Week 4 Identify a FAILED prediction of IT outsourcing to forecast, discuss and analyze

The prediction in the initial waves of outsourcing of jobs from the US to other places in the world where productivity and quality is comparable or better, and where costs are just a fraction of US costs, is that such outsourcing will mean the loss of US jobs and an overall detrimental effect on the jobs situation in the country.

In the early goings, the prediction did not seem to hold water, as just simple back office and other menial, low paid work was outsourced. By 2003, however, the consensus was that there was a growing trend towards the outsourcing of higher-value work that threatened college graduates in the US. As the outsourcing momentum grows, the prediction is that the kinds of jobs that will be outsourced will increasingly be those that are higher up the value chain, leading to the general erosion of the chances of US citizens with high qualifications to compete with their foreign counterparts due to cost. This is true for IT outsourcing and IT jobs in the US as well (IDG News Service, 2003).


The reality, however, is that the prediction does not hold up to the facts. Even in 2003, the observation is that the outsourcing of IT work and processes has not generally resulted in the loss of IT jobs at home. In fact the prediction from 2004 onwards is that the number of US IT jobs will grow rather than shrink, and that overall the share of IT outsourced work to total work that is outsourced is very low. Moreover, with the older generation retiring, the prognosis is that there will actually be a shortage of IT labor supply in the US, rather than a shortage of work (IDG News Service, 2003).

The general prediction that the outsourcing of IT work is going to be a bane on the economy likewise does not seem to be true. While it is true that the outsourcing of all kinds of work and processes, including IT, should remain substantial moving forward, the cost savings to the US economy and the shift of work towards higher value-added work should mean that the US economy should in general be better off as a result of it (Drezner, 2004).
References

Drezner, D. (2004). The Outsourcing Bogeyman. Foreign Affairs. Retrieved 7 August 2007 from http://www.foreignaffairs.org/20040501faessay83301/daniel-w-drezner/the-outsourcing-bogeyman.html
IDG News Service (2003). Offshore outsourcing: Little effect on US jobs? Retrieved 7 August 2007 from http://www.itworld.com/Man/2701/031211outsourcing/