Gartner: Outsourcers on the lookout for cheapest destinations

By Martin Conboy President of Australian BPO Association

According to Gartner’s list of top 30 countries for outsourcing IT, Western companies are on the lookout for the cheapest destinations. There is no question that BPO 1.0 lift and shift is a primary driver for organisations looking to outsource or even offshore. The survey indicated that the new entrants to Gartner’s list made progress versus the 10 criteria assessed. However, they did not score well in data security and protection of intellectual property.

For professionals who have been around the outsourcing space for some time will argue that even though organisations are attracted by the initial price offered by Labour Arbitrage plays, they end up staying for the quality, flexibility and innovation that is on offer from Asian-based BPO suppliers.

There are many factors involved when considering outsourcing; cost is obviously a good place to start. However, access to a highly educated, motivated and available workforce is a very serious consideration – one of the challenges in Australia is finding anybody who is interested in working in a call centre.

Of course other considerations include the legal environment and IP protection. Perhaps the area that causes western executives most heartburn is corruption. The tragic nature of many developing nations that have latched on to BPO is that their corrupt politicians and government officials find ways to siphon-off the hard-earned success of the very people that they swore to protect.

A case in point is former Egyptian President Hosni Mubarak who is now likely the world’s richest man, with an estimated fortune of $US70 billion. According to Princeton political science professor Amaney Jamal, quoted by the ABC network in the US, Mubarak’s three-decade rule in Egypt had kept him in a perfect spot to get a piece of any government action. Five hated cronies of Mubarak each amassed fortunes topping $US1 billion, according to military prosecutors preparing criminal cases against them in the latest government concession meant to defuse the two-week-old Egyptian crisis.
The Egyptian BPO business sector was really starting to make a name for itself. This development will no doubt set it back.

Closer to home, there is a scandal brewing in the Philippines concerning millions of dollars from the United Nations – reportedly payments and reimbursements for the participation of Filipino troops in UN peacekeeping operations – that ended up in the personal bank accounts of senior military officers in the Philippine army. These criminals, and that’s what they are, have bought property in the USA and set themselves up for retirement. They have totally ripped off their countrymen and women and lined their own pockets. This is the type of behaviour that causes executives in western countries to simply roll their eyes, tut tut and make decisions about where not to put their BPO business. The Philippine business community must insist that these immoral offenders are brought to book so that their hard-earned reputation can be restored. With the Philippines slipping down the A.T. Kearney list of countries most attractive for offshore-business activities, this will just pour petrol on that fire.

The Gartner survey indicated that the new entrants to Gartner’s list made progress versus the 10 criteria assessed. However, they did not score well in data security and protection of intellectual property.

Outsourced call centres run by organised crime gangs, employing up to 400 people, are known to set up their own call centres to target people en masse.

Internet users are being warned about cold callers who offer to fix viruses but then install software to steal personal information.

Internet users are also urged to be wary of pop-ups offering virus checks.
Earlier this year, search engine giant Google warned it had discovered massive amounts of malicious fake anti-virus software.

The UK warning on such software comes from Get Safe Online, which is backed by the government, police forces and major businesses with a stake in internet security.

It says it has charted a growth in two related scams designed to trick people into installing fake anti-virus software as a means of harvesting personal information such as credit card details.

These “scareware” approaches encourage users to click through to a site hosting malicious or useless software that acts as a front for gathering personal information. Most of the time, the software appears almost identical to professional anti-virus products.

In other cases, gangs have set up call centres in Eastern Europe or Asia and cold-call UK phone numbers attempting to find people to con.

Investigators from the UK’s Serious and Organised Crime Agency (Soca) e-crime unit attempt to track scams back to the source gangs who have set them up.

Sharon Lemon, deputy director of Soca, said: “In recent cases, we have seen gangs employing 300 to 400 people to run their operations and using call centre-scale set ups to target victims en masse.

Tony Neate, head of Get Safe Online, said that almost half of internet users surveyed for the organisation’s annual report had been confronted with pop-up windows warning of viruses.

“Web users should ignore ‘cold calls’ from companies offering free virus checks, and be very cautious of any on-screen pop ups,” he said.

“Most reputable IT providers do not approach customers in this way without prior notice or a direct request.”

See full story here.

Increasingly chief information officers (CIOs) are considering bringing security and IT management applications back in-house owing to concerns over security and compliance, according to a recent Ovum report.

Rhonda Ascierto, a senior analyst at Ovum said “The main reason for this shift away from IT security outsourcing is most likely a lack of confidence.”

Ms Ascierto went on to say, “The reversal of outsourcing security is also likely to be due to some organisations grappling for more control over their IT operations, of which security is a central aspect,” she said.

The analyst firm’s global survey of more than 500 CIOs found that only seven per cent are considering outsourcing IT security over the next two years, down from 18 per cent.

“Organisations are now more subject to compliance considerations in the form of external and internal policy-driven requirements, particularly in the wake of the US banking controversies and other financial scandals,” added Ms. Ascierto.

Forrester Research has conducted a study for Microsoft and RSA, a corporate security company, on companies that have sensitive internal information. According to the report, these companies’ data security measures are insufficient. Some focus too much on data that belong to clients or customers. While this is important, protecting company data is more important.

Sam Curry, RSA CTO of marketing, said, “More emphasis needs to be placed on protecting the intellectual property and data that has intrinsic value to an organization.”

Forrester discovered that normally 62 percent of a company’s valuable data is about itself or its trade secrets, while custodial data only makes up 38 percent.

John Chirapurath, Microsoft identity and security business head, had this to say about the increasing insider risk: “Companies need to learn more about their business partners to ensure that vital information isn’t falling into the wrong hands.”

It seems that despite closer monitoring of security for the last three to five years, the Indian IT Outsourcing sector has yet to take the matter seriously. Admittedly, both the industry and the government have taken some measures, such as founding the Data Security Council of India (DSCI) and passing the Indian IT Act in legislation, the survey by Forrester Research shows that Indian IT BPO companies are mistaking security apps and technology for a culture of security.

According to the survey, Indian firms take the human element too lightly. Interviewed employees say that the need for data security is not fully emphasized by their companies, relying on security tools such as antispyware, antivirus, network access control, and antispam.

As reflected in the report, titled ‘How secure is your offshore work?’ written by Forrester lead analyst Sudin Apte: “Many of them (employees) had a very casual approach toward this issue, complaining that steps like physical security measures of access control, patrolling guards and screenings are out of proportion to risks. Some claimed that management is only partially serious as most steps taken are only gestures for clients’ sake or in response to peer and media pressures.”

“When asked what their top initiatives are, most security executives described what tools and new technologies they will implement. Achieving certifications, publishing policy statements, and writing white papers were also at the top of the list.. firms have taken relatively easy and client-facing steps. Their emphasis is on showcasing what they are doing to build client comfort, rather than trying to coherently reduce threats.

“Most vendor initiatives are merely gestures or marketing activities rather than genuine efforts at holistic change.”

This is despite of the increasing concerns from their overseas clients about the recent terror attacks in India. “Many clients told Forrester that they are compelled to prepare for the possibility of service outages as the risk profile of some Indian cities increases,” the report said.