An Offshoring Ripple


A new study dispels fears of widespread job losses to overseas outsourcing, concluding that a paltry 4 percent of all job losses stemmed from outsourcing.

Jacob Funk Kirkegaard of the Peterson Institute for International Economics says, “The heated public and political debate … has been vastly overblown.”

Kirkegaard examined data from the Bureau of Labor Statistics involving 1 million layoffs in 2004 and 2005 and discovered that almost a quarter of the job losses were prompted by “contract completion,” 16 percent from downsizing and 10 percent as a result of financial difficulties and bankruptcies.

He traced 12 percent of the layoffs to outsourcing, but found that two thirds were outsourced domestically. Only 4 percent of all jobs were thus lost to offshoring, or overseas outsourcing.

A similar European survey attributed 5 percent of all job losses to offshoring.

Economists believe that almost a fifth of all U.S. jobs could theoretically move abroad.

A survey by the consulting firm A.T. Kearney identified several impediments to offshoring.

 Cultural and language problems 80%
 Lack of skills offshore 49%
 Customer complaints  49%


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