Offshoring Debate

“The USA will create 22 million new jobs between 2000 and 2010, of which only 2 million will be offshored, netting 20 million new jobs for our economy,” was how Angelos Angelou of Angelou Economics summed up the current offshoring debate. “In the last several years, my hometown of Austin has turned over around 35,000 jobs to offshoring, but we are better for it.”

Angelou estimated that 14 million out of our current job base of 130 million jobs could be at risk. His company has developed a model that looks at risks. The most risky are San Jose and Sioux Falls at 12% of their labor market compared to 7% overall for the USA. Jobs most at risk are back office, customer service, shared corporate functions, knowledge services and R&D.

He sees risk in manufacturing which will dwindle from 11% of the workplace today to 8 or 9% in the future. One stat that jumped out at me was that the average Chinese manufacturing employee turns out $5,000 of output compared to $95,000/employee in the USA.

The good news is that the USA generates $1.14 in GDP for every $1 that is outsourced. And Angelou sees the USA gaining market share in the world economy. “In 2005 the U. S. economy is about 30% or $11 trillion out of $36 trillion worldwide. By 2005 it will grow to $40 trillion out of a $100 trillion world economy.