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Southern Miss prof reveals woes of outsourcing
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March 30, 2004

USM prof reveals woes of outsourcing

Book details effects public resentment can have on business

The Associated Press


When American CEOs are berated for outsourcing call center jobs to Asia, most simply retort that their companies are chasing cheap labor.

But companies may decide the price of that cheap labor is too high if they read a new book by a University of Southern Mississippi professor who studied the call center industry for eight years.

David Butler's Bottom-line Call Center Management is a rare examination of a job that employs 7 percent of the American work force.

And it hits print just as credit card giant Capital One Financial Corp. canceled a contract last Thursday with a New Delhi-based firm to outsource a 250-seat call center.

"What CEOs don't tell reporters is that outsourcing is still experimental and the experiment may not be working," said Butler, who heads the international economic development doctoral program at the Hattiesburg-based university. "Overseas call centers can cost more in customer goodwill than they save in staff salaries."

<a href='http://www.clarionledger.com/news/0403/30/b01.html' target='_blank'>CLARION-LEDGER: Book reveals downside of outsourcing</a>
03-31-2004 01:44 AM
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you do know that more services are outsourced to the US out then are outsourced away from it. Your author doesn't seem to recognize that.
03-31-2004 07:10 AM
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ITAA/Global Insight Study Finds IT Outsourcing Results in Net U.S. Job Growth


U.S. Offshore Outsourcing of Computer Software and Services to Grow 26%
Annually

WALTHAM, Mass., March 30 /PRNewswire/ -- Global Insight, Inc. announced
today the release of a new study, "The Impact of Offshore IT Software and
Services Outsourcing on the U.S. Economy and the IT Industry," commissioned by
The Information Technology Association of America (ITAA), the leading trade
association for the IT industry. The Global Insight research team was led by
chief economist Dr. Nariman Behravesh, who is recognized as one of the world's
most accurate economic forecasters. Nobel Prize winning economist Dr.
Lawrence R. Klein, the founder of WEFA and a Global Insight associate, made
significant contributions to the Study.
The in-depth Study found that global sourcing of computer software and
services, while displacing some IT workers, actually benefits the U.S. economy
and increases the number of U.S. jobs. According to Study findings, the U.S.
economy has much to gain from global sourcing and an environment of free
trade, open markets and robust competition. Benefits include job creation,
higher real wages, higher real GDP growth, contained inflation and expanded
exports resulting in increased economic activity.
According to the Study, U.S. spending for offshore outsourcing of computer
software and services is expected to grow at a compound annual rate of almost
26%, increasing from approximately $10 billion in 2003 to $31 billion in 2008.
During the same period, total savings from the use of offshore resources will
grow from $6.7 billion to $20.9 billion. Using offshore resources lowers
costs and boosts productivity. As a result, inflation is lower, interest
rates are lower, and economic activity is higher. The increased economic
activity creates a wide range of new jobs, both in IT and other industries.
While there are some dislocations that affect both industries and regions, the
overall economy adjusts so that offshore IT outsourcing actually creates new
jobs. Over 90,000 net new jobs were created in the U.S. through 2003. The
number of net new jobs is projected to grow by 317,000 in 2008. The impact on
U.S. jobs does vary by industry sector, with the major beneficiaries for the
next five years being construction, transportation and utilities, education
and health services, wholesale trade, and financial services.
"The benefits of free trade clearly provide a boost to the U.S. economy,"
stated Dr. Behravesh. "Using offshore resources reduces costs, dampens
inflation, lowers interest rates, increases spending and creates additional
jobs. The challenge is to help displaced workers transition to other
productive activities," he concluded.
The Study estimates the total number of new jobs by state, by examining
each state's industry employment concentration and its forecasted industrial
growth. The results of the Study indicate states that are larger and more
economically diverse will gain the most new jobs through sheer size such as
California, Texas, Florida, New York, Illinois, Ohio, Pennsylvania and
Michigan. However, the states that will lead in terms of expected growth in
the number of new jobs will be Kansas, Nevada, Washington, Arizona, North
Carolina, Colorado, South Carolina, Iowa and Georgia, according to the Study.
"We have long held the position that worldwide sourcing creates more jobs
and higher real wages for American workers," said ITAA President Harris N.
Miller. "Now we have the data that prove it. This research replaces fear
with sound economic analysis, allowing for an informed approach to the global
marketplace."
Note: For more information or to view the Executive Summary of "The Impact
of Offshore IT Software and Services Outsourcing on the U.S. Economy and the
IT Industry," go to <a href='http://www.globalinsight.com/ITAA' target='_blank'>http://www.globalinsight.com/ITAA</a>. For information on obtaining
the full Study, go to:
<a href='https://www.itaa.org/events/registersec.cfm?EventID=1036' target='_blank'>https://www.itaa.org/events/registersec.cfm...fm?EventID=1036</a>

About Global Insight
Global Insight, Inc. (http://www.globalinsight.com/) is a privately held
company formed to bring together the two most respected economic analysis,
forecasting and financial information companies in the world, DRI and WEFA.
Global Insight provides the most comprehensive economic coverage of countries,
regions and industries available, using a unique combination of expertise,
models, data and software within a common analytical framework to support
planning and decision-making. Global Insight collects and delivers economic
and financial information to clients and also provides a broad range of
consulting capabilities. With its April 2003 acquisition of World Markets
Research Centre, Global Insight also provides the world's first same-day
analysis and risk assessment service covering 196 countries and 4 industries,
providing insightful analysis of market conditions and key events around the
world. The company has over 3,300 clients in industry, finance and government
with revenues in excess of $70 million, over 600 employees and 23 offices in
12 countries covering North and South America, Europe, Africa, the Middle East
and Asia.

About ITAA
The Information Technology Association of America (ITAA) (http://www.itaa.org)
provides global public policy, business networking and national leadership to
promote the continued rapid growth of the IT industry. ITAA consists of over
375 corporate members throughout the U.S., and a global network of 53
countries' IT associations. The Association plays the leading role in issues
of IT industry concern including information security, taxes and finance
policy, digital intellectual property protection, telecommunications
competition, workforce and education, immigration, online privacy and consumer
protection, government IT procurement, human resources and e-commerce policy.
ITAA members range from the smallest IT start-ups to industry leaders in the
Internet, software, IT services, ASP, digital content, systems integration,
telecommunications, and enterprise solution fields.

Contact:
Nariman Behravesh, chief economist, Global Insight, +1.781.301.9101,
(nariman.berhavesh@globalinsight.com)
Mike Raimondi, IT Advisory Srv, Global Insight, +1.781.301.9124,
(mike.raimondi@globalinsight.com)
Bob Cohen, Sr.VP, Information Technology Assoc. of America,
+1.703.284.5301,( bcohen@itaa.org)
03-31-2004 10:22 AM
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