The ‘offshoring’ debate…

… is really hotting up in the US, as skilled workers (e.g. programmers) who once thought themselves indispensable are now discovering that that their employers have discovered real (and cheaper) alternatives overseas. I’ve come across an interesting post from John Robb’s weblog on the scope of the problem:

“Here isan article in the McKinsey Quarterly (via Forbes):  By McKinsey estimates, in 2002 it was worth $32 billion to $35 billion–just 1% of the $3 trillion worth of business functions that could be performed remotely. Because of the significant benefits already being realized through offshoring, the market is projected to grow by 30% to 40% percent annually over the next five years. This prospect may cause consternation over job losses in the United States but it will make offshoring an industry with well over $100 billion in annual revenue by 2008. 

What is $100 b of offshored services worth in terms of jobs?  First, an offshored service costs ~50% of the service produced in the US (on average).  Since this is basically a pure salary play (infrastructure is minimal), these estimates mean that 2 m ($100k) information workers will be offshored by 2008.  Also, given these jobs usually produce upwards of ~4 additional jobs per position (community impact), this is a net loss of 10 m jobs by 2008.”