IT Outlook 2004
Chapter 2: Globalisation of the ICT
sector
Section on International Sourcing
OECD-Eurostat Expert Meeting on Trade-inServices Statistics
OECD April 28 2004
Graham Vickery and Desirée van Welsum1
International Sourcing – Terminology
The international sourcing of IT and ICTenabled 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
2
Illustration
Onshoring, Offshoring, insourcing and outsourcing IT and
business process services
Outsourced
Approximate value of worldwide activity in 2001, USD
Onshore
Outsourcing
Offshore
Outsourcing
(External Domestic Supply)
(External cross-border supply)
(USD 227 billion)
(USD 10 billion)
Internal
Domestic
Supply
Internal
Offshoring
Insourced
Control
(Internal cross-border supply)
(USD 22 billion)
International
National
Location
3
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

4
Growth of exports of other business services and
computer and information services
CAGR 95-02
India
Romania
Peru
Argentina
Nicaragua
Estonia
Ireland
Brazil
Sw eden
China
Israel
Spain
Norw ay
United Kingdom
United States
Iceland
Australia
Netherlands
Canada
Hungary
Sw itzerland
Ghana
Portugal
Denmark
Italy
Germany
Mauritius
Austria
Russia
Poland
Thailand
Korea
France
New Zealand
Czech Rep.
Finland
Japan
Mexico
Turkey
Greece
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
5
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:
6
Share of reported total exports of other business
services and computer and information services,
1995, 2002 (IMF BoP data)
1995
2002
18
16
14
12
10
8
6
4
2
Finland
Australia
Thailand
Brazil
Korea
Sweden
China
Canada
Singapore
Spain
Austria
Ireland
Italy
Japan
India
Netherlands
France
United
States
United
Kingdom
Germany
0
7
However:

There are discrepancies in the
reported data

A challenge for statisticians
8
Discrepancies: total services
Difference in exports reported by India and imports reported by importers (millions USD)
1997
1998
1999
2000
2001
2002
9111
11691
14509
19175
20886
24859
US (1)
1224
1541
1520
1896
1810
1667
EU
2241
2425
2518
2268
2418
2275
702
803
958
865
1030
1007
455
423
357
326
Total services
Exports to all countries reported by India
Imports from India reported by
of which: UK
Japan
Canada
117
118
102
107
155
Sum of reported imports
3582
4084
4595
4694
4740
4268
Discrepancy
5529
7607
9914
14481
16146
20591
61
65
68
76
77
83
i.e. Percentage of Indian exports unaccounted for by the
above countries
9
Discrepancies: commercial services (excl.
travel and transport)
Difference in exports reported by India and imports reported by importers (millions USD)
1997
1998
1999
2000
2001
2002
3852
6096
8892
13018
15126
18630
US
422
614
568
832
803
670
EU
722
800
905
689
957
800
232
237
201
180
All commercial services, excl. travel and transport
Exports to all countries reported by India
Imports from India reported by
of which: UK
Japan
Canada
26
27
16
24
33
Sum of reported imports
1170
1441
1721
1782
1994
1650
Discrepancy
2682
4655
7170
11235
13131
16980
70
76
81
86
87
91
10
i.e. Percentage of Indian exports unaccounted for by
the above countries
Discrepancies: computer and information services
Difference in exports reported by India and imports reported by importers (millions USD)
1997
1998
1999
2000
2001
2002
6341
7556
9600
US
135
104
80
EU
114
336
177
13
45
37
Sum of reported imports
262
485
294
Discrepancy in total
6079
7071
9306
96
94
97
Computer and information services
Exports to all countries reported by India
Imports from India reported by
of which: UK
Japan
Canada
i.e. Percentage of Indian exports
unaccounted for by the above
countries
11
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
12
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?
13