Posted on 12/17/2004 11:02:46 PM PST by Gengis Khan
WASHINGTON: Indian firms will perform 15 per cent of information technology jobs required by American companies by 2010 and save them $ 30 billion annually to be invested domestically in the US, a new study on the hot-button issue of outsourcing has forecast.
By then, the Indian IT labour force will be more than three million-strong, and half of the workers will be performing jobs for US companies, the firm AMR Research said in a report whose contents point to a growing interdependency between U.S and India in the services sector.
Arguing at length that the outsourcing of work to India is good for U.S corporations, their stockholders and the American economy, the study claims that "With the savings from outsourcing to India, US companies can fund and launch 12,000 new strategic projects."
The study, "The Adolescence of Offshoring: Growing Up Fast," is one of the several in recent months that have challenged the populist assertion that outsourcing of US jobs is detrimental to the American economy. "Outsourcing to India will aid the U.S. economy if the savings from outsourcing continue to be reinvested in new strategic projects. The impact of these new projects can be huge," the study concluded.
Explaining the rationale for continued outsourcing, the AMR report said US companies use as much as 80 per cent of their IT budgets to maintain status quo. They are forced to delay investments in innovations that aid growth because they are spending too much of their limited IT budgets on non-strategic activities, such as data centre operations, application development and maintenance, and staffing help desks.
"It doesn't have to be that way...Companies effectively outsourcing to India can slash by 40 per cent to 50 per cent of these costs," the study argued. It said with an average US IT fully loaded labour costs approaching $80,000 per worker per year, a worker in India represents a $36,000 savings per year, and 1.5 million workers represent $54 billion in savings each year. "Our research shows that companies reinvest 60 per cent of savings from outsourcing in IT or business unit projects -- that's $30 billion per year," it pointed out.
The study said investments that allow companies to improve by just 10 per cent their ability to fulfil orders that are complete, accurate, on time, and in perfect condition can result in additional earnings of 50 cents per share—a result that will please stockholders.
The AMR Research paper comes amid continuing concern in the U.S over the outsourcing issue and flight of jobs. A recent cartoon showed bewildered American kids being told make their Christmas wishes to a number in Bangalore -- because even Santa Claus has been outsourced.
Is your first name pronounced with "J" sounds?
ping
Outsourcing/globalization in a nutshell. So now how does the US offset the loss of labor, knowledge and income?
That aint my real name.
Americans pronounce it with a 'g' sound and Indians pronounce it with a 'ch' sound like 'Chengis'
I wouldn't worry about it too much. India still has a deep belief in managed economies.
This may be true...but middle-class warfare is coming to India and there will be a huge fight over the economy and politics by 2020. And the growth of the middle-class will require a vast amount of oil...which trigger higher prices at the pumps for everyone in the world.
that is why I will continue to be an IT contractor for the government...that wont ever go away....
Would you like a slurpee with that?
"Outsourcing/globalization in a nutshell. So now how does the US offset the loss of labor, knowledge and income?"
Frankly...........I dont know!
Perhaps if ur products make use of Indian labour. They will be cheaper and will compete better in international markets and will gain more international market share. That will benefit both India and America.
U win some, u lose some. Thats what globalization is.....level playing field remember?
Thanks, I was curious. John Kerry at one point pronounced it with two "j" sounds. Off topic, I realize, but I wonder where he got that affected pronunciation
ping
Yes, sucking the wealth out of the USA to 3rd world places is just what we want here in the USA....
Oh, it's just the upper management that sees that next quarter that makes those moves. hmm.
Nobody is "sucking" money out of US.
Its a fair deal.
Money saved is money earned.
U can always invest it in something else.
"Outsourcing to India will aid the U.S. economy if the savings from outsourcing continue to be reinvested in new strategic projects. The impact of these new projects can be huge,"
---please read the whole article!
You know you guys are getting a huge benefit while IT workers in the USA are taking a bath..
Now if we deserve it, we deserve it. But remember you'll get outsourced too to lower paying countries eventually. You'll be fighting china or whoever is lower paying than you got.
Hopefully the USA's productive rate can keep these jobs here, and hopefully we'll have some sense of self-interest too.
No, but I'll take a dozen glazed donuts.
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