September 22, 2004
Today, Congressman Adam Smith (D-Washington) announced the results of a study that the General Accounting Office conducted at Smith’s request on issues relating to offshore outsourcing of information technology jobs and the future of the U.S. job market. While the scope of the report was reduced – at GAO’s request – from the original request, the report examined all available government data and analyzed the trend of “outsourcing” as it relates to the American economy. In addition to Smith, this study was at the request of U.S. Rep. Ike Skelton (D-Missouri), U.S. Rep. John Dingell (D-Michigan), U.S. Rep. Tammy Baldwin (D-Wisconsin) and U.S. Rep. Jay Inslee (D-Washington).
“While not an exhaustive study, this is but the first step in a series of studies that the GAO plans to conduct on the issue of outsourcing,” said Smith. “I’m encouraged that this study will be used as a launching point for future studies and that, with this report, we started a serious examination of the scope of outsourcing. With this study, we are beginning to get concrete answers as to how this trend is affecting the U.S. economy. With this and future studies, public figures can undertake a serious discussion aimed at addressing real problems and offering effective and permanent solutions.”
Highlights of the study include:
o Outsourcing has been made possible by growth in telecommunications and technology as well as by a large pool of educated workers in some developing countries.
o Y2K was a factor that drove some technology services abroad. As companies sought ways to protect their systems in the event of a collapse, GAO analysts looked to places like India for programmers who could help fix the software code problems.
o The extent of outsourcing is probably less than they had expected going into the study. Also, at least by using the metrics available, they were unable to separate out the impact of outsourcing on the economy versus other “meta” factors such as the burst of the technology bubble and the hangover from the pre-Y2K tech buildup.
o Services are still a relatively small part of the US imports.
“This study shows us that we have the opportunity to address the growing trend of offshore outsourcing with positive and aggressive solutions,” said Smith. “We should increase investment in research and development, improve math and science education in K-12, enhance training and professional development for workers, open markets for American goods and renew the government’s focus on promoting innovation. By doing so, we can make sure that our economy remains the most vibrant and competitive one in the world.”
Smith continued, “We are at a relatively early state in the offshore outsourcing trend. We must get the facts straight and have a serious and educated policy dialogue on outsourcing. It’s my hope that this study will help “kick off” that process and move the discussion in a positive way that is focused on real issues and solutions. I am committed to continuing my work on identifying real solutions to this potentially growing problem for the American people.”
The study can be found at www.gao.gov and is entitled: International Trade: Current Government Data Provide Limited Insight into Offshoring of Services.