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job losses.24 Until recently, it seemed that jobs in the service sector were safe because most services are delivered face-to-face and only a small fraction is traded globally. But new technologies and business processes are opening an increasing number of services to global competition, from technical support to the reading of x-rays to stock research to the preparation of income taxes and even to the ordering of hamburgers at drive-through windows. There is a US company that uses a receptionist in Pakistan to welcome visitors to its office in Washington via flat-screen television.25 The transformation of collaboration brought about by information and communications technologies means that the global workforce is now more easily tapped by global businesses. It is important to note, however, that a recent McKinsey Company report estimates that only 13% of the potential talent supply in low-wage nations is suited for work in multinational companies because the workers lack the necessary education or language skills.26 But that is 13% of a very large number.

Forrester Research estimates that 3.4 million US jobs could be lost to offshoring by 2015.27 Ashok Bardhan and Cynthia Kroll calculate that more than 14 million US jobs are at risk of being sent offshore.28 The Information Technology Association of America (ITAA), Global Insight,29 and McKinsey and Company30 all argue that those losses will be offset by net gains in US employment—presuming that the United States takes the steps needed to maintain a vibrant economy. Many experts point out that the number of jobs lost to offshoring is small compared with the regular monthly churning of jobs in the US economy. McKinsey, for example, estimates that about 225,000 jobs are likely to be sent overseas each year, a small fraction of the total annual job churn. In 2004, the private sector created more than 30 million jobs and lost about 29 million; the net gain was 1.4 million jobs.31

24

American Electronics Association. Offshore Outsourcing in an Increasingly Competitive and Rapidly Changing World: A High-Tech Perspective. Washington, DC: American Electronics Association, March 2004.

25

S. M. Kalita. Virtual Secretary Puts New Face on Pakistan. Washington Post, May 10, 2005. P. A01.

26

McKinsey and Company. The Emerging Global Labor Market: Part II—The Supply of Offshore Talent in Services. New York: McKinsey and Company, June 2005. P. 23.

27

Forrester Research. Near-Term Growth of Offshoring Accelerating. Cambridge, MA: Forrester Research, May 14, 2004.

28

A. Bardhan and C. Kroll. The New Wave of Outsourcing. Fisher Center Research Reports #1103. Berkeley, CA: University of California, Berkeley, Fisher Center for Real Estate and Urban Economics, November 2, 2003.

29

Information Technology Association of America. The Impact of Offshore IT Software and Services Outsourcing on the US Economy and the IT Industry. Lexington, MA: Global Insight (USA), March 2004.

30

McKinsey and Company. Offshoring: Is It a Win-Win Game? New York: McKinsey and Company, August 2003.

31

US Bureau of Labor Statistics. “NEWS: Business Employment Dynamics: First Quarter 2005.” November 18, 2005. Available at: http://www.bls.gov/rofod/3640.pdf.



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