Top Security Trends for Outsourcing in 2009 by Black Box Research

Political, Economical, Ecological and Social changes in 2008 have substantial effect on outsourcing industry. The global economic crisis, terrorist attacks, corruption, catastrophes and rise of whole new bunch of emerging outsourcing destinations have changed global outsourcing landscape. Black Box Research claims in its report that last year's events have irreversibly changed the process of evaluation of outsourcing destinations and risk/rewards calculations.
With an increased advertisement flow from emerging outsourcing spots on behalf of developers from various countries investors and clients interests are no longer motivated by destination advertisement alone. English skills and high numbers of local unemployment turned into misguided recommendations of where to consider outsourcing. As an example can be recent endorsement of South Africa, Nigeria, Pakistan, Kenya and Jamaica that finally proved unreliable and were excluded from the next year's lists of hot outsourcing destinations.


The realities of politically, economically and socially unsafe world have direct influence on outsourcing decision process. Ability of supplier to ensure that customer's sensitive data and processes remain safe has been included into offshore strategic planning. As every company that outsources is exposed to the downstream (security) risk, it is essential to establish high-quality control and determine the best location choice for its organizational processes.

As the saving gaps between India and other outsourcing locations widens less than ten percent, the value proposition tempered by potential treats. Offshore location rankings that based on cheaper but skilled labor pools and tax incentives are not adequate to make a qualified destination selection. With the emergence of new outsourcing sites and diversification of outsourcing vulnerabilities companies cannot afford to neglect vulnerability management and need to secure their sensitive data. Offshore outsourcing vulnerabilities and weaknesses need to be identified and addressed before they cause a security, quality or access issue.

With increased emphasis on security and reliability outsourcing decision making process has been changed making corporate development and location specialists absorbed by the challenge of determining the best location for their organization. As uncertainty of regional threats in offshore location continues to grow and companies want to control their data and processes there are new trends emerged.

Security Trends in 2009

1. In striving to keep data, process resources and account executives locally many companies will shift outsourcing delivery preference to Nearshore and Sameshore
2. Management of outsourcing strategies and global operations continue to sharpen focusing on mitigating offshore risks, vulnerability assessments and measure tools
3. Lack of nearshore and sameshore options force Indian providers moving to Central & Eastern Europe and Latin America to establish data and service centers
4. Increased role of safety and vulnerability measurement:
- The top locations for operating with lowest downstream risks in 2009 are Central & Eastern Europe and Latin America
- Hot spots to avoid, Southeast Asia (with the exception Singapore, Singapore) and Africa (with the exception Cairo, Egypt)
5. Strong green trend demanding offshore vendors to reduce technology carbon footprint
6. Outsourcer's quality can impact on client's brand. As suppliers integrates deeper into core business processes company's clients are look to see who it uses for outsourcing and where it offshores
7. Outsourcing suppliers will provide better service and price hoping to get long-term deals
8. Clients demand promised savings payment upfront from outsourcers. To cope with global slowdown and credit pressure companies demand upfront savings payment making the costs of acquiring new businesses for offshore vendors higher, however upfront payments can be a good differentiator for money-rich Indian suppliers.
9. Escalating US Unemployment brings workforce back home. Growing US unemployment has already driven domestic wages much below where they previously were. The U.S. Immigration Service slowed the process of obtaining H1B visas discouraging foreign workers to apply for local jobs.

With more organizations embracing offshoring and Business Process Outsourcing (BPO) became a common practice where providers get an access to most sensitive client's corporate data assets an information security has became a top concern among companies evaluating current and potential outsourcing relationships. Companies perceive a significantly higher security risk in working with offshore providers over those in the developed countries due to a lack of trust in legal and regulatory environments in developing countries.

Successful outsourcing requires successful security management and most companies applying outsourcing indicate that security management requirements need to be defined in the contracts and agreements governing outsourcing relationships. At present immaturity of security and vulnerability management stand as the biggest management challenge in outsourcing. A well defined security management plan that balances control and freedom can be effective in securing data and increasing the confidence of consumers and other stakeholders.

In a country scale where providers with operations in Asia and Africa are particularly challenged by the security and perception gaps, those destinations which can undertake resolute steps to improve legal environment and infrastructure for better data protection and minimization of offshoring risks as well as facilitate to the development of a security culture will attract investors and perspective clients not only by providing right mix of enhanced capabilites and costs savings but and increased security confidence that will be a significant differentiator for further strategic choices.