Focus on info security in BPOs after fraud detection
Excerpts from Indiatimes Online - April 15, 2005

The need to put in place stringent information security systems to combat cyber crimes in India’s flourishing IT outsourcing industry has come under the spotlight following detection of a major fraud.

Experts say the stealing of more than $350,000 from a leading multinational bank’s customers in New York by some former and present employees of a well known Indian IT firm, the back office service provider to the bank, comes as a major blow to local firms.

They say the incident involving the bank’s account holders may prompt other global corporations, especially those working in the financial domain, to rethink plans to ship jobs like credit card billing and bank account processing to India.

The total value of IT and BPO services sourced from India in 2004 is estimated at $17.2 billion - over a third higher than the value of services sourced from Canada, the next preferred destination.

India ’s leadership over other competing outsourcing destination is driven by strong fundamentals comprising a large pool of qualified, English speaking manpower and an emphasis on delivering quality at a significant cost arbitrage.

But as global corporations like Siemens, HSBC, American Express, and British Airways ship more jobs to Asia’s fourth-largest economy, the debate on the safety of critical data transferred here is also growing.

The National Association of Software and Service Companies (Nasscom) said in a report in February that Indian BPO companies considered security to be an important aspect while providing services to clients.

The IT industry umbrella group also claimed that most Indian companies provide comparable and, at times, a better security environment to their clients for outsourcing work.

Information security experts, however, disagree.

“Each security aspect has to be looked into thoroughly by the all the companies,” said Mr Yogesh Bhura, Managing Director of Quest Research, a company that verifies potential employee’s credential on behalf of the employer.

Today, many of the companies in the IT sector are utilising our services to check the credentials of an applicant before hiring but it is not an industry wide practice. I think the awareness will increase after this fraud case.”

The spokesperson of the Indian IT firm said his company had “proactively instituted” elaborate systems that were constantly reviewed to ensure and protect client confidentiality.

“We are, therefore, most distressed that the current incident should have happened,” he said.