Averting Security Missteps in Outsourcing

As company-collected data increases in value, it attracts interest from unauthorized persons to access, misappropriate, and misuse it. Despite such risks, companies and financial institutions increasingly contract business processing of data (and other activities normally handled inhouse) to third parties - affiliates or independent service providers located in another country that will perform such tasks on a continuing basis. These outsourcing relationships with an offshore entity, or outsourcing candidates, often involve crossborder transfers of indeterminately large proportions of a client's proprietary and confidential information assets. Organizations must carefully select among third-party outsourcing candidates, because they could be entrusted with core business functions and mission-critical data that the client cannot afford to have compromised, damaged, rendered inaccessible, or handled in ways that fail to comply with legal regulations in the client's country or in the outsourcing candidate's country. This article explores some of the security-related issues and mechanisms to consider when constructing or managing outsourcing relationships.