Sourcing and Outsourcing Arithmetic

Abstract

This chapter studies outsourcing from the United States to India. First, we show that outsourcing is not taking most jobs out of the United States. Second, we argue that outsourcing does not contradict trade theory. Third, we analyze how India has come to occupy a preeminent position in outsourcing. Fourth, we show that the Indian dominance is likely to continue well into the next decade. Finally, we discuss some risks associated with outsourcing.