a

GAO

United States Government Accountability Office

Report to Congressional Committees

October 2005 INTERNATIONAL 

TRADE

U.S. and India Data on 

Offshoring Show 

Significant Differences

GAO-06-116
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

October 2005

INTERNATIONAL TRADE 

U.S. and India Data on Offshoring Show 

Highlights of GAO-06-116, a report to Significant Differences 

congressional committees 

Trade in business, professional,

and technical (BPT) services

associated with offshoring needs to

be accurately tracked, but a gap 

exists between U.S. and Indian 

data. The extent of and reasons for 

this gap are important to

understand in order to address 

questions about the magnitude of

offshoring and to analyze its future

development. Under the authority 

of the Comptroller General of the 

United States, and as part of a body

of GAO work on the issue of

offshoring of services, this report 

(1) describes the extent of the gap 

between U.S. and Indian data, (2) 

identifies factors that contribute to 

the difference between the two

countries’ data, and (3) examines 

the challenges the United States

has faced in collecting services

trade data. GAO has addressed this 

report to the congressional

committees of jurisdiction. 

What GAO Recommends

To improve the overall quality of

services trade data, GAO 

recommends that the Secretary of

Commerce direct BEA to improve 

its coverage of importers and its 

administration of surveys in order

to collect needed information on 

services imports. BEA should also 

pursue additional company 

information from the Census

Bureau. The Department of

Commerce reviewed a draft copy

of this report and concurred with 

GAO’s recommendations. 

The gap between U.S. and Indian data on trade in BPT services is significant.

For example, data show that for 2003, the United States reported $420

million in unaffiliated imports of BPT services from India, while India 

reported approximately $8.7 billion in exports of affiliated and unaffiliated 

BPT services to the United States. 

At least five definitional and methodological factors contribute to the 

difference between U.S. and Indian data on BPT services. First, India and the 

United States follow different practices in accounting for the earnings of 

temporary Indian workers residing in the United States. Second, India 

defines certain services, such as software embedded on computer hardware, 

differently than the United States. Third, India and the United States follow 

different practices for counting sales by India to U.S.-owned firms located 

outside of the United States. The United States follows International 

Monetary Fund standards for each of these factors. Fourth, BEA does not 

report country-specific data for particular types of services due to concerns 

about the quality of responses it receives from firms when they allocate their 

affiliated imports to detailed types of services. As a result, U.S. data on BPT 

services include only unaffiliated imports from India, while Indian data 

include both affiliated and unaffiliated exports. Fifth, other differences, such 

as identifying all services importers, may also contribute to the data gap. 

The U.S. Bureau of Economic Analysis (BEA) has experienced challenges in 

identifying all U.S. services importers and obtaining quality survey data from 

importers. To test BEA’s survey coverage, GAO provided BEA with lists of 

firms identified from public sources as likely importers of BPT services from 

India. The results of this test showed that some services importers were not 

included in BEA’s mailing lists. However, BEA has taken action to address 

these challenges, including collaborating with other federal agencies, such as

the U.S. Census Bureau and the Internal Revenue Service, to better identify

firms to survey. However, data-sharing restrictions hamper BEA’s efforts. 

 

U.S. and Indian Data on Trade in BPT Services, 2002 and 2003 

0 2,000 4,000 6,000 8,000 10,000

2002

Year

2003

Dollars in millions

U.S.--reported unaffiliated 

imports from India

Source: GAO analysis of data from BEA's October 2004 Survey of Current Business and NASSCOM's 2005 Strategic Review.

India--reported affiliated and 

unaffiliated exports to the 

United States

$420

$240

$8,725

$6,464

www.gao.gov/cgi-bin/getrpt?GAO-06-116.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4128 or yagerl@gao.gov. 
Page i GAO-06-116 International Trade

Contents

Letter 1

Results in Brief 2

Background 4

A Significant Gap Exists between U.S. and Indian Trade-in-Services 

Data 7

Five Factors Contribute to the Difference between U.S. and Indian 

Trade in Services Data 10

BEA Encounters Challenges in Surveying All U.S. Importers of 

Business, Professional, and Technical Services 16

Conclusions 21

Recommendations 22

Agency Comments and Additional Information Provided by the 

Reserve Bank of India 22

Appendixes

Appendix I: Scope and Methodology 25

Appendix II: Comments from the Department of Commerce 28

Appendix III: GAO Contact and Staff Acknowledgments 30

Tables Table 1: Selected Firms Importing BPT Services from India 

Compared with BEA Mailing Lists 19

Table 2: List of BEA Surveys 26

Figures Figure 1: Total U.S. Imports of Both Private Services and Other 

Private Services, 2003 6

Figure 2: Comparison of U.S.-Reported and India-Reported Data on 

Trade in Selected Services between the United States and 

India, 2002 and 2003 10

Figure 3: India-Reported Total Worldwide Exports of Information 

Technology and Software Services, 1999 to 2003 17
Contents

Page ii GAO-06-116 International Trade

Abbreviations

BEA U.S. Bureau of Economic Analysis

BOP balance of payments 

BPT business, professional, and technical 

ESC Electronics and Computer Software Export Promotion Council

IMF International Monetary Fund

IRS Internal Revenue Service

IT-ITES Information Technology and Information Technology-Enabled 

Services

NASSCOM National Association of Software and Service Companies

OECD Organization for Economic Co-operation and Development

RBI Reserve Bank of India

STPI Software Technology Parks of India

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-06-116 International Trade

United States Government Accountability Office

Washington, D.C. 20548

A

October 27, 2005 Letr

Congressional Committees:

The offshoring of services from the United States to overseas locations has 

grown recently and is the subject of debate over its extent and 

consequences for the United States. We reported in September 2004 that 

one category of services trade—business, professional, and technical 

(BPT) services—is most often associated with services offshoring.1

 We also 

noted that imports from India—a major source of services offshoring—

were rising, but that a gap exists between U.S. and Indian trade data on 

these services. The extent of and reasons for this gap are important to 

understand in order to address questions about the magnitude of offshoring 

and to analyze its future development. 

In response to widespread congressional interest, we have prepared this 

report under the authority of the Comptroller General of the United States. 

We examine in this report several issues related to the gap between U.S. 

and Indian trade data on BPT services. Specifically:

• What is the extent of the gap between U.S. and Indian data on trade in 

BPT services? 

• What factors explain the difference between U.S. data on imports of 

BPT services and India’s data on exports of those same services? 

• What challenges has the United States faced in collecting services data?

