So, given as I outlined in Part I of my post on this topic, that outsourcing is here to stay - unless its strategic usefulness dissipates, of course, where are we as a nation in the U.S. with offshore outsourcing? Based on a 2005 paper titled “Fear of Offshoring” by Princeton Professor Alan S. Blinder, he concluded that “fewer than a million U.S. service-sector jobs have been lost to offshoring up to now. A million jobs may sound like a lot. But in the gigantic U.S. labor market, with its rapid turnover, a million jobs is less than two week’s normal gross job losses”. More recent numbers from a Forrester Research report titled “Near-Term Growth of Offshoring Accelerating“, claims that more than one million U.S. jobs have already been moved offshore, and that figure is projected to jump to 3.3 million by 2015. By then, nearly 6% of today’s U.S. jobs will be moved overseas. And the total wages associated with that spike is $151.2 billion which represents a sharp increase of approximately $100 billion by 2015 – certainly the biggest jump to date based on this data. And the highest number of U.S. jobs being offshored from 2003 into 2015 are “Office” jobs followed by “Computer” and “Business” jobs. The cumulative total number of U.S. jobs expected to be offshored in 2008 is 1,200,000 and 3,400,000 by 2015 which represents a 35% increase.

On the global front, Gartner Research predicts that global outsourcing is expected to grow by 8.1% in 2008 as companies increasingly turn toward smaller contracts. “Spending on offshore services is three times higher in North America than in Western Europe but the gap is closing, with Indian providers becoming more popular in 2007, growing 40 per cent in the U.S. and 60 per cent in Europe.” According to consulting house Booz Allen Hamilton, engineering, design, and research are increasingly being performed for companies offshore and is expected to continue at a rapid pace. They claim this is being driven by the growing demand for more complicated consumer and industrial products and a shortage of skilled high-tech workers in the West. Similarly, the research firm XMG claims that offshoring is beating previous market expectations and estimates the global outsourcing market will hit $297 billion by year’s end, with an estimated annual growth rate of more than 19%. This forecast is expected to be attributed to growth in IT, BPO (business process outsourcing) and call center services, as well as the onshore and offshore delivery of outsourcing services.

Charts: Bureau of Labor Statistics. In Part III of this series, I will outline other trends and dynamics in outsourcing.