GAO: Little federal data on "offshoring" of services

"GAO report: Offshoring of Services"

The growing practice of sending software development and other service work overseas has captured lawmakers’ attention, but federal data on the trend is largely lacking, according to a government report released today.

Almost no federal data exists to inform the public about the impact of "offshoring" of services on the U.S. economy, the workforce, consumer privacy or national security, Government Accountability Office auditors found.

The auditors conducted a study, Offshoring of Services: An Overview of the Issues, from May 2004 to November 2005 at the request of the controller general.

GAO’s auditors found few explicit restrictions on the type of services work that can be sent offshore.

The Defense Department, for example, does not require managers of major weapons systems programs to identify or manage the potential security risks from foreign suppliers.

DOD recommends but does not require program managers to review computer code from foreign sources that DOD or its contractors do not directly control. DOD program managers cannot always identify all foreign-developed software in their systems, GAO found.

GAO interviewed a variety of experts who had mixed concerns about the effect of offshoring on critical infrastructure such as utilities and communications networks or its impact on the privacy and security of consumers’ financial and medical information.

Federal and state lawmakers have introduced a variety of bills to restrict the offshoring of some government services and to provide more assistance for displaced workers.

GAO’s auditors concluded that more research is needed to understand the effects of offshoring on the economy, the workforce, income distribution and security risks.