To address these questions, we compared U.S. and Indian services trade 

data, reviewed official methodologies, and interviewed U.S. and Indian 

government officials from relevant agencies, including the Department of 

Commerce’s U.S. Bureau of Economic Analysis (BEA) and the Reserve 

Bank of India (RBI). In order to examine the coverage of BEA surveys for 

collecting services data, we supplied BEA with a list of companies we 

collected to compare with its mailing lists. We identified these companies 

through publicly available sources, including public media, company filings 

with the Securities and Exchange Commission, annual reports of 

companies, the list of National Association of Software and Service 

1

GAO, International Trade: Current Government Data Provide Limited Insight into 

Offshoring of Services, GAO-04-932 (Washington, D.C.: Sept. 22, 2004).
Page 2 GAO-06-116 International Trade

Companies (NASSCOM) members, and lists of companies compiled by 

information technology interest groups. Our lists of firms are not 

necessarily representative of all U.S. firms importing from India, and we do 

not generalize our results. We also met with representatives and reviewed 

documents from members of NASSCOM, which assists in collecting India’s 

services data. We interviewed a range of U.S. and Indian businesses that 

supply these data to the United States and India and reviewed relevant 

literature on the reliability of U.S. statistics. NASSCOM did not provide us 

with their methodology for ensuring the reliability of their data. However, 

RBI recently released a public report outlining a new methodology to 

collect services exports data separately from NASSCOM, and in 

accordance with balance of payments (BOP) requirements of the 

International Monetary Fund (IMF).2

 As a U.S. government agency, we do 

not have review authority over these data. Therefore, we were not able to 

independently assess the quality and consistency of these data. However, 

for the purposes of this report, we found both U.S. and Indian data to be 

sufficiently reliable for reporting the difference between the official U.S. 

and Indian trade data in BPT services. We conducted our analysis in 

accordance with generally accepted government auditing standards from 

March 2005 through September 2005. A detailed description of our scope 

and methodology appears in appendix I. This report is one of a series of 

reports that we plan to issue on offshoring.

Results in Brief A significant gap exists between U.S. and Indian data on trade in BPT 

services. 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, and this 

trade—as well as the difference in these data—is growing. 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 

2

Reserve Bank of India, Balance of Payments Statistics Division, Department of Statistical 

Analysis and Computer Services, Computer Services Exports From India: 2002-03 

(Mumbai: September 2005). The full report may be accessed at 

http://www.rbi.org.in/scripts/BS_ViewBulletin.aspx. 

3

Affiliated trade occurs between U.S. parent firms and their foreign affiliates and between 

foreign-owned firms in the United States and their foreign parent companies; while 

unaffiliated trade occurs between U.S. entities and foreigners that do not own, nor are 

owned by, the U.S. entity. BEA does not report bilateral affiliated BPT services data (see 

discussion in the next section of this report).
Page 3 GAO-06-116 International Trade

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. Thus, the gap 

in data has increased by about one-third from 2002 to 2003. 

At least five definitional and methodological factors contribute to the 

difference between U.S. and Indian data on BPT services. First, India 

counts the earnings of temporary Indian workers residing in the United 

States as exports to the United States. However, the United States 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. Second, India 

defines services more broadly than does the United States. 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. In addition, India 

includes in its data certain information technology-enabled services, such 

as some financial services, that are not included in BEA’s definition of BPT 

services. Third, India treats sales to U.S.-owned firms located outside of the 

United States as exports to the United States, but the United States does 

not count these as imports. For each of these three definitional factors, the 

United States follows IMF standards.4

 Fourth, for trade between U.S. 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. Therefore, 

U.S. import data on BPT services from India are available for unaffiliated 

parties only, while Indian data include both affiliated and unaffiliated trade 

but do not separate them. Finally, there may be other collection or 

methodological differences between the United States and India that 

contribute to the overcounting or undercounting of services trade. 

BEA faces challenges in identifying the full range of U.S. services importers 

and in collecting quality services data. We provided BEA with lists of firms 

that public sources indicated are likely importers of services from India, 

and asked BEA to match these lists against its mailing lists. We found that 

4

The recently released RBI report documents India’s efforts to compile export data in 

conformity with definitions given in IMF’s Balance of Payments Manual, 5th edition (1993) 

and the Manual on Statistics of International Trade in Services (2002). 
Page 4 GAO-06-116 International Trade

BEA survey data did not include some of these firms. Although most of 

these firms were on BEA’s mailing list, some were not; therefore, they were 

not surveyed. BEA stated it had previously eliminated many of these firms 

because they did not have reportable transactions or were below survey 

exemption levels. Subsequently, BEA conducted further research on the 

firms that it did not identify and added several of these firms to its mailing 

lists. In addition, it appears that BEA should have sent multiple surveys to 

some of our identified firms for different types of services imports, thus 

potentially undercounting imports. However, BEA has taken several 

actions over time to improve survey data and coverage, such as outreach to 

survey recipients, initiating external reviews of its programs, and 

collaborating with other federal agencies, but challenges still remain. For 

example, the U.S. Census Bureau (Census) maintains a large database of 

U.S. companies with names and addresses that BEA could use to identify 

additional importers of services. However, data-sharing limitations exist, 

and BEA is negotiating with Census and the Internal Revenue Service 

regarding BEA’s accessing Census data to expand its mailing lists for 

surveys.

We are recommending that the Secretary of Commerce direct BEA to 

systematically expand its sources of information for identifying firms to 

survey. BEA should consider ways to improve both its identification of the 

appropriate survey forms to send to firms and the information it requests 

about services imports, particularly regarding affiliated imports. We also 

recommend that BEA continue to pursue additional company information 

from previous Census surveys and consider requesting Census to add 

questions to future surveys to help identify services importers.

We provided a draft copy of this report to the Department of Commerce for 

its review and comment. Commerce generally agreed with the 

recommendations in our report. In addition, while this report was being 

finalized, we received additional information from the Reserve Bank of 

India and incorporated this information in the report where appropriate. 

Background As we reported in September 2004, improvements in information 

technology, decreasing data transmission costs, and expanded 

infrastructure in developing countries have facilitated services offshoring. 

Offshoring is reflected in services import data because when a company 

replaces work done domestically with work done overseas, such as in India 

or China, the services are now being imported from overseas. For example, 

when a U.S.-based company pays for a service (such as computer and data 
Page 5 GAO-06-116 International Trade

processing services in India), the payment is recorded as a services import 

(from India in this example). BEA reports data on trade in services that are 

frequently associated with offshoring. 

BEA’s trade in services data consist of cross-border transactions between 

U.S. and foreign residents and comprise five broad categories of services. 

One of these five categories of services is “other private services,” which 

includes key sectors associated with offshoring under the subcategory of 

BPT services.5

 In 2003, BPT services accounted for $40.8 billion or 48 

percent of U.S. imports of “other private services,” which totaled $85.8 

billion.6

 (See fig. 1.)

