President & CEO
Harvey Nash USAPAC
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Debunking the “IT Offshoring Costs U.S. Jobs” Myth
There is a growing wave of concern that America is turning inwards, becoming isolationist and protectionist. It’s something we Americans cannot let happen.
What drives this irrational, isolationist push? It’s a number of news and media sources misrepresenting offshoring and its effects. The message often conveyed by the media is that American jobs are being taken overseas, which is causing significant job and economic loss here in the States.
However, the marketplace facts do not support these claims. For example, there is Lou Dobbs, CNN anchor, who writes, “…so-called free trade has come at an inordinate cost to working men and women in this country. We've lost three million manufacturing jobs as a result of these so-called free trade agreements that enable corporate America to export plants, production and jobs to cheap foreign labor markets. Millions more American jobs remain at risk of being outsourced.”
To that, I would ask Mr. Dobbs to go back to school and review the basic macroeconomics of “comparative advantage” to understand how he is misleading the public. It’s a widely accepted understanding that the world benefits when there are no barriers to free trade. Every nation should seek the lowest prices for comparative goods and services as it benefits the world economy. Adam Smith espoused this concept in The Wealth of Nations, and our forefathers saw the wisdom in the model, making it a core principle in building our market-driven economy.
But what if you are someone who doesn’t care about the rest of the world? What if you only want to focus on what is good for America (as some in the media seem to suggest is the best approach)? Then, I invite you too to get in the offshoring game as well because its impacts have proven to be good, good, good for the USA.
The U.S. Bureau of Labor Statistics (BLS) reports that during the push to offshore IT jobs, IT unemployment rates have fallen. In 2004, the unemployment rate for computer and mathematical occupations was at 4.2%. It fell to 2.9% in 2005. In the second quarter of this year, the unemployment rate for computer programmers was at an incredible 2.1%. Contrary to the “job loss myth” so many would have us believe, corporate America and IT jobs opportunities are expanding at a steady rate.
My hope is that cooler, forward-thinking heads prevail when it comes to offshoring and the World Trade Organization’s Doha Development Round negotiations. Lowering trade barriers around the world will result in better business and work opportunities across the globe. Whether you’re an isolationist or a fan of the growing global marketplace, offshoring is here to stay. With strategic offshore solutions in place, the U.S. will succeed, the world will succeed and all our boats will rise together.