OUTSOURCING IN TODAY'S ENVIRONMENT

BACKGROUND:
Outsourcing is a highly attractive strategy in today’s tough economy and competitive global market. Like most companies, you probably outsource some functions to third parties to reduce costs and time to market, free up resources to concentrate on your core capabilities, and gain a competitive edge in your market. Global outsourcing offers these substantial benefits, but also poses some notable challenges.

The free flow of non-public information (NPI) and intellectual property (IP) in the form of digital information such as source code or engineering drawings has created a dilemma for companies that outsource -- how do you safeguard digital information and still provide the access third-party partners need to get the job done?

THE RISE OF OUTSOURCING
The ease with which companies can share information electronically across the globe and the low-cost of labor in countries such as India and China have driven today’s outsourcing boom. The barriers that define what can and cannot be outsourced as well as who can outsource are disintegrating rapidly. Gartner predicts global spending on offshore outsourcing services will top $90 billion by 2007.

Outsourcing is not simply the privilege of large corporations anymore either. SMBs are now taking advantage of this new opportunity to leverage economical outsourced resources. According to a study by USA TODAY, nearly 40% of start-ups employ engineers, marketers, analysts and others in jobs created in India and other nations.

HOW SAFE IS YOUR DATA RIGHT NOW?
The question you should be asking is: how safe is your data right now? Recent security breaches at major companies has left companies with lost revenues, reduced shareholder value and lawsuits which defeat the bottom line, as well as damaged reputations — prove that even supposedly well-protected industry leaders are vulnerable.

Outsourcing to the international market makes data security an even greater concern. Many of the tasks delegated to offshore service providers require companies to entrust their outsourcing partner with sensitive data. Sensitive personal information such as tax returns and credit card data tend to be top-of-mind in the public eye, but outsourcing also poses a costly threat to intellectual property. In outsourcing relationships, a company must often provide the partner with access to vital IP assets which are the key to the company’s competitive edge. Exposing this valuable information to outsiders can pose huge risks.

The need to protect intellectual property isn’t new — but offshore outsourcing and the evolution of IP into a digital format pose new challenges that must be addressed. No matter how thorough the outsourcing contract, it cannot prevent data theft or provide peace of mind to intellectual property owners, shareholders or service providers.