Outsourcing Times

Fraud at HSBC Outsourcing Center

In a shocking incident, the Bangalore police have arrested an employee of HSBC Data Processing Center for allegedly passing the data of the UK customers to others. As a result, the UK customers lost £233,000 pounds from their accounts. The arrest was made after HSBC Electronic Data Processing India Ltd. filed a complaint saying one of its employees Nadeem Kashmiri, accessed personal debit card information of the customers and passed them on to associates involved in the fraud. Unfortunately, this is the second major bank fraud reported by an outsourcing center in India in less than a year. The incident put the outsourcing industry in a tizzy. It might affect the future outsourcing to India. The incident already raised fears and criticism about cyber safety standards in India.

According to IT Business Net -

The HSBC incident was brought to notice by some of its customers in England who complained that money had been money transferred from their accounts between March and May without their knowledge, the Financial Express newspaper reported.

Managed security umbrella to shield against data theft

Outsourcing is viable because of costs savings. However, if this cost factor is countered by the danger of data theft in an outsourced environment, the principle of outsourcing will come to a dead end. All the negativity surrounding data security—such as hacking, data loss in transit, and illegal storage of data—can lead to both a material and ideological loss that can easily outweigh the cost savings in an outsourced deal.

But wait, there is a new instrument at hand: managed data security services. In effect, this means handing over security management to a service provider who understands the security needs of the outsourcer and takes on the burden of protecting critical data from pilferage. All this comes at a cost, and outsourcers can opt for a dedicated data security service or the more affordable shared service.

How exactly does the managed security work? Well, the first step is a security audit conducted by experts who understand security regulations and assess security threats. Only then is the service provider able to put a security network in place to counter all threats.

Needless to say, the concept of managed security appeals most to financial institutions such as banks and lending institutions, who have already taken a beating because of theft and loss of critical customer information such as credit card numbers. This image can be cleared by putting a managed security service in place. The entire concept rides on complete trust between the client and the service provider.

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How secure is your outsourced IT data?

The Data Protection Act (DPA) is in force in the UK for eight years now, but its provisions are not yet completely understood. Or at least, the provisions are not enforced. This is clear from a trend among senior IT decision makers to use live data to test applications.

A study conducted by Vanson Bourn reveals this unhealthy practice in the IT outsourcing industry. Nearly half of the IT decision makers are not even clear on the provisions of the act, and 44% use real data for testing purposes.

This obviously runs the risk of data dissemination to a third party. Confidentiality is of utmost importance in the data-driven IT industry, and greater care is a must for IT companies and executives. As the Vanson Bourne research indicates:

By exchanging known values, such as addresses, with other known values, customer data can be transformed so that it is unrecognisable from the original but can still be processed by the systems across the organisation, with important fields, such as postcode, left intact.

Outsourcing Managed Security Services

There is a common view that companies looking into managed security services need to weigh the cost saving against the risks attached with outsourcing. Many companies are seeking the help from outside experts in dealing with the risks involved in handling confidential information. Hacking incidents, money laundering and violation of company policies are the major concerns for the companies that are outsourcing their business to third party vendors. Providers of managed security services are offering to relieve the burden of protecting sensitive data. They can eliminate the pitfalls of managing and monitoring security devices and events and ensure a solution to the problems.

Obtaining security services from an outsourcer demands an understanding of these services. They include a company's security policies, technology and standards. Since sensitive and confidential data hold much importance for any company, organizations need to be cautious while entrusting their protection to third party companies. Both Security management and Security monitoring come under managed security services. Security management deals with the management and maintenance of devices such as firewalls and routers. Security monitoring involves recruitment of personnel to analyze data that flow across multiple devices in a company.

Outsourcing theft in Bangalore BPO: Interpol swings into action

Destination India for many outsourcers has received a severe jolt with the recent incidents of theft in Gurgaon and Bangalore. Hopefully, the outsourcing boat will not be rocked too much by these controversies. However, they certainly have international ramifications with several thousands of pounds involved in the racket, and quite naturally the Interpol has received the signal to bring the miscreants to book.

