Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth

Policy Brief
03-11
December 2003

Deeper transformation and wider diffusion of the whole gamut of information technology (IT) throughout the US economy will bring about a second wave of productivity growth. To that end, an international value chain should increasingly produce not only hardware but also software and services, which will lead to a decline in the prices of software and services, thus making the overall IT package affordable for more businesses. While some IT jobs will consequently be performed abroad, the number of higher-paid jobs demanding IT skills is at the same time projected to grow very quickly in the United States. Are US workers prepared to fill those jobs? The US workforce needs the skills and adaptive capabilities to succeed in a global labor market, where fewer and fewer occupational categories can be shielded from foreign competition and where global competitors are spending even more on education relative to their income levels than is the United States.