Outsourcing is becoming more popular in recent years. This business strategy brings many benefits to companies, including:
- Better quality work– companies are usually outsourcing their work to experts;
- Cost savings– in most cases it is cheaper for a company to outsource parts of its work, then to hire additional staff.
- Increased efficiency– after outsourcing process start, entrepreneurs and employees get more time to focus on core areas of their business.
Even with all these tangible benefits, some companies still avoid this business practice. Security is one of the main reasons for this. Companies that handle sensitive data, worry that outsourcing implementation can lead to data breach.
Main Concerns and Security Measures
Companies should always ask for recommendation before contacting an outsource vendor, plus they need to sign some kind of legal contract that stops vendors from exploiting data they work with.
Biggest problems for American companies who are interested in implementing outsourcing business model is that there are laws that forbid them to share certain kinds of data with other corporate subjects. This means that outsourcing is not applicable for some parts of business process.
Another great concern is that data sent to outsourcing vendors can fall into hands of cyber criminals. This happens when outsourcing vendors don’t apply all necessary security measures for keeping their client’s data safe. Data breaches often happen in cases of overseas outsourcing, because unlike United States, many foreign countries don’t have such strict regulations when it comes to data.
The lack of strict regulation increases the number of companies with insufficient security, which is why complicated several-step selection is a definite must, when it comes to outsourcing vendors choosing.
During selection process and later cooperation with outsourcing vendors, companies need to:
- Check vendor’s security policy prior to hiring– Security policy of outsourcing agency should be equal or better than the company one. It should contain elaborated list of both physical and cyber security measures and rules. One of the most important security rules outsourcing vendors need to have is the one that stops their employees from copying client’s data.
- Do risk assessments on regular bases– these should include both regular and random risk assessments and should cover all 10 security domains.
When it comes to data security, the hardest work usually falls on outsourcing vendors. These are some security measures vendors should implement:
- Encrypt data– this should be applied to stored data, as well as the one in transit.
- Conduct background checks on agency employees– vendor needs to check future employee’s credit history and do a criminal background check.
- Do physical security controls– agency employees shouldn’t be able to use optical devices at their workplace. Physical security controls should be both regular and random and can also include strip-search, if there’s any doubt that an agency employee is trying to steal client’s data.
There are plenty of advanced tech solutions that can improve outsourcing security. These should be used by company as well as the outsourcing vendor. Companies should use remote server monitoring tools to directly monitor their data on vendor’s servers, while vendor should use wide variety of security systems and tools. These systems should include:
- Multi-level authentication– most basic attempts from cyber criminals should be prevented by simple user name and password authentication.
- Intrusion defense and reporting– these programs provide alerts and basic defense against network attacks.
- Next-generation Firewall– unlike older firewalls next-generation ones have much more complex monitoring and prevention methods.
- Cloud-based cyber security– the most advanced security systems are cloud based and they start monitoring network traffic immediately after plugging the module in the network router.
- Encryption– all data should be encrypted, so cyber criminals can’t use it in case of data breach.
In my opinion trust is the most important criterion for healthy outsourcing cooperation. That’s why companies need to stick to proven vendors, even if they ask for higher price for their services. Many companies think about outsourcing security when something bad happens.
Even when it comes to long lasting business relationships, companies need to conduct risk assessments and security screening of their outsourcing partners regularly, because that’s the only way to be ready for emergency situations.
Breaches of sensitive data (especially financial one) can be very expensive and it can also put company’s reputation on the line, which is why all funds spent for improving outsourcing security is a money well-spent.
Nate M. Vickery is an entrepreneur and business consultant from Sydney, Australia. In his free time he likes to share some of his insights and experience by blogging.