In the case of the HSBC BPO in Bangalore, it is believed that there are co-fraudsters based in Britain, who are being lined up by Interpol. India Daily reports that the Karnataka Corps of Detectives alerted Interpol to the case.

Security Concerns on Outsourcing

India has become the hub for outsourcing industry. Most US companies outsource their customer service to call centers to India because of low labor costs and abundance of workers. However, in the recent days, security concerns have forced companies to reconsider their decision on outsourcing to India.

According to a recent survey made by Forrester Research, companies such as Bank of America, ChoicePoint, Citibank and Time Warner experienced the loss of customer information. The security concerns have raised the debate over the reliability of business process outsourcing industry. For India, it is a serious issue as the country receives huge benefits from outsourcing. Outsourcing also provides employment and career opportunities to millions of Indian youth. Hence, it is in India's interest to ensure effective data protection to woo more outsourcing companies to its soil.

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In one security breach last year, three former employees of MphasiS, a company providing outsourcing services, were arrested for stealing more than $350,000 from four customers of Citibank. The workers were accused of acquiring passwords and transferring money from customers' bank accounts into their own.

Data Liability Rests With Outsourcer

Companies that outsource their data processing functions to organizations overseas are often not too bothered with the data protection rules that need to be adhered to. To help such firms, the Information Commissioner’s Office (ICO) in the United Kingdom has published advice such as requesting and procuring clarification from both organizations that handle personal information and from the people whose interests have to be protected. The booklet makes it clear that the company that outsources the work is responsible for any misuse of secure and personal data, even though the misdemeanor occurs abroad. 

U.S. looks at Outsourcing Security Procedures

The U.S. is considering options to outsource the security procedural work involved in the inbound transfer of cargo from foreign ports. The department is concentrating on the validation process for it's outsourcing plans which will mainly amount to on-site inspections of ships and cargo but it won't be easy as it has to consider several issues when it comes to third party outsourcing. World Peace Herald reports:

The program, which would give speedier entry to U.S. ports to ships and suppliers that meet the security standards, is now in the hands of 80 Homeland Security inspectors who have to plow through more than 10,000 applicants.

Outsourcing centers in India: soft targets for terrorists?

The recent attack on the Indian Institute of Science in Bangalore has shifted the focus of attention regarding terrorist attacks from north India to this southern city of information technology. Analysts believe that outsourcing could be the next terror target. Evidence has been building that terrorist outfits could take advantage of the soft targets such as the outsourcing industry.

The question that is now being asked is: how well-prepared are the outsourcing centers in India to answer the terror threat? Security is being strengthened in Bangalore, and only time will tell regarding the seriousness of the threat. Time Online Edition reports:

The attack is likely to shift attention within India to the question of how well prepared the country's outsourcing centers are for terror strikes. In a press statement released immediately after the terror attack, NASSCOM, the trade body for India's technology sector, stated that the country's outsourcing companies already have many security measures in place; however, it said that the incident “highlights the need to review and upgrade these.”

RBI directive to banks: Ensure security in outsourced business processes

To avoid compromising on vital data, the Reserve Bank of India has asked banks to systematize outsourcing to third party vendors by meeting the regulatory and supervisory requirements. Prior to entering into an outsourcing agreement, banks should ensure that they can control and monitor the outsourced business processes. The Economic Times reports:

The RBI has said that breach of security, confidentiality or non-compliance with legal and regulatory requirements by either the service provider or the outsourcing bank can lead to financial losses for a bank and systemic risks within the entire banking system. “Therefore, a bank’s board of directors and management need to provide direction and guidance to adopt sound and responsive risk management practices for effective oversight, due diligence and management of risks arising out of outsourcing,” said RBI.