BPO cos allay fears on security of info shipped abroad

Monday, 30 June 2003, 07:00 Hrs
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NEW YORK: As the debate in the U.S. over outsourcing of jobs to other countries like India to cut costs continues, the issue of security of crucial information shipped overseas is beginning to gain centre-stage.

The question being asked is: how can information on issues such as personal medical details, financial data and government records be sent to a third country for being processed?

While this remains a matter of concern, the business process outsourcing (BPO) industry in both the U.S. and India are seeking to allay fears, saying all the companies have already put in place a stringent security protection standard.

"We follow an extremely stringent security standard for physical security, network security and data security," Kumar Mahadeva, founder and president of Cognizant Technology Solutions, said.

"More importantly, each one of our clients, audit us on security - MetLife, or OfficeData or Chase - and ensure that we follow their security standards, have segregated work places for them, separate networks.

"So they have in India the same standards of security which they have for their employees and offices in the U.S."

Analysts say the challenge to India's dominance in the BPO sector also comes from concerns over geopolitical issues as also unforeseen incidents, forcing companies to look at multiple locations for their backend operations, rather than "putting all their eggs in one basket".

But Atul Vashishta, chief executive of NeoIT, a consulting firm in New York that helps companies locate a BPO station and establish their operations, told a seminar that the stage has not yet been set for competition.

"The market pie itself is yet to be established. So there is room for everyone as long as they are competitive and offer good quality services."

Yet, some countries are emerging as major competitors, notably the Philippines, Russia, China and Malaysia, which have also begun to specialise in some niche areas within ITES and BPO.

Some companies such as Proctor and Gamble, American International Group, Citibank, who were looking at establishing BPO operations outside the U.S. for some specific job functions at a fast pace, all zeroed in on the Philippines.

They found that it would take them twice as much time were they to consider similar operations in India.

As Mahadeva put it: "There will always be issues. It happened when automobile plants were being relocated out of Detroit 20 years ago. But the BPO market is here to stay."

The driving force for competition will not be cost alone, but the quality and reliability of service.

Since the dotcom bust in 2000 and the resultant job losses in corporate America, particularly in the IT sector, the resentment over outsourcing of business operations overseas has been simmering.

It was estimated by Forrester Research in November 2002 that 3.3 million jobs from the U.S. would move out by 2015 from 100,000 in 2000, with India being a main beneficiary.

In December last year a bill was proposed by New Jersey State Senator Shirley Turner to ban outsourcing of government contracts overseas, particularly to countries like India.

The bill has yet to become law since it has to be cleared by the state assembly, after which the governor has to put his stamp of approval.

Following an outcry in the media and government circles in the U.S., eFunds Corporation of Scottsdale, Arizona, which had a contract from the New Jersey government for call centre operations, said it was shifting its year-old operations out of Mumbai back to the U.S.

The company, mandated to serve 155,000 food stamp recipients and 45,000 welfare clients in New Jersey, said its new operations would be located in Camden.

Soon after, it came to be known that several other states --- Missouri, Maryland, Wisconsin and Connecticut --- were considering similar legislation.

As a result, the Indian IT industry, which was not too unduly worried over possible backlash over BPO from the U.S. a year ago, became truly concerned.

The matter became a topic of hot debate both at corporate and official levels between India and the U.S. But there were some who were not unduly perturbed.

"We make too much of that legislation (on outsourcing)," said Vivek Paul, vice chairman of Wipro Technologies.

"The reality is that there will be voices that you will hear. But business will continue," Paul added.

To the relief of some players came the news in March that New Jersey's Senate Committee on Information Technology, which discussed the bill, decided to put it on hold.
Source: IANS
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