On the Economic Effects of Outsourcing Computer Jobs

The snippet below is from this blog post which is an excerpt of economist Russ Roberts' book The Choice: A Fable of Free Trade and Protection (3rd Edition).

“That’s the part of the story that was missing when people complained about foreigners providing computer services at a lower cost than Americans. It did put some Americans in some industries out of work at first. But it let companies pay a lot less for computer services. Companies that couldn’t afford computers before were now able to. Companies that already were using computers expanded their use of technology. The worriers ignored all those benefits and all the new things that became possible because Americans didn’t have to spend as much as they did before to get computer technology. And as it turned out, only the lowest-paying computer jobs became less numerous. Those were the jobs that foreigners could do at a distance much more cheaply than Americans. Between 1999 and 2004, when the worries about outsourcing were at their peak, the number of computer programmers in America fell by 25 percent. But the number of software engineers rose by 50 percent, more than making up for the lost jobs in computer programming. Overall, the number of high-paying computer jobs rose by 17 percent, and the real wages of American workers in the computer industry increased as well. Outsourcing made most workers in the high-tech sector better off as demand for those skills increased.”

FYI, a computer programmer is someone who taught himself a little bit of programming in order to land the job, a software engineer is someone with a BS in CSE.