5

Selected BPT services that are relevant to offshoring include such subcategories as 

accounting, auditing, and bookkeeping; architectural, engineering, and other technical; 

computer and data processing; database and other information; legal; management, 

consulting, and public relations; and research, development, and testing. Other categories, 

such as financial services, may also involve offshoring.

6

Preliminary services trade data for 2004 are available, but primarily at an aggregate level. 

Since data at a country and detailed service level are not available for affiliated BPT 

services, we discuss 2003 data. For 2004, U.S. imports of total private services amounted to 

about $263.1 billion, and U.S. imports of other private services totaled about $95.7 billion. 
Page 6 GAO-06-116 International Trade

Figure 1: Total U.S. Imports of Both Private Services and Other Private Services, 2003

U.S. data on BPT services differentiate between affiliated and unaffiliated 

trade. Affiliated trade occurs between U.S. parent firms and their foreign 

affiliates and between foreign parent firms and their affiliates in the United 

States; while unaffiliated trade occurs between U.S. entities and foreigners 

that do not own, nor are owned by, the U.S. entity. In 2003, total U.S. 

imports of affiliated BPT services accounted for approximately $29.9 

billion, or about 73 percent of all U.S. imports of these services. BEA does 

not disaggregate affiliated trade by country, in particular types of services, 

due to its concerns about the accuracy and completeness of data firms’ 

report. Total U.S. imports of unaffiliated BPT services amounted to 

approximately $11.0 billion in 2003, or about 27 percent of the total 

Other private

services

($85.8)

Travel 

($56.6)

Other transportation ($44.7)

Royalties and 

license fees 

($20.0)

Passenger fares 

($20.9)

Insurance services 

($26.7)

Financial services 

($9.8)

Telecommunications 

($4.8)

3%

Education ($2.7)

1%

Other services ($1.0)

11%

31%

48%

6%

9% 9%

20%

25%

37%

Source: GAO presentation of Department of Commerce data.

Business, professional, 

and technical services 

($40.8)

Total private services imports, 2003 (dollars in billions) Other private services imports, 2003 (dollars in billions)
Page 7 GAO-06-116 International Trade

unaffiliated U.S. imports of BPT services.7 According to U.S. data, the 

growth of U.S. trade in BPT services has been rapid. For example, from 

1994 to 2003, total unaffiliated U.S. imports of these services more than 

doubled. In addition, U.S. exports of unaffiliated BPT services almost 

doubled during the same period. 

To report data on trade in BPT services, BEA conducts mandatory 

quarterly, annual, and 5-year benchmark surveys of firms in the United 

States. In administering its services surveys, BEA seeks to collect 

information from the entire universe of firms with transactions in BPT 

services above certain threshold levels for the period covered by each 

survey. The mailing lists for the surveys include firms in the United States 

that have previously filed a survey and other firms that BEA believes may 

have had transactions in the services covered by the survey. The mailing 

lists of firms receiving surveys are derived, in part, from U.S. government 

sources, industry associations, business directories, and various 

periodicals. Firms receiving the surveys are required to report transactions 

above a certain threshold value, which BEA believes, in theory, captures 

virtually the entire universe of transactions in the services covered by its 

surveys. Those firms with transactions falling below the threshold value 

are exempt from reporting data by type of service, but they are asked to 

voluntarily provide estimates of the aggregate value of their transactions 

for all services covered by the survey. 

The trade data that BEA produces help government officials, business 

decision makers, researchers, and the American public to follow and 

understand the performance of the U.S. economy. For example, analysts 

and policy makers use U.S. trade data to assess the impact of international 

trade on the U.S. balance of payments and the overall economy. In addition, 

U.S. trade data are used by trade policy officials to negotiate international 

trade agreements.

A Significant Gap 

Exists between U.S. 

and Indian Trade-inServices Data

U.S. data show a significantly smaller volume of trade in BPT services 

between India and the United States than Indian data show. BEA data on 

U.S. imports of unaffiliated BPT services from India indicate that U.S. firms 

import only a small fraction of the total that India reported in exports of 

similar services to the United States. In addition, this gap has grown 

7

For 2004, total U.S. imports of unaffiliated BPT services increased to $12.5 billion. 
Page 8 GAO-06-116 International Trade

between 2002 and 2003. This gap does not exist just for U.S. and Indian 

data. A similar gap also exists between other developed countries’ import 

data and Indian export data.8

BEA data show a rapid increase in U.S. imports of unaffiliated BPT services 

from India. For 2002, the total unaffiliated U.S. imports of BPT services 

from India totaled approximately $240 million. For 2003, the total 

unaffiliated U.S. imports of BPT services from India increased to about 

$420 million.9

 India reports exports to the United States of similar services 

of about $6.5 billion for 2002 and $8.7 billion for 2003.10 Thus, the value of 

the gap between U.S. and Indian data in 2002 was approximately $6.2 

billion and, in 2003, was about $8.3 billion, an increase of about one-third.11

(See fig. 2.)

RBI, which is India’s central bank, is responsible for reporting official 

Indian data on trade in services. However, RBI data on trade in services 

incorporate the data collected by India’s primary information technology 

association—the National Association of Software and Service Companies 

(NASSCOM). To improve the completeness of the data NASSCOM provides 

to RBI, NASSCOM includes data on the software services exports it 

receives from an Indian government program, the Software Technology 

Parks of India (STPI). While RBI does not provide country-specific data on 

India’s exports of services to the United States, NASSCOM’s data do 

provide a country-specific breakdown. Thus, the data cited above for India 

8

Organization for Economic Co-operation and Development, Information Technology 

Outlook 2004 (Paris: 2004). 

9

BEA data on U.S. imports from India of selected BPT services show a similar trend. For 

example, of the total unaffiliated U.S. imports of BPT services from India, BEA reported 

$186 million for 2002 and $372 million for 2003 in unaffiliated U.S. imports of selected BPT 

services that are particularly relevant to offshoring. These selected BPT services include 

computer and information services; research, development, and testing services; and 

management consulting and public relations services.

10India’s data reported here include the category of IT and IT-enabled services (ITES). BEA’s 

definition of BPT services is not identical to this Indian category, although they roughly 

compare. We discuss this difference further in the next section of this report. Furthermore, 

RBI recently provided new data and definitions on computer services exports, which 

exclude exports of ITES services. 

11However, U.S. data on BPT imports as a share of Indian data on exports of BPT services, 

narrowed over this time period. In 2002, U.S. data on BPT imports were about 3.7 percent of 

Indian data on BPT exports. In 2003, U.S. data on BPT imports increased to about 4.8 

percent of Indian data on BPT exports.
Page 9 GAO-06-116 International Trade

come from NASSCOM. According to a recent RBI report, a technical group 

recommended in 2003 that RBI compile data on software and information 

technology exports through quarterly surveys, and through a 

comprehensive survey to be conducted every 3 years. The first of these 

studies was released in September 2005, as our report was being finalized, 

and provides data on Indian exports of computer services for 2002.12 The 

2005 RBI report showed that India reported approximately $4.3 billion in 

computer services exports to the United States and Canada for 2002 (2003 

data have not yet been provided).13 Although RBI’s report did not provide 

an estimate of the U.S. share of these exports, on the basis of NASSCOM’s 

estimate that 80 to 85 percent of exports to North America were destined 

for the United States in 2002, we estimate that India exported 

approximately $3.5 billion in computer services to the United States. 

