Concerns about data privacy are rising in the sourcing
industry, and I expect the issue to get a real workout in 2008.
Which is fine. But first a couple of points: From the earliest days of outsourcing there have always been third parties involved in processing client information. More to the point, data breaches can and do happen with in-house operations, too.
Still, the data issue is gaining traction in light of legislation aimed at protecting financial and medical data. Both clients and providers are feeling the heat.
The sourcing industry has already adopted safeguards and best practices to protect information, but the question remains in the mind of many: Does sourcing mitigate or exacerbate data risks?
Companies are calling us seeking advice on the capabilities of service providers to help reduce the perceived risks relating to data protection. At the same time, providers are starting to squirm at contractual terms aimed at allocated damages due to breeches in data security policies.
We shall see whether the sourcing industry is a source of extra risk or solution. But there are two things we already know: Whether data are processed in country or offshore doesn’t matter, so don’t believe in headlines about “outsourcing” as a culprit. And the market can and will play a regulatory role, as it always has, because reputations and bottom lines will suffer if customers suffer.