Rediff.com  » Business » US's IT job losses: Don't blame India

US's IT job losses: Don't blame India

March 09, 2006 09:56 IST

Automation of tasks has had more impact on IT job losses than offshore outsourcing to low-cost locations such as India, according to a study by the Organisation for Economic Co-operation and Development (OECD).

The comprehensive OECD research, The share of employment potentially affected by offshoring - an empirical investigation, found that one in five jobs could be hit by the continued growth of offshore outsourcing, including those in IT, accounting, consulting, financial services and research and development.

But the study, which is based on a detailed analysis of occupational data for OECD countries and other business and economic statistics, claims that in the long term the benefits of offshore outsourcing and the globalisation of services will outweigh any short-term job losses.

The report said: "In the long run the positive benefits of services offshoring outweigh the costs, even though the adjustment process may occasionally be difficult in the short run."

An examination of economic data by the OECD found no "systematic evidence" that net outward investment of services is associated with significant levels of decline in employment as a result of offshoring.

The report said: "Exports of business services are found to have a positive statistical association with the share of employment potentially affected by offshoring, suggesting that increases in demand and production have also raised demand for these types of ICT-using occupations."

In fact the report found that IT standardisation and automation - not offshore outsourcing - are more likely to be responsible for rendering many jobs and roles redundant.

The report comes in the same week that a study by US IT industry body the Association of Computer Machinery also claimed offshore outsourcing has not hit IT jobs, citing the fact there are more jobs now than at the height of the dot-com boom.

Mark Kobayashi-Hillary, author of Outsourcing to India: The Offshoring Advantage, welcomed the report as the most definitive analysis of the benefits of free and open trade in the export and import of IT services yet.

He said: "Quite often the economic reality is directly opposed to the media perception of offshoring as a destroyer of jobs and talent."

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