Outsourcing in the New Economy

The Issue

The debate on outsourcing of US white-collar jobs in information technology (IT) to low-wage developing countries has picked up remarkable momentum over the last year. Globalization of IT hardware contributed to rapid productivity and job growth in the 1990s, and globalization of software and IT services likely will spur a second wave of US productivity and job growth. Nevertheless, the specter of losing white-collar IT jobs abroad looms large, and frequently cited projections indicate that millions of jobs could be lost to offshore workers. While some jobs will be done abroad, just as in the 1990s, higher-paid jobs demanding IT skills will grow very quickly in the United States. Public policy must be redirected to assure that US workers can both transition to, and upgrade their skills for, the jobs that globalization and technological change are creating.

Essential Reading from the Institute

Policy Brief 08-1: "Fear" and Offshoring: The Scope and Potential Impact of Imports and Exports of Services [pdf]
by J. Bradford Jensen, Peterson Institute for International Economics
and Lori G. Kletzer, Peterson Institute for International Economics
January 2008

Working Paper 07-2: Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia [pdf]
by Jacob Funk Kirkegaard, Peterson Institute for International Economics
April 2007

Book: Accelerating the Globalization of America: The Role for Information Technology
by Catherine L. Mann assisted by Jacob Funk Kirkegaard
June 2006

Paper: Tradable Services: Understanding the Scope and Impact of Services Outsourcing
by J. Bradford Jensen, Peterson Institute for International Economics
and Lori G. Kletzer, Peterson Institute for International Economics
May 2006

Policy Brief 03-11: Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth [pdf]
by Catherine L. Mann, Peterson Institute for International Economics
December 2003

Paper: This is Bangalore Calling: Hang Up or Speed Dial? What Technology-Enable International Trade in Services Means for the US Economy [pdf]
by Catherine L. Mann, Peterson Institute for International Economics
Article published by the Federal Reserve Bank of Cleveland
January 15, 2005

Paper: The US Current Account, New Economy Services, and Implications for Sustainability [pdf]
by Catherine L. Mann, Peterson Institute for International Economics
January 2004

Paper: Outsourcing--Stains on the White Collar? [pdf]
by Jacob Funk Kirkegaard, Peterson Institute for International Economics
February 2004

Working Paper 05-1: Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather Than Off the Cliff! [pdf]
by Jacob Funk Kirkegaard, Peterson Institute for International Economics
March 2005

Paper: Preempting Protectionism in Services: The GATS and Outsourcing [pdf]
by Aaditya Mattoo, The World Bank
and Sacha Wunsch-Vincent, Peterson Institute for International Economics
January 2004