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New Delhi, Nov. 2

A RECENT study commissioned by the IT Association of America (ITAA) has said that the "incremental economic activity" triggered by offshoring is likely to create over 3.37 lakh net new jobs in the US by 2010.

"Even as the global software and IT service outsourcing has displaced IT workers in the US, the total employment in the US increases as the benefits ripple through the economy. The incremental economic activity that follows offshore IT outsourcing created over 2.57 lakh net new jobs in 2005 and is expected to create over 3.37 lakh net new jobs by 2010," the study conducted by Global Insight, an economic analysis and financial information company, said.

Stating that global sourcing was a "net positive" for American workers and the US economy, the ITAA President, Mr Harris N. Miller, said that by driving down the costs associated with computer software and services, global sourcing sharpened the US' competitive edge at home and abroad.

"The result is more American jobs, higher wages and a faster growing economy overall," he said.

The study found that outsourcing of IT services added to the take-home pay of average US workers. "With inflation kept low and productivity high, worldwide sourcing will increase real hourly wages in the US by $0.06 in 2005, climbing to $0.12 in 2010. Cost savings and use of offshore resources lower inflation, increase productivity and lower interest rates. This boosts spending and increases economic activity," it said.

The study predicted that spending for global sourcing of computer software and services will grow at 20 per cent, from about $15.2 billion in 2005 to $38.2 billion in 2010.

"Total spending on software and services will also continue to increase in the US. During the same period, total cost savings from worldwide sourcing of computer software and services will grow from $8.7 billion to $20.4 billion, much of which will be reinvested in the US," the study said.

The ITAA study found that raising barriers to worldwide sourcing would adversely impact US workers and its firms. If all global sourcing of software and IT services terminated completely, the impact will slow the US economy and actually reduce the number of new jobs available to American workers, it said.

(This article was published in the Business Line print edition dated November 3, 2005)
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