Outsourcing and American jobs

Outsourcing and American jobs

Does the offshoring and outsourcing of Information Technology and related skills hurt America? How much does it hurt.  I just finished reading an editorial comment in Information Week magazine from Bob Evans, Senior VP and Director of their Global CIO unit. By Bob’s estimate, drawn from Forrester Research numbers,  perhaps $60 billion of work was offshored by American companies in 2008. That’s a lot of dough and thousands of jobs. But then he points out that just four American companies, Eli Lilly, Nike, Boeing, and John Deere had revenues of $54 billion from outside the United States in the last four quarters.  Bob’s point is that offshoring of outsourced work is a small component of the overall economic activity.

(While I agree with the conclusion, there is a hidden fallacy in the international revenues of those four companies, particularly Nike.  I bet 90% of Nike’s international revenue does not result in any American jobs; it’s Asian workers being hired and the products are being sold in Asia or Europe or elswhere).

It turns out that there is INDEED a more complete analysis of the number of American jobs created by exports to Asia. According to the East West Center, Inn manufacturing along, the number of American jobs created or supported by exports to Asia in the year 2008 was 1,515,026.

This includes over 290,000 jobs in my home state of california alone. And the stats don’t count services jobs such as those created in Hollywood, or such as those created by engineering and construction companies. Merchandise exports to Asia earned America $305 billion. This far exceeds exports to the European Union ($230 billion).  What’s more, American exports to Asia grew 67% from 2001 to 2007 (whereas they grew only 53% to EU and 47% to Nafta countries).  Growth rates are best calculated over five year moving intervals since a major purchase of aircraft or infrasctructure in a given year can distort the year-to-year growth numbers. The East-West Center’s website for this data is appropriately called AsiaMattersforAmerica and is worth a visit.  The East-West Center is an education and research organization established by the U.S. Congress, so you can be sure that it free of bias from “external” sources.


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