In recent years, China and India have often been mentioned together in the context of their phenomenal economic growth and their combined potential to shift the centre of world influence to Asia. Both countries also come to mind as leading suppliers of outsourced services to developed countries such as the USA, a trend which has generated international attention and controversy amongst policy makers, scholars and analysts.

This chapter will focus on the legal aspects of outsourcing under the General Agreement for Trade in Services (GATS). After an introduction to outsourcing and the role of China and India in the outsourcing of services, the chapter will examine to what extent the provisions of GATS are conducive to promoting and regulating the global outsourcing of services, and the implications of these findings for China and India. Matters that will be considered include the existing level of liberalisation of trade in outsourced services; protectionist measures to curb offshore outsourcing; the importance of rules of origin particularly in free trade agreements (FTAs); and options for liberalisation of trade in offshored services in the future.

Outsourcing

What is outsourcing?

Much international attention has been focused on the outsourcing phenomena, but it must be noted that various writers and speakers might not necessarily be referring to the same thing when they refer to ‘outsourcing’.