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Has offshoring harmed U.S. IT workers? One researcher says 'no'

Offshoring's negative consequences offset by job gains, study says
By Jon Brodkin , Network World , 08/20/2008
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The word "offshoring" might send shivers down the spine of IT pros who are unemployed or fearful of losing their jobs. But how much impact does offshoring - the outsourcing of IT functions to foreign countries - really have on employment prospects in the United States? Despite alarming forecasts from some analyst firms, one new study concludes that the impact is minimal.

“It is … difficult to ease offshoring fears because a lack of solid data makes it impossible to strongly refute consultants who have said that IT offshoring is already large and will soon get far larger,” writes Raymond Panko, professor of IT management at the University of Hawaii. “However, in the few cases where we should be able to measure offshoring job losses, there is no evidence that massive job losses have occurred.”

Panko’s 36-page report is titled IT Employment Prospects: Beyond the Dotcom Bubble, and was published in the European Journal of Information Systems. Despite being published in a European journal, the paper relies heavily on U.S. statistics, and covers various topics including the dot-com bubble’s impact on IT jobs, projected job growth rates for computer specialists, and the impact of offshoring.

Back in 2002, Panko writes, Forrester predicted an average loss of 34,000 IT jobs per year through 2015 due to offshoring. In 2004, Panko adds, Gartner said that “5% of U.S. IT jobs had already been offshored and that 25% of IT jobs would be offshored in 2010.”

Despite these gloomy predictions, there is really little hard data that can either refute or confirm the Forrester and Gartner conclusions, Panko says.

“Quite simply, there is no good statistical data on job offshoring or even revenues for service companies outside of the United State,” he writes. “While this means that there is no way for Forrester, Gartner, and others to verify their numbers, it also means that there is no way for others to refute them in a comprehensive way.”

Panko reviewed data from the U.S. Bureau of Labor Statistics (BLS), which predicts that computer specialist jobs in America will increase by 25% through 2016, more than twice the rate of growth for all job types.

How is this possible if so many IT jobs are being offshored? Panko looked at data from BLS’ Mass Layoff Statistics http://www.bls.gov/MLS/ program, which tracks layoffs involving 50 or more jobs. Out of nearly 1 million layoffs tracked in 2004, only 16,197 were due to offshoring, he writes.

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huh?By Anonymous on August 20, 2008, 10:07 amin the Related Content box are 3 links: Related Content Gartner: Indian outsourcers gaining global share Gartner: Top 30 offshore locations for 2008 Offshoring...

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From Ray PankoBy Anonymous on August 20, 2008, 2:24 pmExcellent review, but the evidence does not suggest that offshoring is nonexistent or unimportant--simply that it is not as massive as it is sometimes portrayed....

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What a crockBy Anonymous on August 20, 2008, 5:04 pmYour article sounds like it was written more by a spin-doctor than a reporter. And of course the effects are minimal, unless you are one of the ITers who have lost...

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either way you slice it...By davidkoby on August 20, 2008, 8:25 pmLook, either way you slice it, off-shoring ANY job is bad for the U.S. economy in the long run. Sure, the people at the top get more because labor is cheaper. ...

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Articles and Research On Results of OffshoringBy Mark Cummuta on October 1, 2008, 6:37 pmHere are two articles in CIO Magazine based on a decade of research that highlights just one aspect of what offshoring and other short-term investment mentalities...

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Where do our outsoursing dollars go?By Anonymous on October 20, 2008, 12:48 pmWhy are 80% of H1-B visas awarded to India offshoring firms Infosys, Wipro, and Tata We hear about a technology shortage from Microsoft, Cisco, Google, but 80%...

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