1. 1 IT Outlook 2004 Chapter 2: Globalisation of the ICT sector Section on International Sourcing OECD-Eurostat Expert Meeting on Trade-in- Services Statistics OECD April 28 2004 Graham Vickery and Desirée van Welsum

2. 2 International Sourcing – Terminology The international sourcing of IT and ICT- enabled services (often referred to as ‘offshoring’) is part of the globalisation of the ICT sector, and also of other services sectors ‘Offshoring’ includes: –Insourcing: to foreign affiliates –Outsourcing: activities are contracted out to independent parties abroad But: (in- and) outsourcing can also take place domestically

3. 3 Illustration Onshoring, Offshoring, insourcing and outsourcing IT and business process services Approximate value of worldwide activity in 2001, USD

4. 4 But: no official statistics on international services sourcing  Look at: Exports of services  if service activities are sourced internationally, the country receiving the international in- and/or outsourcing must export services back to the country of origin Employment data Input-output tables Trade in intermediates

5. 5 Growth of exports of other business services and computer and information services

6. 6 This shows Some of the countries often mentioned in the outsourcing debate have experienced strong export growth (e.g. India) But, the exports of some of these countries are growing from a low base:

7. 7 Share of reported total exports of other business services and computer and information services, 1995, 2002 (IMF BoP data)

8. 8 However: There are discrepancies in the reported data A challenge for statisticians

9. 9 Discrepancies: total services Difference in exports reported by India and imports reported by importers (millions USD) 199719981999200020012002 Total services Exports to all countries reported by India91111169114509191752088624859 Imports from India reported by US (1)122415411520189618101667 EU224124252518226824182275 of which: UK70280395886510301007 Japan455423357326 Canada117118102107155 Sum of reported imports358240844595469447404268 Discrepancy552976079914144811614620591 i.e. Percentage of Indian exports unaccounted for by the above countries 616568767783

10. 10 Discrepancies: commercial services (excl. travel and transport) Difference in exports reported by India and imports reported by importers (millions USD) 199719981999200020012002 All commercial services, excl. travel and transport Exports to all countries reported by India385260968892130181512618630 Imports from India reported by US422614568832803670 EU722800905689957800 of which: UK Japan232237201180 Canada2627162433 Sum of reported imports117014411721178219941650 Discrepancy268246557170112351313116980 i.e. Percentage of Indian exports unaccounted for by the above countries 707681868791

11. 11 Discrepancies: computer and information services Difference in exports reported by India and imports reported by importers (millions USD) 199719981999200020012002 Computer and information services Exports to all countries reported by India634175569600 Imports from India reported by US13510480 EU114336177 of which: UK Japan134537 Canada Sum of reported imports262485294 Discrepancy in total607970719306 i.e. Percentage of Indian exports unaccounted for by the above countries 969497

12. 12 Possible explanations Reporting difficulties (definition of services and modes of delivery) Lags in implementation of BPM5 methodology Different data collection methods (difference between imports and exports surveys) and possibly recording criteria Differences in treatment of certain categories (e.g. movement of temporary workers) Operations of global firms

13. 13 Questions How can the discrepancies be explained? Is the list of possible explanations exhaustive or are there other plausible explanations? What can be done to improve the situation –In the short term? –In the long term?