U.S. government: Offshoring caused two per cent of layoffs Q1

Despite the growing concern over the number of IT jobs being shunted overseas, a new report by the U.S. Bureau of Labor Statistics (BLS) says that just two per cent of layoffs in the first quarter were the result of offshoring.

According to the BLS, which began tracking layoffs due to “the movement of work” in January this year, of the 239,361 employees who were laid off in the first quarter of 2004, just 4,633 workers lost their jobs because of “the movement of work outside the country.”

At the same time, 9,985 employees lost their jobs because of “domestic relocation of work,” meaning positions were transferred to another location within the company or to other companies in the U.S.

Some analysts have viewed the BLS’ findings with some skepticism and the agency notes the limitations of its data. The data collected is for companies where at least 50 people filed for unemployment insurance during the five-week sampling period and the layoff lasted more than a month. The statistics do not include companies that employ fewer than 50 workers.

Still, the findings could help boost the arguments of economists and analysts who contend that the offshoring issue is less significant than some would make it out to be. Many say that offshoring actually will result in a boost to the U.S. economy because it enables companies to save money on less critical tasks and boost productivity domestically.

The Information Technology Association of America, for example, released a report earlier this year that concluded that offshoring computer software and services will actually increase total employment in the U.S.

“This activity generated an additional 90,000 U.S. jobs in 2003; by 2008 the net new jobs will total 317,000,” the group says.

Other studies have resulted in less positive findings. Forrester Research Inc., for example, recently updated its widely regarded offshoring study to increase its estimate of the number of U.S. services jobs that would move offshore by 2015 from 3.3 million to 3.4 million. It also said that the near term use of offshoring would grow 40 per cent faster than originally expected, with 830,000 jobs moving overseas by the end of next year, compared to its earlier estimate of 590,000.

Yet even Forrester notes that the number of jobs impacted is small when compared to the country’s overall job market. It points out that the number of jobs shifted offshore in 2003 — 315,000 — represents less than one per cent of all jobs in the impacted categories.

As for the BLS findings, 65 per cent of laid-off workers were from manufacturing industries, including “computer and electronic products.” Geographically, the Midwest suffered the brunt of the job losses with 34 per cent of “layoff events” happening there, followed by the South with 31 percent, the West with 27 per cent and the Northeast with 12 per cent.

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Jim Love, Chief Content Officer, IT World Canada

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