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US
Government Accountability office (GAO) confirms
outsourcing in fed human services programs, problems in
data collection
One
study released just last month-- GAO-06-342 -examined
four federally-funded state-administered programs (Child
Support Enforcement, Food Stamp, Temporary Assistance
for Needy Families (TANF), and Unemployment Insurance)
and two federally-administered programs that provide
student financial aid (Pell Grants and Federal Family
Education Loan (FFEL)). GAO
sought to determine:
(1)
the occurrence and nature of
offshoring
(2)
the benefits state agencies have achieved through
offshoring and problems they have encountered,
and
(3)
the actions, if any, states and the federal government
have taken to limit offshoring and
why.
The
report's summary concludes that (emphasis
added):
*
Some work is performed offshore in the majority of
states for the four state-administered programs we
reviewed, but no work is performed offshore for the two
federally-administered student aid programs. Offshoring
occurred in one or more programs in 43 of 50 states and
the District
of Columbia, most frequently in
the Food Stamp and TANF programs. However, expenditures
for services performed offshore in the four
state-administered programs appear to be relatively
small. The services states most frequently reported as
being performed offshore in the Food Stamp and TANF
programs were functions related to customer service,
such as call centers, and in the Unemployment Insurance
and Child Support Enforcement programs functions were
related to software development. India was the most
prevalent offshore location, followed by
Mexico. We
did not find any occurrences of offshoring in the Pell
Grant and FFEL programs and the Department of
Education's U.S.
residency requirement for contractors performing
high-risk work has the effect of limiting
offshoring.
While
numerous actions have been proposed at the state and
federal levels to limit offshoring by government
agencies, few restrictions exist with respect to the six
programs we reviewed. Two states--New Jersey and Arizona--have
prohibited offshoring in state contracts. Some states
have also taken other actions, such as requiring state
agencies to disclose when state-contracted work is
performed offshore or to report on the implications of
offshoring. The federal government does not have
regulations specifically related to the offshoring of
services in the six programs we
reviewed.
An
earlier study--GAO-06-116 dated October of 2005,
examined a conflict in the statistics on
U.S.
offshoring of business, professional, and technical
(BPT) services to India.
Specifically, they wanted to know why
'U.S.
data indicate that U.S. firms import a small
fraction of what India reports as exports
to the United States
in this category.'
The
magnitude of the discrepancy was alarming, which is
undoubtedly what drew GAO's
attention:
*
For 2002, the United States reported $240 million in
unaffiliated imports of BPT services from India, while
India reported about $6.5 billion in affiliated and
unaffiliated exports in similar services categories.3
For 2003, the United States reported $420 million in
unaffiliated imports of BPT services from India, while
India reported approximately $8.7 billion in affiliated
and unaffiliated exports of similar services to the
United States.
So
what did GAO find to explain
this?
1.India counts the earnings
of temporary Indian workers residing in the
United
States as exports to the
United
States, but the US only includes
temporary foreign workers who have been in the
United
States less than 1 year and who are
not on the payrolls of firms in the United
States. Indian
officials estimate that this factor may account for 40
to 50 percent of the difference between
U.S. and
Indian data.
2.India defines services
more broadly than does the US. For
example, Indian data on trade in services include
packaged software and software embedded on computer
hardware, which the United
States classifies as
trade in goods. An Indian official estimated that this
factor accounts for approximately 10 to 15 percent of
Indian exports.
3.India treats sales to
US-owned firms located outside of the
United
States as exports to the
United
States, but the United
States does not count
these as imports.
4.For
trade between US firms and their foreign affiliates, BEA
does not report BPT data by country due to its concerns
about the quality of responses it receives from firms
when they allocate their affiliated imports to detailed
types of services. US import data on BPT
services from India are
thus available for unaffiliated parties only, while
Indian data include both affiliated and unaffiliated
trade but do not separate
them.
5.It
appeared that the US did not survey some US
firms that Indian data indicate were importers of BPT
services from India.
It's
all stated very neutrally, but the net effect is that,
again, official data from the government is misstating
an important statistic, and the direction of the
misstatement is in the US
government's favor: understating offshoring of services,
which obviously minimizes public
outcry.
Taken
together, the GAO reports serve as a pretty good
introduction to US Government
offshoring. | 
