Saturday, November 12, 2005

BPO Creativity Vs Cost !

According to a study by the Information Technology Association of America (ITAA), offshore outsourcing has a positive affect on the US economy by lowering production costs for IT vendors which in turn has a positive effect on product costs for consumers. The net result is a lower rate of inflation. The study finds offshore outsourcing as a 'net positive for American workers and the US economy.' The study, conducted by Global Insight, further adds that the economic benefits derived from offshore outsourcing will create as many as 337,000 jobs by 2010. The new jobs will be over and above the number of jobs lost as a result of offshoring. The study also concludes that offshore outsourcing not only results in local wage raise but also contributes positively to the GDP. Offshore outsourcing, as per the study, will contribute to a USD 0.06 increase in US hourly wages in 2005 and about USD 0.12 by 2010.

However, the Institute of Electrical and Electronics Engineers-USA (IEEE-USA) has contested the study pointing that it has failed to take into consideration a number of sensitive factors like national security and that of the country's leadership in the field of innovation. According to IEEE-USA, the continued dependence on offshoring would result in the US losing its edge in developing new weapon systems and IT products. IEEE officials further added that the assumption that displaced workers are absorbed back into the working population was misplaced. As per a US Bureau of Labor Statistics survey, released in July 2004, out of 5.3 million workers who lost their jobs between January 2001 and December 2003, only 65 percent were re-employed by January 2004. The body also finds the increase in the number of H1B visas to have a detrimental affect on the local workers.

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