Outsourcing May Be Beneficial To Job Markets

Feb. 9 (KGO) -- Outsourcing is certainly never good news for the person loosing a job to an overseas worker, but there are indications that outsourcing is not necessarily bad for the economy as a whole, or the jobs market.

The issue of outsourcing is clear to many people.

Lauree Maacks, San Francisco resident: "I know it can save companies a lot of money, but it's not good for the employees in the area where they leave from."

However, a recent study by the Information Technology Association says there's an upside both for employees and companies.

It claims 257,000 new jobs were created by outsourcing last year. Another 337,000 jobs will be created by 2010.

Outsourcing, the authors say, leads to cost savings, it keeps inflation low by keeping prices down, and allows companies to operate 24/7.

Bob Cohen, Information Technology Association: "That's the phenomenon of global sourcing ... causes the U.S. economy to perform at a higher level and that means more jobs and actually higher wages for American workers."

Those who have studied outsourcing say it also helps companies to globalize, to develop new markets overseas and to put workers where their customers are.

Hiring workers overseas helps to develop their economies and creates consumers for American goods.

Raju Reddy, Sierra Atlantic Chief Executive Officer: "How can you ignore the fact that there is a large growing market in India with a billion people? Granted only 200 to 300 million of them may be middle class and can afford many of the luxuries that we do here in America. But that's a growing middle class."

It's not clear if new jobs created in America pay more or less than the job lost.

As baby boomers retire, American companies may need overseas workers to stay in business.

Cynthia Kroll, Ph.D., Haas School senior regional economist: "There's going to be concern where the new labor force is coming from in the U.S., and I think one of the attractions of offshore labor to companies is knowing that they have a wider labor base."

Still, that's no comfort to those who lose their jobs to outsourcing.

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