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Report: Global outsourcing helps U.S.

Labor shortages and immigration curbs make offshore outsourcing more important to U.S. economic growth, a report an Indian tech industry group commissioned says.

Labor shortages and immigration curbs are making offshore outsourcing even more important to maintaining growth in the U.S. economy, according to a report market research firm Evalueserve released this week.

The firm said outsourcing to offshore locations could increase the competitiveness of American companies due to lower costs, increased flexibility and access to trained workers. And if local economies grow, it could mean new markets for the goods and services of U.S. businesses. For every $100 worth of work shipped offshore, $130 to $145 will be reinvested in the U.S. economy, according to Evalueserve.

The National Association of Software and Services Companies, an Indian information technology industry body, commissioned the report to try to allay fears over the adverse impact of outsourcing on the U.S. economy.

"Offshoring keeps U.S. businesses competitive, creates new markets for U.S. goods and services, and fills the shortfall in services labor that the U.S. is expected to face in the next seven years," Marc Vollenweider, CEO of Bermuda-based Evalueserve, said in a statement.

Not everyone is so sanguine, however. IT workers have complained that while the trend may help the overall economy, it is already depriving IT workers of jobs in the United States. Recently, about 50 people protested an outsourcing event in San Francisco.

Losing jobs isn't the only issue, opponents say. They also contend that the countries that receive the work often have less rigorous environmental and labor laws than the United States has. And moving tech jobs offshore could hurt the United States' technological power in the long run, some opponents claim.

But Evalueserve predicts that an aging U.S. population and slower population growth will lead to a shortfall in the domestic labor supply of 5.6 million jobs by 2010. Of these, immigrant workers will fill nearly 3.2 million jobs, and another 1.3 million jobs will be filled offshore, according to the report. That still leaves a gap of 1.1 million jobs.

In the worst case, the report said, offshore outsourcing will displace 1.3 million U.S. workers. But Evalueserve predicted that the loss will have limited impact on the U.S. labor market because of the practice of reallocation of jobs across industries.