Scant data on overseas outsourcing

GAO report: "Offshoring of Services: An overview of issues"

A congressional watchdog agency says more research is needed to understand the economic and national security risks of sending software development and other service work overseas.

"No federal data series directly measures the extent of offshoring or its effects," according to a new report from the Government Accountability Office.

The report states that the growing practice of offshoring -- sending service work overseas -- has captured lawmakers' attention, but the federal data needed to make informed decisions is largely lacking.

Almost no federal data exists to help the public debate about the impact of offshoring services on the U.S. economy, the workforce, consumer privacy or national security, GAO auditors found.

They conducted the study, "Offshoring of Services: An Overview of the Issues," from May 2004 to November 2005 at the request of GAO's controller general.

The study found few explicit restrictions on the type of service work that can be sent overseas. The Defense Department, for example, does not require managers of major weapon systems programs to identify or manage 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 foreign-developed software in their systems, GAO found.

The auditors interviewed a variety of experts who had mixed feelings 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.

Public debate about offshoring yields widely differing views because it is a relatively recent phenomenon and people have divergent expectations about its impact, the study found.