Data security top risk concern in outsourcing

The survey of 158 US senior executives from a variey of industries found that the vast majority of respondents - 91% - were 'somewhat' or 'very concerned' about data theft or misuse in outsourced operations.

Information security is one of the top three most important factors in selecting an outsourcing partner, chosen by 50% of respondents, ahead of financial strength, business stability and reputation. Furthermore, 85% of respondents say they may be willing to pay 10% - 15% more for extra security.

Nearly 70% of respondents also said they were reviewing their outsourcing strategy in response to hearing of recent high profile cyber crime, customer data theft and network security incidents.

Around three quarters of respondents (76%) perceive a higher security risk with offshore firms, rather than domestic providers, which is due in part to a lack of trust in legal and regulatory environments in developing countries.

Just five per cent of respondents believe that China has a strong regulatory and legal infrastructure, followed by South America (six per cent) and Southeast Asia (11%). Around 27% of respondents felt that India has a robust legal infrastructure.

Booz Allen says over half of the survey participants feel that customer trade groups or industry associations should be responsible for defining and establishing the security standards for outsourcing providers. However an almost equal number said standards should be established by governments from within major industrialised nations, such as the US and western European countries.

The research also found that half of all respondents are sceptical of the security claims by outsourcing providers - 30% of respondents find security capability claims impossible to verify, while 20% find provider security claims not credible.

Commenting on the study, Vinay Couto, vice president, Booz Allen, says: "As security concerns rise, the industry needs to establish security capabilities that restore the trust of outsourcing customers and provide them with the information they need to make good decisions."

While data theft is a top issue when outsouring, terrorism is viewed as a 'moderate' to 'serious' threat by 48% of respondents. Only 35% feel that physical breaches and natural disasters are a major concern.