Combined Impact of Outsourcing and Hard Times on BPO Risk and Security

IT-based BPO arrangements continue to proliferate in the current difficult economic conditions, as private companies, government agencies, and other organizations seek to reduce their costs. The potential for compromise from cyber security exploits also increases, however. Over the past decade, the expansion of BPO, particularly offshore, was during times of continued economic growth, save for the recession around 2001 when a number of major outsourcers failed, giving little or no notice, as described in (Berinato, 2001). Prosperous times tend hide nefarious activity. However, when the tide recedes, questionable activities are exposed, as for example with Satyam. Motivation for exploiting outsourced services generally rises. Threats posed by insiders, in particular, are thought to increase considerably as employees are fired and remaining employees are both disgruntled and feel threatened economically. Insider threat is difficult to measure since insiders operate using authorized access and practices. Consequently, while one might expect computer crime generally to increase when individuals are ABSTRACT