5) Winners and Losers in Outsourcing

The phenomenon that outsourcing had brought job losses in the USA is often regarded as more political than economic in India. Even since the USA passed the bill on banning government outsourcing projects to foreign countries in January 2004, it has raised a lot of resentment in Indian software outsourcing industry.

It is estimated that there are 245,000 employees now working in business process outsourcing in India and they have posed a threat to the 100 million workers in the same services sector in the US. In fact, American businesses themselves do not want to be affected in any way by tapping cheaper sources from other countries. By 2015, America is predicted to have lost approximately 75,000 legal jobs. Meanwhile, Europe will have about 120,000 fewer computer professionals.

Most of US concerns come from the predictions that by 2015 around 3.3 million US business-processing jobs will have been outsourced to other countries. It is suggested that the number of US service jobs lost due to off shoring will increase at the rate of 30% to 40% annually in five years.

In fact, these fears have no proper basis as large percentages of jobs in US require consumers and retailers in the same place. Besides, this advantage seems to remain for a long period. Estimation shows that between 2003 and 2020, about 250 million workers to the labor pool will be added to India. The estimation also indicates that the BPO sector in India has been growing at almost 60-70% per annum. By 2007, China's software outsourcing industry could come to match, and maybe even overtake, India's capability.

The favorable condition in China is that while the government has created excellent offshore outsourcing infrastructure, entrepreneurs have become unable to take full advantage of it. $7 billion has been invested to China in technical and English education, and over $25 billion in telecom-related fields.

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