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.
Do you have a question, comment or suggestion?