12Computer services as defined by IMF’s Balance of Payments Manual include the 

following: databases, such as development, storage, and online time series; data processing, 

including tabulation, provision of processing services on a time-share or specific basis, and 

management of the facilities of others on a continuing basis; hardware consultancy; 

software implementation; and maintenance and repair of computer and peripheral 

equipment. 

13RBI’s report did not provide us with a U.S. dollar value of services exports; therefore, we 

converted the values provided using the rupee/dollar exchange rate published by IMF for 

2002. 
Page 10 GAO-06-116 International Trade

Figure 2: Comparison of U.S.-Reported and India-Reported Data on Trade in 

Selected Services between the United States and India, 2002 and 2003

Note: Although BEA data were collected on the basis of a respondent’s fiscal year, they approximate a 

calendar year basis. However, NASSCOM reports data for India’s fiscal year (April 1 to March 31). 

Five Factors 

Contribute to the 

Difference between 

U.S. and Indian Trade 

in Services Data

Those examining trends in offshoring often compare U.S. and Indian data 

series; however, there are at least five factors that make this comparison 

difficult and affect the difference between U.S. and Indian data. These 

factors relate to (1) the treatment of services provided by foreign 

temporary workers in the United States; (2) the definition of some services, 

such as computer programs embedded in goods and certain information 

technology-enabled services; (3) the treatment of transactions between 

firms in India and the overseas offices of U.S. firms; (4) the reporting of 

country-specific data on trade in affiliated services; and (5) the sources of 

data and other methodological differences in the collection of services 

trade data. 

2002

Year

2003

Dollars in millions

U.S.--reported unaffiliated imports from India

Source: GAO analysis of data from BEA's October 2004 Survey of Current Business and NASSCOM's 2005 Strategic Review.

India--reported affiliated and unaffiliated exports to the United States

0 2,000 4,000 6,000 8,000 10,000

$420

$240

$8,725

$6,464
Page 11 GAO-06-116 International Trade

India’s Treatment of 

Earnings of Foreign 

Temporary Workers 

Providing Services in the 

United States Contribute to 

the Difference in U.S. and 

Indian Trade Data

According to U.S. and Indian officials, U.S. and Indian data differ in their 

treatment of salaries paid to certain temporary foreign workers providing 

services to clients in the United States. U.S. data do not include such 

salaries as cross-border trade in services. The United States only includes 

the salaries paid to temporary foreign workers who have been in the United 

States less than 1 year and are not on the payrolls of firms in the United 

States. However, Indian data do include, as Indian exports, the value of 

services provided by Indian workers employed in the United States for 

more than 1 year, according to Indian officials. The U.S. approach accords 

with the international standards of IMF. According to BEA and 

international standards, cross-border trade in services occurs between 

residents of a country and nonresidents, or “foreigners,” and residency of a 

temporary foreign worker employed abroad is based, in part, on the 

worker’s length of stay in the country. Therefore, according to these 

standards, if a temporary foreign worker stays or intends to stay in the 

United States for 1 year or more, that worker is considered a U.S. resident, 

and the value of the work performed is not included in U.S. import data. 

The treatment of services provided by temporary foreign workers in the 

United States is likely a significant factor contributing to the difference 

between U.S. and Indian data, according to Indian officials. Some Indian 

officials estimated that in past years, approximately 40 percent of India’s 

exports to the United States of services corresponding to BPT services 

were delivered by temporary Indian workers in the United States. For 

example, for 2002, RBI found that approximately 47 percent of India’s 

global exports of computer services occurred through the on-site delivery 

of services by temporary Indian workers. 

India Defines Services 

Differently Than Does the 

United States 

U.S. and Indian data differ, in part, due to differences in how both countries 

count services trade. India counts as trade in services certain transactions 

in software that are classified as trade in goods in U.S. data. For example, 

Indian data on trade in services include software embedded on computer 

hardware, which the United States classifies as trade in goods. Consistent 

with internationally recommended standards, the United States does not 

separate the value of embedded software that is physically shipped to or 

from the United States from the overall value of the media or computer in
Page 12 GAO-06-116 International Trade

which it is installed.14 Thus, the value of such software is not recorded as 

trade in services but is included in the value of the physical media and 

hardware–-which are counted as trade in goods in U.S. data. We were not 

able to determine the extent to which this factor contributes to the 

difference in U.S. and Indian data because we found no estimates of the 

proportion of embedded software in Indian data on services exports to the 

United States. Indian officials stated that the difference in the treatment of 

embedded software likely does not significantly contribute to the 

difference in data because India exports a relatively low value of embedded 

software. For example, according to Indian officials, the portion of India’s 

global services exports delivered through physical media and hardware 

accounts for 10 to 15 percent of the total value of India-reported exports of 

services corresponding to BPT services.

U.S. and Indian data also differ in how they define services in their 

respective data series. Unlike BEA, RBI and NASSCOM do not report data 

under the category of BPT services. RBI officials stated that it reports trade 

data on services similar to BPT services under the category of Software 

Services. RBI does not report a breakdown of its data on software services 

into subcategories of services. According to a NASSCOM official, 

NASSCOM classifies its trade data on services that most closely 

correspond to BPT services under Information Technology and 

Information Technology-Enabled Services (IT-ITES). The subcategories of 

services under this classification do not directly correspond to the 

subcategories of BPT services, but are similar. For example, under its ITITES classification, NASSCOM reports data on IT Services and Software, 

while BPT services include computer and data processing, and database 

and other information services. However, NASSCOM includes data on 

certain information technology-enabled services, such as certain financial 

services, that are not included in BEA’s definition of BPT services, but are 

recorded separately. Although these categories roughly compare, a 

reconciliation of these subcategories has not yet been done. Thus, we were 

not able to determine the extent to which these definitional differences 

contribute to the difference between U.S. and Indian data. 

14IMF, Balance of Payments Manual, 5th edition (Washington, D.C.: 1993); and United 

Nations, European Commission, IMF, Organization for Economic Co-operation and 

Development, United Nations Conference on Trade and Development, and World Trade 

Organization, Manual on Statistics of International Trade in Services, (Geneva; 

Luxembourg; New York; Paris; and Washington, D.C.: 2002).
Page 13 GAO-06-116 International Trade

India Counts Sales to 

Overseas Offices of U.S. 

