Computing Research Policy Blog

Outsourcing May Mean More IT Jobs for US?

ACM's Queue has an article by Catherine L. Mann, of the Institute for International Economics here in DC, on the potential positive effect of the "global sourcing" trend in IT.

Mann argues that just as outsourcing IT hardware production during the 1990s lowered product costs (by 20%), encouraging increased IT investment throughout the economy, the current wave of outsourcing software and IT services will have a similar effect on costs. This will, in turn, encourage large sectors of the US economy that haven't yet heavily invested in IT (health, education, and much of the small to medium size enterprises (SMEs) sector) to do so, creating a demand for IT workers in those sectors here in the US, as well as moving jobs "up the IT skills ladder."

She recommends a two-prong approach for dealing with this situation. First, she says, the US needs to encourage foreign macroeconomic growth, because as foreign countries increase their GDPs, they become bigger markets for IT services, where US providers currently dominate. Second, she thinks we need to focus domestically on the displaced workers by providing "extended unemployment benefits (providing more time for adjustment), training assistance, wage insurance, and portable health insurance" to ease the transition to new jobs and careers. She also sees a "human-capital-investment tax credits" to achieve "abetter-functioning skills pipeline of IT workers, for incumbent as well as for entry-level workers."

It's an interesting article and I think it jives well with some of the IT job growth projections we've discussed here previously.