In this presidential campaign (presidential as in “for the office of president,” not “of a caliber deserving of the office”), “spin” is the label applied to the most accurate statements candidates make. Complete fabrication is a polite label for the other end of the spectrum. (Don’t believe me? Check www.factcheck.org — an outstanding and completely non-partisan website whose name is well-deserved.)
Business speech isn’t far behind. Take as a recent example a report, published by the ITAA — the Information Technology Association of America, on offshore outsourcing’s impact on the U.S. economy (the ITAA calls it “global sourcing”).
According to the ITAA, offshore outsourcing is good for the U.S. economy. In this, it isn’t alone, of course, and the point of this column isn’t to debate that issue. It’s to debate whether the ITAA is offering real evidence, or just more spin than you’d find in an average pulsar. Take, for example, this statement:
“In the software and services area, the economy will create 516,000 jobs over the next five years in an environment with global sourcing but only 490,000 without it. Of these 516,000 new jobs, 272,000 will go offshore and 244,000 will remain onshore. Thus the U.S. IT workforce will continue to grow.”
Sounds great, doesn’t it? But look more closely. The ITAA predicts that with global sourcing, the U.S. economy will create 244,000 domestic jobs; without it, 490,000 domestic jobs.
It didn’t read like that, did it?
Another quote from the ITAA report:
“While global IT software and service outsourcing displaces some IT workers, total employment in the United States increases as the benefits ripple through the economy. The incremental economic activity that follows offshore IT outsourcing created over 90,000 net new jobs in 2003 and is expected to create 317,000 net new jobs in 2008.”
90,000 net new jobs spread throughout the U.S. economy sounds great. But are they full-time jobs or part-time? The ITAA doesn’t say, nor does it provide an estimate of the average wage of these marvelous employment opportunities. Want to place a bet?
Then there’s this:
“Workers are expected to enjoy a bump up in real wages. Offshore IT software and services outsourcing actually increases average real wages of U.S. workers. With lower inflation and higher productivity, real wages were 0.13% higher in 2003 and are expected to be 0.44% higher in 2008.”
So if you are still employed in the technology sector, the ITAA says you made an extra hundred bucks in 2003 because of global sourcing. Don’t spend it all in one place. Oh, that’s right — you can’t, because you don’t have the time anymore. “Higher productivity” is EconomistSpeak for “employees work more hours without getting more pay.”
One more:
“Demand for U.S. exports is expected to increase due to relatively lower prices of U.S. produced goods and services and higher incomes in the offshore outsourcing destinations. Real exports were $2.3 billion higher in 2003 and are expected to be $9 billion higher by 2008.”
Now that sounds sensational, doesn’t it? We all know the U.S. has had a net trade deficit for decades. Global sourcing is going to reduce it, suggests the ITAA. The unstated reality is just a wee bit different: Sending work offshore is the economic equivalent of importing trade goods, and the U.S. dollars that flowed offshore in 2003 as a result of global sourcing — $11.3 billion — resulted in a net increase in the trade deficit of $9 billion.
And did you notice how much bigger all benefits will be in 2008 than they are right now? This sounds familiar. The ITAA estimates closely resemble those published by the IT research firms during the dot.com era: Tiny markets now, huge sales in five years. And we all know how often those forecasts came true.
Since the ITAA’s members have a considerable stake in promoting offshore outsourcing, its findings were a foregone conclusion. What’s sad is the extent to which the business press reported these findings as fact, with little or no analysis and few attempts to discover dissenting opinions.
Or maybe the problem was a typographic error: Where they said global sourcing is better for the U.S., they meant to say, “Global sourcing is better for us.”