Firms as Exports to the 

United States

The treatment of services involving the overseas offices of U.S. firms by 

BEA and India is another factor explaining some of the difference between 

U.S. and Indian data. Unlike the United States, India counts the sales of 

services from firms in India to U.S.-owned firms outside the United States 

as exports to the United States. U.S. data do not count such sales as U.S. 

imports of services from India, because BEA considers the overseas offices 

of U.S. firms to be residents of the countries where they are located rather 

than residents of the country of the firm’s owners. The U.S. approach is 

consistent with international standards.

U.S. and Indian officials could not provide us an estimate of the extent to 

which the treatment of transactions involving the overseas offices of U.S.-

owned firms contribute to the difference in U.S. and Indian data. However, 

one high-level Indian official stated that it is likely a significant factor.

U.S. and Indian Data Differ 

in the Reporting of Affiliated 

Trade in Services 

The reporting of affiliated trade in services differ in U.S. and Indian data. 

BEA reports country-specific data only for unaffiliated U.S. imports of BPT 

services, while Indian data include both affiliated and unaffiliated trade in 

services but do not separate the two. BEA reports detailed data only for 

unaffiliated trade because it has concerns about the accuracy and 

completeness of the data that firms report about affiliated trade in BPT 

services by country. For example, multinational firms with global offices 

may find it difficult to establish where, between whom, and what type of 

services have been transacted; and report these data along national lines to 

a statistical agency. BEA does collect data on overall affiliated services 

trade, but it reports only the total value across all countries due to its 

concerns about the reliability of how companies are allocating these totals 

to specific countries. In addition, due to concerns over the reporting 

burden on U.S. companies, BEA collects less detailed data on affiliated 

transactions than on unaffiliated transactions. 

U.S. data on overall affiliated trade across all countries show that a 

significant majority of total U.S. imports of BPT services take the form of 

trade between parents and affiliates. For example, for 2003, approximately 

three-quarters of all U.S. imports of BPT services—about $29.9 billion—

represented trade within multinational firms. If U.S.-Indian trade in these 

services reflects this overall share of trade through affiliates, then 

unreported affiliated trade with India may be much larger than the 

unaffiliated trade that is reported. Therefore, the lack of reported data on 

affiliated imports of BPT services contributes to the difference in data. 
Page 14 GAO-06-116 International Trade

Other Data Collection and 

Methodological Differences 

May Contribute to the 

Difference between U.S. and 

Indian Data 

There are differences in the sources of data the United States and India use 

to collect data on trade in services, which may contribute to overcounting 

or undercounting of services trade. While both BEA and NASSCOM 

prepare estimates of cross-border trade in services by surveying qualifying 

firms, U.S. and Indian data differ in the universe of such firms covered by 

their survey methodologies. 

The universe of firms in India exporting services is relatively easily 

identified because these firms have an incentive to report data on their 

exports of services and tend to be concentrated in certain industries. For 

example, firms exporting software services are required to report export 

data to the government of India’s STPI program. STPI requires firms to 

report these data in order to comply with India’s foreign exchange controls 

and to qualify for certain tax incentives and infrastructure benefits. To 

improve the completeness of its own survey data from its member firms, 

NASSCOM incorporates information on other exporters collected under 

the STPI program prior to providing these data to RBI. In addition, services 

exporting firms tend to be concentrated in certain industries. For instance, 

according to Indian officials, NASSCOM surveys its member firms in India 

to collect the annual dollar value of these firms’ exports. The member firms 

that NASSCOM surveys number approximately 900 and, according to a 

NASSCOM official, these firms contribute a large share of India’s total 

exports of these services. In addition, RBI has begun its own 

comprehensive survey of companies, which according to RBI, covered all 

of the identified companies engaged in software and IT services exports 

activities. RBI identified these companies on the basis of lists provided by 

NASSCOM, STPI, and the Electronics and Computer Software Export 

Promotion Council (ESC).

In contrast to how India identifies firms exporting services, BEA does not 

have an easily available list of services importers. Instead, it must identify 

firms from public sources. BEA acknowledges that its survey methodology 

may contribute to the undercounting of U.S. imports of services due, in 

part, to the difficulty it faces in identifying the universe of services 

importers. The firms in the United States that BEA surveys to estimate U.S. 

imports are in many different industries and number in the thousands. 

Thus, BEA notes that it is difficult to establish and maintain a 

comprehensive mailing list for all U.S. firms importing services from 

foreign sources, particularly if the group of firms that import services 

changes substantially from year to year. In addition, maintaining accurate 

coverage using surveys is particularly difficult when there is rapid growth 

in the activity, as is the case with BPT services imports from India. Under 
Page 15 GAO-06-116 International Trade

BEA regulations, BEA exempts smaller importers from reporting their 

imports.15 Instead, it estimates these imports on the basis of a sample. If the 

value of smaller transactions is higher than BEA assumes in its estimation 

procedures, then imports of services would be understated. BEA, 

therefore, may undercount the total value of U.S. imports of services. 

The data collection entities–-BEA and NASSCOM–-also differ significantly 

in mission and scope. BEA is the U.S. agency charged with collecting, 

analyzing, and reporting official statistics on a broad range of U.S. imports 

and exports of services. BEA is regarded as a leading statistical 

organization, and it provides both statistical concepts and best practices to 

other countries and statistical organizations worldwide. NASSCOM is not a 

government statistical agency. It is a private trade association that 

represents the interests of the software and services industry in India, and 

data collection is but one element of a broader mission that focuses on 

representing that industry. Recently, RBI has recognized a need to 

reexamine the current methodology on the collection of software exports 

data, and is utilizing a methodology to collect services data in accordance 

with IMF standards.16 As a U.S. government agency, we were not able to 

fully review India’s methodologies, but we did further examine in the next 

section of this report the challenges BEA faces in collecting services 

statistics. 

15Under 15 C.F.R. § 801, U.S. persons and intermediaries are required to report annual 

transactions with unaffiliated foreigners for transactions of over $1 million in any one kind 

of service. Respondents whose transactions fall below this level must report the total level 

of transactions in all services. Under 15 C.F.R. § 806, for transactions with affiliated 

foreigners, quarterly and annual reporting are required only for affiliates whose total assets, 

sales, or net income exceed $30 million. For majority-owned foreign affiliates, detailed 

foreign direct investment reporting is required if assets, sales, or net income is greater than 

$100 million.

16Upon the recommendation of India’s National Statistical Commission, RBI developed a 

technical group consisting of members of the Ministry of Commerce, NASSCOM, STPI, the 

State Bank of India, and a few major software companies to recommend better ways to 

collect data on software and IT exports.
Page 16 GAO-06-116 International Trade

BEA Encounters 

Challenges in 

Surveying All U.S. 

