Offshoring: The Job Creator

From: Global Services
By: Shyamanuja Das

Employee unions and various politicians have long blamed offshoring for overall job losses in the U.S. economy. Business lobby groups who perceive "labor arbitrage" as a means for cutting cost and a sure-shot way to impress Wall Street, have defended it vehemently. They have used studies by thought leaders to argue that in the long-term offshoring creates value for the U.S. economy. McKinsey Global Institute, in a study three years ago, estimated that for every dollar spent on offshoring by the U.S. companies, $1.47 worth of value is created for the global economy, out of which close to $1.14 comes back to the U.S. economy. Free-trade proponents, among them economists like Gregory Mankiw and Jagdish Bhagwati, have also maintained that offshoring is not very different from any other international trade, and at the end, everyone gains. President Bush, during his India visit, defended offshoring by saying, it creates markets for American products.

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