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Outsourcing impact 'limited': US study

September 24, 2004 16:41 IST

Amidst the raging debate over offshoring in the Untied States, a Congress study has found that outsourcing has had a 'far limited impact' on US jobs and economic growth, though the government data on the 'growing' phenomenon remains limited.

Outsourcing appears to be growing but the number of US technology-related jobs that have migrated to lower wage countries (like India) in recent years is still unclear, as also the economic impact of the growing phenomenon, according to a study released by the Government Accountability Office, the investigating agency of Congress.

At the same time, it said that that so far it has had 'far limited impact' on US jobs and economic growth.

GAO conducted the study at the request of several members of Congress. It said that its work was hampered by limited government data on offshoring -- and even the lack of a commonly accepted definition of the term.

GAO said that existing data could provide some insight into the extent of offshoring but said that the picture is incomplete.

It cited Department of Commerce statistics showing that US imports of services associated with offshoring -- business, professional and technical services (BPT) -- grew from $21.2 billion in 1997 to about $37.5 billion in 2002, an increase of 76.9 per cent.

During the same period, US exports of BPT services increased 48.6 per cent, with the US maintaining a trade surplus in this category.

Commerce data also show that US investments in developing countries that supply offshore services 'were small compared to those in developed countries' and that most of those services were sold to non-US markets.

GAO said it would continue to monitor the statistics and other dimensions of offshoring. It also suggested that additional study might shed light on offshoring benefits such as 'lower prices, productivity improvements and overall higher growth.'

"While we make no recommendations at this time, we observe that the reasons for the growth of offshoring are relatively well understood, but less is known about the extent and the policy consequences of this activity," the study said.



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