A story at Dataquest India (subscription required) suggests that protectionist laws being passed in the US senate to prevent the offshoring of American government jobs to places such as India may be premature.

Given the election year in the USA, it not hard to figures why candidates are actively taking up the outsourcing issue. We have seen enough of such stunts in India and expecting rational business sense would be far fetched at such times. However policy makers have to realize that setting up trade barriers today will hurt the USA more than any other.
Observers also feel that US lawmakers are being shortsighted and populist in bringing about such legislation and will be brought to their senses when enough qualified people are not found to do the job. US policy makers need to give more thought on how to bridge up the huge demand-supply gap looming large in the next few year. Rather than trying to ban offshoring and passing bills, they need to analyze on how to stop the potentially huge $884 billion cumulative GDP loss. One hopes that sane sense prevails, but then its election time. Let us hope that US policy makers who want their voters to see the light at the end of the tunnel are not mistaking it for an approaching train in the long run.
 





The $884 bn Loss

While the domestic working population (16+ years), expected to grow at 0.72% by year 2010, is not sufficient to meet the country’s future labor demand, statistics suggest that one out of six working persons in the US will be 65+ years.

This according to Evalueserve would lead to a demand-supply gap of 5.6 million jobs in the country’s labor market by 2010.

Factoring in the estimated levels of cumulative immigration at 3.2 million until 2010, the US will need to address a shortfall of approximately 2.4 million workers. According to Evalueserve, if the shortfall of 2.4 million is not addressed, the US economy will face a cumulative GDP loss of $ 884 billion—a reason enough for the US government to ensure free flow of work to offshore.