ACM Information Technology job offshoring study

February 24th, 2006

ACM published a study on the globalization and offshoring of software with several findings:

  • Globalization and offshoring of the software industry are deeply connected and both will continue to grow.
  • Offshoring can, as a whole, benefit both, but competition is intensifying.
  • Offshoring will increase but determining the specifics is difficult. Skepticism is warranted regarding claims about the number of jobs to be offshored and the projected growth of software industries in developing nations.
  • Standardized jobs are more easily moved to developing countries than are higher-skill jobs. While these standardized jobs were the initial focus of offshoring, global competition in higher-end skills, such as research is increasing today.
  • Offshoring magnifies existing risks and creates new and poorly understood threats to national security, business property and processes, and individuals’ privacy.
  • To stay competitive in a global IT environment and industry, countries must adopt policies that foster innovation.

The study concluded that predictions of job losses were greatly exaggerated and that 2-3% of the US IT jobs will go offshore annually over the next decade. But more jobs will be created than are lost in the future as long as US industry moves up the economic ladder to do higher-value work — typically, applying IT to other fields, like biology and business. Employment in the IT industry is higher today than it was at the peak of the dot-com bubble, despite the growth of offshore outsourcing in the last few years.

(spotted on the CRA policy blog)