Importers of Business, 

Professional, and 

Technical Services 

BEA faces challenges in collecting services import data, including 

identifying the full universe of services importers. To test its survey 

coverage, we provided BEA with lists of firms that we identified from 

public sources as likely importing BPT services from India. Although the 

BEA mailing lists included most of the firms we identified, they did not 

include all of these firms. In addition, BEA may be undercounting imports 

because it is challenging to identify all of the applicable surveys to send to 

firms. BEA also has not always received quality survey responses from 

firms. BEA has taken action to improve survey coverage and responses 

through outreach to survey respondents and by attempting to collaborate 

with other federal agencies, but it has not been able to access data that 

could assist in identifying the universe of firms importing services. 

BEA Has Challenges in 

Tracking Services 

Offshoring Trends

Services offshoring presents its own challenges for statistical agencies. As 

previously discussed, identifying services importers becomes difficult if the 

group of firms and individuals importing services changes over time, or if 

there is a rapid increase in services imports. In the case of BPT services, 

both the United States and India have reported a rapid increase of exports 

to the United States and BEA may be undercounting U.S. firms importing 

such services from India due to this growth. (See fig. 3.) BEA 

acknowledges that it is able to identify a higher proportion of U.S. 

exporters than U.S. importers. This is because exporters tend to be large 

firms providing one particular type of service and are concentrated in 

certain industries, while importers vary in size and industry affiliation. 

Thus, BEA officials expressed concern that they are not able to identify and 

survey small firms that import BPT services infrequently, and are 

potentially undercounting U.S. trade in these services. 
Page 17 GAO-06-116 International Trade

Figure 3: India-Reported Total Worldwide Exports of Information Technology and 

Software Services, 1999 to 2003

Test of Firms Importing 

from India Confirms 

Challenges to Collecting 

Services Data

To test for potential undercounting of U.S. imports, we provided BEA with 

lists of firms that we identified through publicly available sources as likely 

to be importing BPT services from India.17 BEA then (1) reviewed its 

mailing lists of firms that were sent surveys to verify that it had previously 

identified and surveyed these firms and (2) verified whether the firms we 

identified reported imports from India. Table 1 shows the following: 

• BEA had included in its mailing lists 87 of the 104 firms we identified as 

likely importing BPT services from India; thus, BEA did not send 

surveys to 17 of these firms. After further analysis, BEA added 13 of 

0

2

4

6

8

10

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

Source: GAO presentation of NASSCOM data.

Year

Dollars in billions

17The sources utilized were publicly available and included the following: media articles 

covering the period from 2002 to 2005; information technology association lists compiled 

using 2001 to 2005 data; and Securities and Exchange Commission filings and annual reports 

using 2004 data. 
Page 18 GAO-06-116 International Trade

these firms to its mailing lists and has sent them surveys, thus improving 

the universe of services importers. 

• Of the 66 affiliated firms that received surveys, 48 firms received the 

quarterly survey for affiliated imports; thus, BEA did not send 18 

affiliated firms this quarterly survey, although they received other 

surveys. 

• Of the 21 unaffiliated firms that received surveys, 6 received the 

quarterly survey for unaffiliated imports; thus, BEA did not send 15 

unaffiliated firms this quarterly survey, although they received other 

surveys.

BEA may miss some BPT services imports because it is difficult to identify 

the total number of surveys that apply to all of the services transactions for 

which each firm was qualified.18 On the basis of the review of our lists, it 

appears that some of the firms that BEA identified in at least one of its 

comprehensive mailing lists were not on the mailing lists for other surveys 

that we expected. These firms likely had transactions covered by surveys 

other than the one they received. For example, several companies we 

identified as having an affiliate office in India did not receive one of the 

surveys for affiliated transactions, although these firms received a survey 

for unaffiliated transactions. 

With respect to BEA’s effort to verify whether firms that we identified 

actually reported imports from India, of the 51 firms responding to the 

quarterly surveys, 15 firms indicated imports from India. Thus, 15 of the 104 

firms we identified on the basis of public-source data as likely importing 

BPT services from India, reported those imports to BEA. High-level BEA 

officials indicated that it is possible that companies are not reporting 

country information because they fall below the survey exemption levels 

and, thus, were not required to provide such detailed data to BEA. BEA 

requests firms falling below survey exemption levels to voluntarily report 

18BEA uses separate surveys to collect data on affiliated and unaffiliated trade in services. 

To collect data on unaffiliated trade in BPT services, BEA uses quarterly, annual and 5-year 

benchmark surveys of selected services transactions with unaffiliated foreign persons (BE25, BE-22, BE-20). BEA collects data on affiliated trade in BPT services using BEA’s surveys 

of direct transactions of U.S. Reporter with Foreign affiliate (BE-577), and 5-year 

benchmark surveys of U.S. direct investment abroad (BE-10). Affiliated trade-in-services 

data are also collected through the benchmark (BE-12) and quarterly (BE-605) surveys of 

foreign direct investment. A firm’s operations may span several of these categories; thus, 

BEA sends some firms multiple surveys. 
Page 19 GAO-06-116 International Trade

aggregate transactions for all countries combined, without a countryspecific breakdown. 

Table 1: Selected Firms Importing BPT Services from India Compared with BEA 

Mailing Lists

Source: GAO analysis of BEA data. 

Note: The publicly available sources utilized to identify these firms included data covering the period 

from 2001 to 2005. 

a

Appropriate surveys refer to those surveys that we believe firms should have received on the basis of 

publicly available information about their investments and imports.

While these results cannot be generalized, they confirm the challenges of 

collecting services import data. However, they do not provide an indication 

of the magnitude or extent of these challenges. In addition, our lists of 

firms were based on a review of multiple sources of publicly available 

information. Without directly surveying each firm, however, it is not 

possible to confirm that they actually purchased BPT services from India. 

BEA is addressing concerns related to the identification of U.S. importers, 

the undercounting of services, and the administration of its surveys. For 

example, BEA contracted with a private firm to undertake an external 

review of its data sources and methods of identifying these services 

importers. The review will examine the extent of undercounting in both 

affiliated and unaffiliated services transactions, including the possible 

sources of undercounting, and any additional methods or sources of 

information that will improve survey coverage. The goals of this effort 

include identifying the extent of qualified firms that are not currently on the 

survey mailing lists, and to improve the estimates of international 

transactions. BEA expects the results of this review early in fiscal year 

2006. BEA also has made efforts to ensure that firms receive the surveys for 

which they are qualified. BEA routinely sends surveys to firms that may be 

exempt from reporting in order to make a determination that they are still 

exempt. In addition, firms having transactions in services not covered in 

Firms

GAOidentified

firms

Firms on

any BEA

mailing list

Firms

receiving

appropriatea

survey

Firms

responding to

appropriate

surveys

Responding

firms

indicating

imports from

India

Affiliated 81 66 48 46 12

Unaffiliated 23 21 6 5 3

Total 104 87 54 51 15
Page 20 GAO-06-116 International Trade

the surveys they receive are required to request additional surveys from 

BEA. 

