WTO seeks to allay fears on moving IT services offshore
Predictions that offshore information technology services will transfer millions of jobs from rich to poor countries are wide of the mark, the World Trade Organisation said yesterday.
Jul 01, 2005
Predictions that offshore information technology services will transfer millions of jobs from rich to poor countries are wide of the mark, the World Trade Organisation said yesterday.
In its annual World Trade Report, the WTO said that, while offshoring of IT services was set to increase, there would be no dramatic impact on employment either in sending or receiving countries.
"The impact of offshoring services jobs is far stronger in the popular perception than on actual production, employment and trade patterns," the report said.
Estimates by business consultancies have suggested that the US could lose up to 3.5m jobs by 2015 and that up to a quarter of traditional IT jobs in industrialised countries could be relocated to emerging markets by 2010.
However, the WTO said these seemingly apocalyptic figures had to be set in the context of total employment and trade.
It noted that the estimated $45bn (ˆ34.5bn, £25bn) of offshored IT services accounted for less than 10 per cent of world exports of business services, while the two countries playing the biggest role in offshoring, the US and UK, were also by far the biggest net exporters.
Although 3.4m people work in computer occupations in the US, this represents only 2.3 per cent of all jobs. Moreover, their numbers are increasing after the shock delivered by the bursting of the dot.com bubble in 2001.
In India, the main provider of offshore IT and business services, more than 800,000 people are now working in the sector. Still, they account for only 0.25 per cent of India's 320m workforce.
Moreover, the report said, India had only a limited supply of people with the necessary skills, which was likely to lead to rising wage costs as demand increased.
In its annual World Trade Report, the WTO said that, while offshoring of IT services was set to increase, there would be no dramatic impact on employment either in sending or receiving countries.
"The impact of offshoring services jobs is far stronger in the popular perception than on actual production, employment and trade patterns," the report said.
Estimates by business consultancies have suggested that the US could lose up to 3.5m jobs by 2015 and that up to a quarter of traditional IT jobs in industrialised countries could be relocated to emerging markets by 2010.
However, the WTO said these seemingly apocalyptic figures had to be set in the context of total employment and trade.
It noted that the estimated $45bn (ˆ34.5bn, £25bn) of offshored IT services accounted for less than 10 per cent of world exports of business services, while the two countries playing the biggest role in offshoring, the US and UK, were also by far the biggest net exporters.
Although 3.4m people work in computer occupations in the US, this represents only 2.3 per cent of all jobs. Moreover, their numbers are increasing after the shock delivered by the bursting of the dot.com bubble in 2001.
In India, the main provider of offshore IT and business services, more than 800,000 people are now working in the sector. Still, they account for only 0.25 per cent of India's 320m workforce.
Moreover, the report said, India had only a limited supply of people with the necessary skills, which was likely to lead to rising wage costs as demand increased.