Outsourcing to India Not Causing Job Loss in US: McKinsey

Filed in archive Outsourcing News on February 6, 2005

Consultancy firm, McKinsey, said that US concerns over job losses due to outsourcing are exaggerated. Data shows that only 274,000 jobs were moved to India from 2000 to 2003, while US' annual job increase was about 327,000 in the same period.

The consultancy firm qualified the job losses as "a drop in the bucket." In the US, job losses of this size is small compared to the 2.1 million service jobs created during the 90s, and the net annual job increase of 327,000 from 2000 -- 2003.

Nonetheless, programmers and support personnel had the biggest job losses due to outsourcing to India. In particular, 99,090 computer-programming jobs were lost in the US. McKinsey estimated that 134,000 software-related jobs were created in India --- roughly equivalent to the number of US software sector jobs lost.

On the other hand, the number of high end IT jobs ("software engineers and system analysts that work on higher-end applications and systems") increased from 2000 -- 2003. This increase offset the number of lost jobs in the same period.

Mckinsey said, ''Since trade and offshoring weren't the primary reasons for the weak post-2000 US employment performance, they shouldn't be the focus of policies to create or restore jobs.''