BEA Has Not Received 

Quality Responses on 

Affiliated Trade by Country

In order to report data on trade in services, BEA needs to receive accurate 

and complete survey responses. However, BEA notes that the information 

it receives from firms on their affiliated imports of particular types of 

services has not proved sufficiently reliable to support the release of 

country-level estimates. As previously discussed, BEA is able to report 

overall affiliated trade for specific countries, but it is not able to report BPT 

trade for specific countries. This is because BEA has concerns over the 

quality of responses it receives from firms when they allocate affiliated 

imports to detailed types of services. Global firms may have difficulty 

accurately attributing services exported to the United States when their 

operations are spread across multiple countries. In addition, a high-level 

BEA official said that firms may not fully report all of their affiliated 

transactions for which they should report. This official noted that these 

reporting difficulties may reflect business record-keeping practices, which 

are intended to meet financial reporting requirements, rather than 

government surveys. 

In order to address these challenges, BEA is taking action to improve the 

quality of survey responses and to overcome the difficulty of reporting 

detailed data on affiliated imports of services. For example, an examination 

of BEA’s data on affiliated transactions is a component of BEA’s contract 

with a private firm that is conducting an external review of BEA’s data 

sources and methods of identifying services importers. In addition, BEA 

has requested Census to conduct an external review of its survey forms and 

instructions, and to make recommendations that would improve clarity and 

promote accurate reporting. BEA is also performing its own review of its 

surveys to determine the clarity of survey instructions and is providing 

training to survey recipients on how to complete the surveys accurately. In 

addition, to improve the quality of its data on affiliated services imports, 

including affiliated imports of BPT services, BEA is considering collecting 

data on both affiliated and unaffiliated transactions on the same survey 

form. BEA is also considering expanding the types of affiliated BPT 

services for which it requests data to match the detailed data it collects on 

unaffiliated imports of BPT services.
Page 21 GAO-06-116 International Trade

BEA Has Difficulty in 

Gaining Access to Other 

Federal Agency Data

BEA is currently negotiating access to data from other federal agencies to 

expand its existing sources of data and to improve its survey coverage, but 

BEA has been unable to access this data from other federal agencies. 

According to BEA officials, other federal agencies, such as Census, possess 

data that could assist BEA in preparing its estimates of trade in services, 

including information on firms in the United States that could be importing 

services. For example, Census surveys firms to collect data of firms’ 

business expenses, which include the purchase of BPT services. These 

surveys may be useful to identify importers because large purchasers of 

services may also be importing these services. The survey data that Census 

currently collects are not directly useful for BEA because the data on 

business expenses do not separate domestic from international expenses 

and do not distinguish between affiliated and unaffiliated transactions. 

However, BEA would get name and addresses of potential services 

importers. In addition, BEA could potentially request that Census add 

questions to one or more of the surveys that Census administers in order to 

identify services importers. 

However, BEA currently faces legal restrictions in gaining access to data 

utilized by Census. Although federal laws allow such data sharing between 

Census and BEA, BEA is generally restricted from gaining access to federal 

tax information that Census obtains from the Internal Revenue Service. 

According to BEA officials, BEA is negotiating with Census and the 

Internal Revenue Service to gain access to sources of data to improve its 

mailing lists. 

Conclusions The large difference between U.S. and Indian data on BPT sources makes 

the analysis of the extent of offshoring more difficult. Some of this 

difference in data can be attributed to varying definitions of BPT services, 

but some also appears to be due to incomplete U.S. data. BEA has been 

seeking various ways to improve the overall quality of U.S. services trade 

data, but our test of whether they had identified BPT service importers 

indicated that they were not identifying all U.S. importers of services. 

Given the importance of this category of data in understanding the extent 

of offshoring of services, a subject of continuing public and congressional 

concern, we believe that additional efforts to strengthen the quality of U.S. 

services data are merited.
Page 22 GAO-06-116 International Trade

Recommendations We are recommending that the Secretary of Commerce direct BEA to 

systematically expand its sources of information for identifying firms to 

survey. BEA should consider ways to improve its identification of the 

appropriate survey forms to send to firms and the information requested 

about services imports, particularly with regard to affiliated imports. We 

also recommend that the Secretary direct BEA to pursue additional 

company information from previous Census surveys and consider 

requesting Census to add questions to future surveys to help identify 

services importers.

Agency Comments and 

Additional Information 

Provided by the 

Reserve Bank of India 

The Department of Commerce provided written comments on the draft 

report, which are reproduced in appendix II. Commerce concurred with 

our recommendation that BEA should strive to improve its coverage of 

services imports. In particular, Commerce agreed that BEA should pursue 

additional company information from Census. Commerce also provided 

technical comments, which we incorporated into the report as appropriate.

Following the receipt of agency comments from Commerce, RBI publicly 

released a report outlining a new methodology to compile services export 

data in accordance with IMF standards. Although RBI’s new survey 

methodology conforms more closely to IMF standards for defining 

international transactions in services, differences between U.S. and Indian 

data remain due to a variety of factors we discuss in this report. For 

example, the RBI report acknowledges that Indian data include not only 

exports of computer-related services but also exports of ITES. Since the 

primary objective of RBI’s survey was to collect data on software exports in 

conformity with IMF’s definition of computer services, RBI’s survey data 

exclude data from companies exclusively exporting ITES, and include only 

data on computer services. However, RBI’s report does not indicate that 

RBI’s survey methodology addresses other factors contributing to the 

difference between U.S. and Indian data. For example, it appears that RBI’s 

survey data include the earnings of foreign temporary workers employed 

abroad without taking into account their length of stay or intention to 

remain abroad. RBI estimated this on-site work to account for 

approximately 47 percent of India’s total worldwide exports, although 

some portion of this total may include services provided by temporary 

Indian workers employed abroad for over 1 year. In addition, RBI’s report 

does not indicate that sales of embedded software are excluded from RBI’s 

survey data. 
Page 23 GAO-06-116 International Trade

We are providing copies of this report to interested congressional 

committees and the Secretary of Commerce. Copies will be available to 

others upon request. In addition, the report will be available at no charge 

on the GAO Web site at www.gao.gov.

If you or your staff have any questions about this report, please contact Mr. 

Yager on (202) 512-4128. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

Other GAO contacts and staff acknowledgments are listed in appendix III.

