A report compiled by the National Association of Software and Service Companies warned on Thursday that the US economy could lose up to $2 trillion worth of growth opportunities due to a massive labour shortage by 2010, if it (US) did not take appropriate measures like outsourcing and immigration to bridge this gap.
Cautioning the US market against "protectionism", in the wake of outcry over outsourcing to low cost destinations like India, the Nasscom-Evalueserve report has forecasted a labour shortage of 5.6 million workers by 2010, a large chunk of which would be in high-tech areas.
Poll: Is outsourcing leading to a jobs boom in India?
Special: The Call Centre Boom
This gap could be bridged through immigration to the tune of 3.2 million workers, and offshoring to the tune of 1.3 million jobs, the report said, adding that India was strongly positioned to claim over 50 per cent of offshored work on strength of its cost and language (English-speaking) advantages.
"There will be a short term impact on the US labour force. About 1.3 million jobs will move offshore between 2003-2010, impacting one million US workers," Marc Vollenweider, CEO of business research and intellectual property service firm, Evalueserve, told reporters.
The remaining labour gap of 1.1 million workers would have to be bridged with temporary workers.
Forecasts for the US indicate an annual GDP growth of 3.20 per cent, which would lead to an increased demand for labour, the Nasscom report said.
Making a strong case for outsourcing, the report said that for every $100 of call centre work offshored by the US firms, about $143 was invested back into the US economy in the form of repatriated profits, increased sales of telecom equipment and cost savings.
Similarly the amount invested back into the US economy was $133 for IT services and $142 for high-end knowledge services like equity research, underwriting, tax preparations and risk management.
"Offshoring of IT services has enabled US workers move to specialised and creative roles while moving process oriented programming to offshore locations. The proportion of specialists in the US IT workforce increased to 74 per cent in 2002 from 38 per cent in 1983," it said.
It said utilisation of offshore facilities resulted in the growth of the local economies and an increase in the disposable income leading to expansion of the global market for US goods and services.
"For instance, in India, the proportion of the consuming class in overall population expanded from 14 per cent to 30 per cent in 1990s and is set to reach 40 per cent in 2006-06.
"The Indian retail sector is expected to grow from $180 billion in 2003, to $300 billion in 2010," it said.
The Nasscom report which highlights how the US economy would see significant benefits from global sourcing, is based on interviews of economists and offshoring experts world-wide to produce the 80 page report.