NCPA - National Center for Policy Analysis

Better Information Technology Jobs

January 29, 2004

Is American losing highly paid technical jobs, such as computer programming, due to outsourcing computer software and service jobs overseas to India?

New programming jobs may be springing up in India, says Virginia Postrel, but they aren't canceling out job growth in the United States. Compared with the end of 1999 -- rather than the peak of the economic bubble that ended in the 2000-2001 recession -- December 2003 data show a 14 percent increase in business and financial occupations, a 6 percent increase in computer and mathematical jobs, and a 2 percent drop in architecture and engineering jobs.

Catherine L. Mann, an economist at the Institute for International Economics in Washington, argues that the globalization of software and computer services will enhance American productivity growth and create new, higher-value, higher-paid technical jobs.

This happened in computer hardware in the late 1980s when Asian manufacturers began turning out basic memory chips, undercutting American chip makers' prices. Semiconductor makers here shifted to higher-value microprocessors.

Mann estimates that:

  • Globalized production and international trade made I.T. hardware some 10 to 30 percent less expensive than it otherwise would have been.
  • U.S. gross domestic product grew about 0.3 percentage point a year faster than it would have otherwise, adding up to $230 billion over the seven years from 1995 to 2002.

By building the components for new integrated software systems inexpensively, offshore programmers could make information technology even more affordable. And as in hardware, software systems integration jobs can replace those lost for basic programming.

Source: Virginia Postrel, "The Trend of Vanishing Tech Jobs," Economic Scene, New York Times, January 29, 2004; Catherine L. Mann, "Globalization of I.T. Services and White-Collar Jobs: The Next Wave of Productivity Growth," Policy Brief 3-22, December 2003, Institute for International Economics.

For Mann study


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