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Offshore Outsourcing to India - A shift in motivation
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Why We Have Nothing to Fear from Foreign Outsourcing
Contrary to the popular perception, foreign outsourcing is not to blame for the deep recession that struck the information technology industry beginning in early 2000. The IT recession began in March of that year when the dot.com and telecom bubbles burst, and the tech-laden NASDAQ lost three-quarters of its value during the next three years. Meanwhile, business investment collapsed during the 2001 recession, reducing domestic demand for both IT hardware and services. The terrorist attacks of September 11, 2001, and the ensuing war on terrorism put a further chill on business confidence. Adding to the IT sector's woes were corporate scandals and slow growth abroad among our major trading partners. Foreign outsourcing was not an important variable in the equation. A fundamental mistake made by the critics of outsourcing has been to confuse the passing pain of the IT recession with an alleged long-term decline in the sector. That mistake is compounded when current output and employment levels are compared with levels at the frenzied peak of the boom in 2000 rather than with more normal levels from the late 1990s. A more accurate and less alarming picture of the industry emerges if we compare the state of the industry a few years after the bubble burst with its state a few years before. http://www.freetrade.org/node/104
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