• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Krishnan Thiagarajan

eWorld takes a look at the deeper message underlying the recent incident of reported fraud at the BPO arm of an Indian player.

AT Nasscom's annual industry event held last year, the fears of an outsourcing backlash from the US affecting IT service and BPO companies was top-of-the-mind recall for most industry captains and other participants.

Representatives from IT industry associations, economic policy institutes, and think-tanks in the US were invited in large numbers to discuss the strategic, policy and regulatory responses of India to the growing protectionism in the US.

Strangely, in this sombre atmosphere, a senior executive at one of India's highly respected companies completely pooh-poohed the adverse impact of the outsourcing `noise', as he called it. He said categorically that the outsourcing backlash will not kill the industry, but what will affect us badly are issues relating to data security and privacy.

These words are turning out to be quite prophetic for the Indian BPO industry. In the run-up to the US Presidential elections in November last year, protests over loss of jobs to outsourcing slowly died out in the natural course. Even as this noise faded, key issues relating to data security and privacy were left unaddressed by the Indian Government.

The recent media spotlight over alleged theft by former employees of MphasiS' BPO arm, MsourcE, has rocked the BPO industry.

Can this latest episode be quickly dismissed as an isolated case that the overzealous media is attempting to blow out of proportion? Hardly so. The latest instance of alleged theft is entirely different from other instances of outsourcing deals that fell short of expectations in the past few years. For instance, compare the latest theft to Dell's decision to stop handling technical support services for its corporate customers from third-party BPO outfits in India. Or compare it to Lehman Brothers' move to pull out its technical help desk support from an Indian third-party BPO or for that matter, US-based Conseco's agreement to sell its interest in a customer and back office outsourcing work to an Indian BPO company.

Clearly, the decisions by Dell, Lehman or Conseco were policy moves that emerged on account of expectation mismatch between vendors and customers or inappropriateness of long distance BPO for certain kinds of customer care jobs. Unlike these, the latest fraud exposes the soft underbelly of data security in BPO outsourcing, if employees decide to play truant and breach the internal data security norms in place.

This episode has larger implications for the sustenance and growth of the Indian BPO industry as a whole. Instances of fraud or other misdemeanours have surfaced regularly in the US and Europe, but these two countries either have necessary legislation in place for data protection or enforcement cells that can protect the interests of the customers. Unlike these countries, India does not have a comprehensive data protection law in place. No wonder, for the last few years, data security and privacy has been one of the key concerns of US-based financial services and telecom service companies offshoring voice-based customer care and support to India. So far, labour arbitrage and cost considerations have outweighed security concerns.

But this development is bound to put security right at the top of the customer's offshoring checklist. If the BPO industry has to emerge unscathed from this, the industry, Nasscom, and the Government will have to swing into action on multiple fronts to make some fundamental changes to the way the industry operates. The four areas on which focus is imperative are:

Stories in this Section
Widen the Wi-Fi road

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line