Niyamath Parveez

Outsourcing is necessary to reduce operational costs and increase profits of an organization. There can be no doubt about it. But exposing too much sensitive data to the offshore service providers can backfire on a company. There have been incidents in the past when a company’s sensitive data has been compromised, and their offshore service providers have been suspected for the breach. The fault is not just of the providers either. The company’s have often been less than cautious about their confidential data. When a company leaves their sensitive data exposed, even hackers can gain access to it.

In order to prevent incidents of data leakage, companies need to follow some good policies to ensure security of sensitive data. Here are some of those:

1. Classifying the data – This is one of the most important steps to be taken to secure data. The company needs to determine which types of data are sensitive and which types won’t make much difference even if compromised. For banks, for instance, data about the changing rates of taxation based on the clients’ monthly income won’t make much difference even if it is seen by outsiders. But, critical information about clients, such as, their contact details, bank account numbers and passwords, etc. must never get compromised if the bank is to stay in business. Literally.
2. Categorizing the organization – This is another important step. Is the company a bank or a financial institution? Is it a healthcare company or a public company? Does the company deal with loads of personal data of clients? These are the questions that the personnel of a company must answer before opting for an offshore service provider. If they deal with a lot of sensitive data about clients, such as their contact information, their bank account details and their monthly salary figures, then the company needs to be extra cautious to ensure that the clients’ data is not compromised by the service provider.
3. Choosing the right vendor – This is a pretty tough thing to do, but important nonetheless. It is better to choose offshore service providers who also have branches in the US, for ensuring extra credibility about the provider. Some questions are good to ask to a prospective provider before the deal is finalized. The provider should be asked whether they would agree to submit to an external security audit of their company. This will ensure that the provider takes the issue of security of client data seriously. Also, it is good to ask them whether they can provide a list of names of past clients. If the company tries to weasel out of answering these two questions satisfactorily, it is a sure shot sign that they are hiding something. The deal should not be made with them in the first place.

Finally, before completing the deal, care should be taken to determine which activities are going to be outsourced. Sensitive activities like penetration testing of the company’s network and automation scripting are best done by service providers with excellent reputation in the field, to ensure that the safety of the company’s network and sensitive data will not be compromised. Offshore service providers should be chosen carefully. The safety and reputation of the company both depend on taking the right decision regarding this.

In these dark times of economic recession, most companies from US and Europe are looking to outsource their projects to offshore service providers in a desperate rush for cutting costs. Keeping with the trend, many independent service providers are coming forward to provide services at lucrative rates to their US clients. However, choosing the perfect service provider is no easy task for US based companies. Before outsourcing the business or IT processes, the company must make sure that the service provider will be able to carry out the services properly and meet the standards required by them. A balance needs to be maintained between the quality of service and the cost incurred by the company that is outsourcing its work processes.

When choosing an offshore service provider to take care of their work processes, companies need to be cautious. If the provider is small, there is every reason to check out everything about the provider and make sure that they are indeed capable of providing the service required by the company. There are several procedures for doing this, not only in case of small companies, but in case of larger companies with a stable reputation in the market as well. These include:

1. Contacting trade associations – The trade associations maintain records of the type of services provided by most organizations in the same country. For example, in India, the trade association is the National Association of Software and Services Companies (NASSCOM). These associations can help the companies looking for service providers by providing important details regarding the quality of service provided by the company, its past record in the market, and so on.

2. Sending out an RFP – The next procedure would be to send a request for proposal (a.k.a. RFP) to the service provider. A questionnaire can be sent along with RFP to ensure that the company gets proper service from the provider. If the provider has a website, where it displays the list of past clients’ names, then personnel from the company outsourcing its project should check that first. This helps by providing concise information about the service provider. The questionnaire should contain questions asking the provider to state how they are better from the competition, the process model that they follow, their delivery methods, how qualified the personnel concerned with the project would be, and so on.

3. Conducting a thorough background check – This is easier if the service provider has a website. Otherwise, it is a must to call up at least some of their clients anonymously and ask about how well the services were provided. It is crucial to know whether the projects were delivered on time, without any problems in communication at any stage. If the company has certifications of quality maintenance, such as ISO, then it is a clear indication of their capability.

4. Running a pilot project – This is a good thing to do, if possible. Running a short pilot project will help the company assess the capabilities of the service provider properly. It will cost some funds though, so it is always a good idea to carry out the first three steps mentioned above first.

These procedures can help a company to choose the perfect service provider for outsourcing their projects to. The key is to get superior service at low costs. That alone can help a company survive these troubled times.

It is undeniable that outsourcing projects benefits a US-based company in quite a few ways. The difference in value of many Asian and European currencies with respect to the American dollar ensures that companies in US can raise their profit margin effectively by reducing their overall expenses. However, outsourcing is not all about roses; the thorns that lurk underneath cannot be ignored. There are two significant problems with large-scale outsourcing, which include,

1. Imbalance of knowledge – When a company outsources some or most of its work, there is an increased dependence on outsiders. Consequently, the company maintains a smaller body of staff. This concept is logical for cutting of working costs of the company, but the problem lies elsewhere. Let us suppose that the internet connection between the company and the offshore service providers is disrupted for a few days at a stretch. This would mean that all work of the company would come to a standstill for those days, since there are not enough staff members who are knowledgeable about the company’s projects. This type of imbalance of knowledge, when the company’s own employees do not know about the projects being handled by the company, the situation becomes potentially dangerous.

2. Inconsistency in quality – Let us suppose that a company outsources its projects to 5 different offshore service providers, located in different countries. This policy, often followed by US-based companies, has a noticeable flaw. It is that providers located in different countries will often have significantly different quality of work. One of the providers may provide content of excellent quality, while others may not be that proficient. These providers will often have their own conventions and styles of work, which might be very different from those used by the company itself. This can lead into an inconsistency in quality between different projects handled by the company. Thus while looking to save some costs; the company may indeed lose out more on profit in the long run.

Does that mean that companies in US should stop outsourcing their projects to offshore clients? The answer is no, of course not. But, some standards need to be maintained while outsourcing projects. Firstly, there needs to be a balance between the numbers of in-house employees and outsourcing providers. That way, if an outsourcing provider has problems with the work, an in house team can take over. This may result in a little more expenses for the company, but in the long run, it can act as a saving grace.

As for the quality issues, there is just one feasible solution. The company could evaluate the quality of service of the different offshore providers after they have taken care of the first few projects. Then the company could outsource its projects only to the providers that provide services of proper quality. This would result in some problems in the initial stages, but in the long run, this could prevent damage to the company’s reputation because of the inconsistency in quality of work of its offshore service providers.

Outsourcing is a profitable way of conduction projects for US companies. But the trick lies in maintaining a balance between the offshore service providers and the knowledgeable in-house employees. Only through maintaining a proper balance between the two will a company be able to strike the balance between profits and quality of its work.