At risk offshore

1 2 Page 2
Page 2 of 2

Usually, such hasty decisions are driven by the need to keep up profits and revenue. Looking at only short-term financial gains is a huge mistake, Malik says, and cases like the one unfolding in India show why.

Also ahead: a shift in the outsourcing market that will put intellectual property protection in the spotlight. The first wave of software outsourcing has focused on application development and maintenance, both of which have fairly contained levels of risk, outside of the odd rogue employee like Verma. But as companies move more and more types of software development overseas, such as databases and other packaged applications, they need to think about what kind of data they are making available for testing. Also, Nasscom members are aggressively seeking out higher-end business process outsourcing opportunities, such as call centers and claims processing. India outsourcing did more than $1.2 billion in this type of work last year and expects to generate $16 billion in revenue from business process outsourcing in 10 years. These kinds of applications create thorny issues about personal data protection for U.S.-based customers.

Legal eagles such as Bierce say India and other nations interested in drawing more high-end software work such as business process outsourcing need to adopt laws that protect personal information when it's transferred from other countries. "Software development is easy -- you don't have data protection problems until you start populating a database," Bierce says. He notes that Nasscom is working on such a law, though it failed to generate one in a similar effort several years ago. The push for call centers, claims processing and other back-office work means that U.S. companies must reassess what's at stake. As offshore vendors deal more and more often with customers and specific customer data, the potential for abuse rises.

This story, "At risk offshore" was originally published by CIO.

Copyright © 2003 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon