Report: Offshoring to Have No Sudden Bad Effects

By Deborah Perelman  |  Posted 2007-02-22 Email Print this article Print

A new report finds that while the software packaging industry stands to be able to offshore the large percentage of jobs by 2008, it may have a relatively small impact on the economy.

While offshore outsourcing is expected to affect wages and employment in developing countries, it won't have any sudden negative impact on developed countries' economies, according to a report released Feb. 22 by the McKinsey Quarterly, the business journal of the global management-consulting firm McKinsey & Company.

The report "Sizing the Emerging Global Labor Market" attempts to find a middle ground between those who argue that nearly all service jobs will eventually move from developed countries to low-wage ones, and those who feel that rising wages in cities such as Bangladore and Prague indicate that supply of offshore talent is already running thin. It attributes these rifts to a confusion surrounding the relatively new global labor market.

In analyzing the potential availability of offshore talent in 28 low-wage nations as well as the likely demand for it in service jobs across eight of the develop world's sectors--IT services, packaged software, retailing, financial services, health care, insurance and pharmaceuticals--the report found that these sectors provided about 23 percent of the nonagricultural jobs in developed country.

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