Loren Yager

Director, International Affairs and Trade
Page 24 GAO-06-116 International Trade

List of Committees

The Honorable Charles Grassley

Chairman 

The Honorable Max Baucus

Ranking Member

Committee on Finance

United States Senate

The Honorable Susan Collins

Chairman

The Honorable Joseph Lieberman

Ranking Minority Member

Committee on Homeland Security and 

Governmental Affairs

United States Senate

The Honorable Bill Thomas

Chairman 

The Honorable Charles Rangel

Ranking Minority Member

Committee on Ways and Means

House of Representatives

The Honorable Tom Davis

Chairman

The Honorable Henry A. Waxman

Ranking Minority Member

Committee on Government Reform

House of Representatives
Page 25 GAO-06-116 International Trade

Appendix I

Scope and Methodology AAppenednxidexiIs

This report discusses (1) the extent of the difference between U.S. and 

Indian data on trade in business, professional, and technical (BPT) 

services, (2) the factors that explain the difference between U.S. data on 

imports of BPT services and India’s data on exports of those same services, 

and (3) the challenges that the United States has faced in collecting 

services data. 

To obtain information on the extent of the difference between U.S. and 

Indian services trade data, we analyzed and compared U.S. and Indian data 

and interviewed U.S. and Indian government officials from the relevant 

agencies, including the U.S. Bureau of Economic Analysis (BEA), and the 

Reserve Bank of India (RBI). RBI relies on a trade association, the National 

Association of Service and Software Companies (NASSCOM), to collect 

data on these services. Although we reviewed NASSCOM's survey form and 

discussed with a NASSCOM official the collection of their statistics, 

NASSCOM did not provide us with their methodology for ensuring the 

reliability of their data. Therefore, we were not able to independently 

assess the quality and consistency of their data. However, for the purposes 

of this report, we found these data to be sufficiently reliable for reporting 

the difference in the official U.S. and Indian trade data in BPT services. 

To determine the factors that explain the difference in U.S. and Indian trade 

data, we reviewed official methodologies, interviewed relevant officials, 

and conducted a search of available literature. We reviewed documentation 

and technical notes from BEA and RBI to determine the U.S. and Indian 

methodologies for collecting and reporting trade in services data and to 

assess the limitations and reliability of various data series. We discussed 

these topics with BEA officials. In addition, we traveled to India to 

interview RBI officials and NASSCOM representatives and to obtain 

documentation on the collection and limitations of Indian data. We also 

interviewed a range of U.S. and Indian businesses in India that supply trade 

data to the United States and India to determine how they report data. We 

performed a literature search and obtained information from the Brookings 

Institution, the Institute for International Economics, and the Organization 

for Economic Co-operation and Development (OECD). To determine the 

international standards for collecting and reporting trade-in-services data, 

we reviewed relevant documentation from international organizations, 

including the International Monetary Fund and the United Nations. 

In September 2005, as our report was being finalized, RBI released a report 

entitled “Computer Services Exports from India: 2002-03,” which 

discusses the methodology and results of a comprehensive survey that RBI 
Appendix I

Scope and Methodology

Page 26 GAO-06-116 International Trade

conducted to collect data on India’s “computer services” exports for 2002 in 

conformity with the International Monetary Fund’s Balance of Payments 

Manual, 5th edition (1993). The RBI report provides information about 

RBI’s survey methodology, including the number and types of companies 

surveyed and the information sought through the survey. In addition, the 

report outlines recommendations for RBI to collect data on software and 

information technology exports through representative quarterly surveys 

and a comprehensive survey every 3 years. We incorporated this additional 

information from the RBI report where appropriate. 

To examine the coverage of BEA’s surveys for collecting trade-in-services 

data, we supplied BEA with lists of U.S.-based companies we identified as 

likely importers of services from India to compare with its mailing lists. We 

developed two lists. The first list included the names and addresses of 

companies in the United States with affiliate offices in India that are likely 

importing BPT services from India through affiliates. The second list 

included the names and addresses of companies that are likely purchasers 

of services through unaffiliated parties in India. We identified these 

companies through publicly available sources, including public media, 

company filings with the Securities and Exchange Commission, annual 

reports of companies, the list of NASSCOM member companies, and lists of 

companies compiled by information technology interest groups. Our lists 

of firms are not necessarily representative of all U.S. firms importing from 

India, and we do not generalize our results. 

We asked BEA to compare these lists with the following mailing lists for 

affiliated and unaffiliated surveys to identify how many companies it was 

surveying:

Table 2: List of BEA Surveys

Source: GAO presentation of BEA data. 

We requested that BEA provide us with the number of companies from 

both lists that BEA was able to identify and not identify on its 

Mailing list BEA survey

Affiliated Business, Professional, and Technical Services BE-577

Affiliated Computer and Information Services BE-577

Unaffiliated Business, Professional, and Technical Services BE-25, BE-22

Unaffiliated Computer and Information Services BE-25
Appendix I

Scope and Methodology

Page 27 GAO-06-116 International Trade

corresponding mailing lists. For companies that received a survey, we 

asked BEA to identify the number of these companies that responded to 

the survey and provided information on purchases from India. For 

companies that were not on any mailing list, BEA was asked to identify (1) 

whether the firms were excluded from its mailing list because they were 

assumed to be below exemption levels for the particular survey, (2) 

whether the firms are on BEA’s current mailing list for the particular 

survey, and (3) whether the firms are listed on other BEA mailing lists. We 

discussed the results of this review with BEA officials.

To assess the challenges the United States has faced in collecting and 

reporting data on trade in services, we reviewed relevant BEA 

documentation and interviewed BEA officials. We reviewed BEA 

documentation to determine BEA’s data limitations and to assess the 

challenges BEA faces in collecting and reporting U.S. data on trade in 

services. To determine the challenges of expanding BEA’s survey coverage 

through interagency data sharing we interviewed officials at BEA and the 

U.S. Census Bureau (Census), and we reviewed Census documentation. We 

also interviewed BEA officials to discuss these identified challenges and to 

determine the plans and actions BEA has taken to improve the quality of 

U.S. data. Finally, we interviewed Internal Revenue Service (IRS) officials 

to gain an understanding of IRS policy on restricting access to federal tax 

information that the IRS provides to Census.

We performed our work from March 2005 through September 2005 in 

accordance with generally accepted government auditing standards.
Page 28 GAO-06-116 International Trade

Appendix II

Comments from the Department of 

Commerce ApendxiI
Appendix II

Comments from the Department of 

Commerce

Page 29 GAO-06-116 International Trade
Page 30 GAO-06-116 International Trade

Appendix III

GAO Contact and Staff Acknowledgments ApendxiI

GAO Contact Loren Yager, (202) 512-4128

Staff 

Acknowledgments

In addition to the person named above, Virginia Hughes, Bradley Hunt, 

Ernie Jackson, Sona Kalapura, Judith Knepper, Robert Parker, Cheryl 

Peterson, and Tim Wedding made major contributions to this report.

(320325)
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