WTO plays down fear of IT off-shoring

Concerns over job losses amid the offshoring of IT services are being overplayed because the shift could lead to broad economic benefits in rich nations, the World Trade Organisation said Thursday. "Most of the expressed expectations and fears related to the size and dynamic of offshoring of IT services are exaggerated," the WTO said in its annual World Trade Report.
Offshoring has become a major political issue in many wealthy nations, provoking calls for restrictions on companies that move operations abroad.
WTO director general Supachai Panitchpakdi, speaking at the launch of the report, said that off-shoring "has been debated ad nauseam over the past couple of years.
"But it is only part of the total picture, and its effects should not be exaggerated."
Much discussion on the issue is misguided and the worries it generates misplaced, Supachai added.
"At present, the impact of off-shoring services jobs is far stronger in the popular perception than on actual production, employment and trade patterns," the WTO report said.
"The number of jobs affected today by off-shoring IT services is small if related to the overall employment levels in the developed countries most affected."
Citing various studies, the WTO noted that the global turnover from offshore IT services reached 45 billion dollars (37.25 billion euros) in 2003, or less than 10 percent of total world business service exports.
The WTO, whose 148 member governments set the rules of global commerce, said that rich countries were likely to get an economic boost from off-shoring.
"Productivity and profits are expected to rise, and the 'loss' of off-shored jobs should be compensated by increased employment and perhaps higher wages in the medium term, provided labour markets are suitably flexible."
In 2003, Ireland and India were the main beneficiaries of off-shoring and the largest exporters of IT services, reaching 14.4 billion dollars and 11.3 billion dollars respectively, according to International Monetary Fund figures.
The United States, Britain, Germany and Israel were next in the export ranking.
"Despite their reputation as the major global off-shorers of IT services, the United States and the United Kingdom are both major net exporters of computer and information services," the WTO said.
Germany tops the table of IT service importers, followed by the United States, Britain, Japan and Spain.