Assessing The Impact Of It Enabled Services Offshoring On Us Employment And Earnings

This paper provides a preliminary assessment of the recent impact of what can be called the “IT-enabled services offshoring” process on U.S. domestic employment and earnings in relevant services sectors. It draws upon relatively new international services trade data sets developed by the U.S. Department of Commerce's Bureau of Economic Analysis (BEA), which are used in conjunction with service employment and real wage data from the U.S. Department of Labor's Current Employment Statistics (CES), and deals with the years since the turn of the new century, when concerns about the IT-enabled services offshoring process sparked intense professional discussion. The study documents that U.S. trade in IT-enabled services is generally a two-directional phenomenon, entailing both an import as well as an export dimension. While the overall U.S. trade balance for IT-enabled services has been consistently positive, consistently negative trade balances are observable in computer services, an indication of substantial offshoring in that area; moreover, the significant two-way trade pattern in the telecommunications area suggests the presence of offshoring in that area as well. With respect to the other IT-enabled categories (e.g., legal, accounting, and architectural and engineering services) consistent two-way trade has existed in all of the areas reviewed, thus suggesting the presence of some degree of offshoring across all areas. However, while not representing a congruent mapping of categories with the international trade in services data, the available occupational employment and earnings data indicate that the overall relative impact of the IT-enabled offshoring phenomenon has thus far apparently been modest, reflecting most notably the small shares that the relevant occupational categories represent in overall U.S. private employment. Moreover, the observable diverse annual fluctuations and trends in relative occupational employment and earnings in these services sectors are what one would reasonably expect in a huge continental labor market (with its numerous regional and local sub-markets) that is influenced by a variety of forces, including but beyond IT-enabled offshoring.

In this paper, we link industry-level data on offshoring activities of U.S. multinational firms, import penetration, and export shares with individual level worker data from the Current Population Surveys. We examine whether increasing globalization through offshoring or trade has led to reallocation of labor, both within and out of manufacturing, and measure its impact on the wages of domestic workers. We also control for the "routineness" of individual occupations. Our results suggest that (1) offshoring to high wage countries is positively correlated with U.S. manufacturing employment (2) offshoring to low wage countries is associated with U.S. employment declines (3) wages for workers who remain in manufacturing are generally positively affected by offshoring; in particular, we find that wages are positively associated with an increase in U.S. multinational employment in high income locations (4) much of the negative effects of globalization operate through downward pressure on wages of workers who leave manufacturing to take jobs in agriculture or services and (5) the downward pressure on aggregate U.S. wages operating through import competition has been quite important for some occupations. This effect has been overlooked because it operates across, not within, industries.

This book is generated from a thesis written by this author in 2009 and provides an insight into the myth that is offshore outsourcing. The Information Technology field has often been criticized for its offshore outsourcing strategy and the negative impact it has on the American Economy. This book however, will provide insight and data gathered over the last twenty years, to show the true effects of offshore outsourcing. The advantages provided by offshore outsourcing are evident through the research in this book. Are we really losing all our jobs to offshore outsourcing? The rapid deployment of call centers to Asia Pac, has many claiming that all our jobs are overseas, this book gives you an insight into how globalization has affected the Information Technology field. The results might surprise you.

Offshoring, also known as offshore outsourcing, is the term now being used to describe a practice among companies located in the United States of contracting with businesses beyond U.S. borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term is equally applicable to U.S. firms offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to service providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among U.S. workers. This concern is especially pertinent to policymakers because of a national unemployment rate persistently exceeding 9 per cent despite the end of the latest recession. This book discusses the impacts of offshoring on jobs and small U.S. manufacturers.

Much attention has focused on the offshoringÓ of services to lower-wage locations abroad. Offshoring generally refers to an org. purchase of goods or services from abroad that were previously produced domestically. Extensive public debate has arisen about both the potential benefits of services offshoring, such as lower consumer prices & higher U.S. productivity, as well as the potential costs, such as increased job displacement for selected U.S. workers. This report: provides an overview of experts' views on the potential impacts of services offshoring; describes the types of policies that have been proposed in response to offshoring; & highlights some key areas where add'l. research might help advance the debate about offshoring. Illus.

The Oxford Handbook of Offshoring and Global Employment deals with a key issue of our time: How do globalization, economic growth and technological developments interact to impact employment? The book brings together eminent authors from a wide range of countries around the world, drawing on their diverse academic and policymaking backgrounds, and specific national or regional settings to assess how global economic changes have affected employment opportunities. The book is unique in a number of ways - It has a global reach, presenting analyses and viewpoints from both developed and developing countries, from all continents; its timing and context is particularly instructive, since most papers are located in the aftermath of the global financial crisis; and it addresses a wide range of questions-How do different types of offshoring and global linkages impact employment? How is the skill mix of the labor force impacted by globalization? How do institutional structures and regulations influence the outcome of globalization in developed and developing countries? Individual chapters analyze how the impact of global linkages on national economies is mediated through a number of structural aspects of the economy - its institutional and industrial structure, its resource base, its predominant firm type, its comparative advantage, and its regulatory practices. The chapters in the book cover both manufacturing and services sectors, and many chapters also address policy issues regarding innovation and job creation.

"Outsourcing has indeed become a crisis, but not because it is inherently bad - it is both good and bad. The key - and the imperative - is to maximize its benefits while mitigating its many negative consequences. Outsourcing America provides the necessary steps to confront this snowballing challenge and bring more high-paying jobs back to the U.S."--Jacket.

Offshoring - the transfer of an industrial activity abroad - is defined in detail and its effects examined.