Outsourcing Benefits

From: The Milken Institute Review - December 2004

We looked into what happens to a dollar of U.S. corporate spending when a company moves a service job to India. We found that, far from being a zero-sum game, offshoring is a story of mutual gain, benefiting both countries.
The receiving economy (India) captures 33 cents, in the form of wages paid to local workers, profits earned by local outsourcing providers and their suppliers, and taxes collected from second- and third-tier suppliers to the outsourcing companies.
But the gains to the U.S. economy are much larger. The most obvious source of value is the cost savings enjoyed by U.S. companies. Thus, far from being bad for the United States, offshoring creates net value for the economy – to the tune of $1.12 to $1.14 for every dollar that goes abroad.

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