Statistics: US Insourcing outweighs US outsourcing

In previous articles, we have discussed how the benefits of free trade and globalization outweigh any perceived losses. Many regard outsourcing as simply "job loss" and it thus not surprising that outsourcing is confronted with negative public opinion. For many reasons however, such a view is a misconception.

Outsourcing is a part of free trade and globalization and free trade and globalization is a "two way street". It is unfeasible to expect the US to export and not import, witness insourcing but not outsourcing. Most importantly as a result of free trade and globalization US insourcing outweighs the outsourcing. It is for this reason free trade should be encouraged and outsourcing should not be deemed negatively. Outsourcing is simply a part of the free trade "deal" that brings the US more than it losses:

• US companies sell 3 times more IT services to the rest of the world, (more than $10 billion worth) than we buy. Despite India's prominent ability in IT services, it is the US which dominates the industry.
• The SiliconValleyBusiness Journal in March 2009 stated,"An annual survey by accounting and consulting firm BDO Seidman LLP showed that 22 percent say the United States is the outsourcing destination they are most likely to consider in 2009, compared to 13 percent for India."
• India is the worlds second largest I.T exporter of software after the United States. Outsourcing helps maintain US dominance.
• With a 59% share, the US commands the largest share of the global BPO market.
• In 2002 US companies exported $14.8 billion worth of computer, data-processing, research, development, construction, architectural, engineering and other IT services. During the same year, Americans imported $3.9 billion of similar services. Thus, for every dollar outsourced, the rest of the world outsourced more than three dollars back to the US.
• According to the Bureau of Labor Statistics, the number of outsourced jobs increased from 6.5 million in 1983 to 10 million in 2000. The number of insourced jobs increased even more in the same period, from 2.5 million to 6.5 million.
• In 2001, U.S. cross-border exports of IT services totaled $10.9 billion, while imports totaled $3 billion, yielding a trade surplus of $7.9 billion.
• In 2002, overall commercial services exports exceeded imports by $58 billion.
• Nearly 170 Indian IT companies have offices in the US and they employed nearly 60,000 people in the US in 2001. These people paid nearly $810 million in taxes in 2001. Employees of Indian IT firms bought goods and services worth $1.2 billion in the US and paid nearly $300 million as social security in 2001.

Outsourcing is merely one element of the overall free trade and globalization compound. And free trade and a globalised world is of vast benefit to the US. Most significantly, free trade and globalization produces an overall net gain for the US economy. It is thus why steps should not be taken to counter outsourcing, for such measures could have repercussions which escalate beyond what one might envisage. An attack on outsourcing, is an attack on free trade and globalization, and it is the US economy which has the most to win or loss from free trade.