October 6, 2008

The Effects of Outsourcing Technical Jobs.

I worked in the Information Technology area for over 20 years and we have been warning of the implications of outsourcing these jobs for a while now.

Outsourcing IT jobs has been occurring over recent years primarily as cost cutting initiatives became the primary directive of corporations in their increasing movement to please stock holders. The bottom line figures in the market have moved to the top of the list of management mindset and thus all other business methods are influenced from there.

My fellow workers in the technical field have long been aware of the dangers and impact that moving these types of jobs from employees of the company to the less expensive outsource company. Workers who do not belong to a company will not have the same passion to support the business and the factor of distance, not having technical resources on hand at the local business, only makes for communication errors and delays in help.

One important area where issues are already showing up is in security. This Associated Press article shows how Verizon Communications shows how security leaks of credit information are occurring due to outsourcing companies not being as rigid on security.

Outsourcing aids many data thefts, Verizon say

Oct 1, 2008 11:55 PM EST
NEW YORK - The reliance of restaurant chains and retail stores on outside companies to handle credit-card processing and other information-technology functions is partly to blame for a rash of consumer data breaches over the last few years, according to data sleuths at Verizon Communications Inc.

Even a chain with thousands of restaurants might have only 100 employees in information technology, so it uses outside vendors for many IT functions, said Bryan Sartin, director of the investigative response team at Verizon Business.

"What happens is there's a lack of accountability on the third party," Sartin said.

Verizon's unit investigates a quarter to a third of the big, publicly announced data breaches that occur each year, and hundreds of smaller cases.

In recent years, restaurant and retail businesses have accounted for more than half of Verizon's 230 to 250 cases per year, according to a report Verizon was set to issue Thursday. It often finds that insiders at service vendors are part of the heists.

Organized data-stealing gangs "go to the call centers, the Web development companies, the content development companies, the business partners, the people who pick up the backup tapes," Sartin said. "They say ... if you hate your boss and you're in financial straits, we're your solution. Give us access to your customers. Better yet, give us your data."

In a typical case Sartin was involved in, the team was approached by a large oil company in Canada, with thousands of gas stations. Customers were finding spurious charges on their credit cards after using them at the stations.

The team soon figured out that someone at a technology vendor was responsible, but couldn't pin it down. So the investigators set a trap in the system, to see who accessed customer data.

"The trap went off on Saturday morning," Sartin said. "Hackers always think nobody's looking on Saturday mornings."

A police car headed to the vendor's office, and the culprit turned out to be a 21-year-old who supported the software that operated the gas pumps. He had sold lists of customer data to organized crime.

Many breaches don't happen through outsourcing. In one of the largest cases in recent years, the gang that stole 41 million credit and debit card numbers from chains including TJX Cos. obtained access through unsecured wireless networks, not through subcontractors' systems.

Still, Verizon's report advises companies to keep a tighter rein on contractors, including by limiting partners' access to only the data they need.

By PETER SVENSSON AP Technology Writer
Sent from my Verizon Wireless BlackBerry

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