Would you outsource to China now?

Will a report of government-involved hacking change the risk calculation?

Security issues, as well as a language barrier, have kept China's IT outsourcing industry from becoming a serious threat to India's thriving counterpart. The Chinese government's reported role in hacking companies in the United States may further thwart the nation's outsourcing prospects, reports Patrick Thibodeau at Computerworld.

After the security firm Mandiant released a report last week with details on the Chinese government's role in cyber espionage, U.S. businesses may rethink the risks associated with sending their IT and BPO work to China. However, some analysts and consultants say the security risks are already accounted for in the outsourcing calculation.

Deploying best practices for data protection and security are more important than the location of the outsourcing provider, according to James Slaby, director of the security practice at HfS Research. Companies using outsourcers in China are "only embracing nominally more risks" if they use best practices, he said.

While the actual risk calculation may not be much different in light of the Mandiant report, it may become more difficult to conduct business with Chinese firms if the United States establishes new policies or sanctions against the country, said Daniel Castro, an analyst at the Information Technology & Innovation Foundation.

The market for Chinese IT and BPO outsourcing services is only about 50 percent of the outsourcing revenue of India's Tata Consultancy Services alone, according to Jimit Arora, a vice president at the consulting firm Everest Group.

For more:
- see Patrick Thibodeau's article at Computerworld

Related Articles:
The upside and downside of outsourcing to China
Focus of outsourcing shifts from price to value
Hidden costs in outsourcing to Latin America

Filed Under