5 Key Considerations for Ensuring Data Security in Outsourcing

Businesses today often opt for outsourcing to streamline operations, focusing on core development objectives while minimizing costs associated with internal team management. Additionally, outsourcing allows leveraging specialized technological expertise.

However, one critical challenge in outsourcing is ensuring the security of business data, particularly in software development partnerships. Failure to address this concern proactively can leave businesses vulnerable to data breaches and compromises.

Get a long with Evotek to learn about data security risks and important requirements that businesses will have to pay attention to when outsourcing software development.

Understanding the Risks

Cyber ​​attacks and data leaks

• Lax security procedures: Outsourcing partners may not uphold robust security protocols, increasing the risk of cyber attacks and data breaches. This can result in severe repercussions such as reputational damage and financial losses due to the exposure of sensitive. information like customer data and trade secrets.
• Weak Security Practices: Inadequate security measures within outsourcing firms may lead to technical vulnerabilities, potentially facilitating data leaks during software development, implementation, or maintenance phases.For instance, the 2018 incident where 87 million Facebook users’ data was compromised due to bugs in third-party API software underscores this risk.
• Unauthorized Software Usage: Outsourcing providers might employ unlicensed software, including cracked versions, which could harbor malicious code or originate from unreliable sources. This poses a significant security threat during the software development lifecycle.

Seeking ISO 27001:2013 certification from outsourcing partners, as it signifies adherence to internationally recognized data security standards.

Legal Risks

• Varied Country Laws: Cybersecurity and data privacy laws differ from one country to another, making it challenging to apply uniform standards across international operations.
• Absence of International Enforcement: The lack of a dedicated international law enforcement agency for cybersecurity poses a significant loophole, enabling hackers to exploit jurisdictional gaps and unlawfully access business data.
• Complex Legal Proceedings: Investigating and prosecuting cybercriminals involves intricate procedures, compounded by the transnational nature of cyber attacks, leading to prolonged and convoluted legal processes.
• Limited International Cooperation: Political, economic, and cultural differences between nations hinder seamless cooperation in cybercrime investigations and prosecutions, further complicating legal proceedings.

For instance, the WannaCry ransomware attack affected over 200,000 computers across 150 countries, highlighting the formidable challenges in apprehending perpetrators due to jurisdictional complexities and evidentiary hurdles.

Data Ownership Concerns

• Ambiguous Contracts: ill-defined outsourcing agreements may result in disputes regarding data ownership, usage rights, and governance protocols.
• Intellectual Property Risks: Inadequate clarity on intellectual property rights within outsourcing contracts can trigger conflicts over software ownership, usage permissions, and proprietary rights.

For example, the Oracle versus Rimini Street case exemplifies the consequences of ambiguous data ownership clauses in contracts. Oracle sued Rimini Street for copyright infringement, citing unauthorized use of Oracle’s proprietary data in software development. Due to contractual ambiguities, Oracle emerged victorious in the lawsuit, securing a substantial compensation of 128 million USD.

Identifying Tasks Suitable for Outsourcing

Effective planning is paramount when considering outsourcing for software development. Assessing whether outsourcing aligns with your business operations and

evaluating its potential impact on data security and financial viability are crucial considerations.

Here’s a structured approach to identify tasks suitable for outsourcing

• Define Project Scope: Clearly outline the tasks involved, methodologies, and expected timelines for project completion.
• Assess Internal Resources: Evaluate the existing workforce, their skill sets, and availability to handle the project internally.
• Compare Costs: Conduct a thorough cost-benefit analysis comparing outsourcing expenses to the potential costs of in-house development, including both direct and indirect expenses.
• Ensure Data Security Compliance: Prioritize outsourcing partners with robust data security measures that comply with relevant standards and regulations.
• Develop a Detailed Work Plan: Once tasks earmarked for outsourcing are identified, craft a comprehensive work plan specifying project scope, timelines, and deliverables.

Moreover, when engaging with front-end or back-end developers, it’s imperative to ensure compliance with pertinent regulations such as GDPR, HIPAA, ISO standards, or other regulatory mandates. Understanding the requisite security protocols, technologies, and systems is essential to safeguarding project integrity.

Evaluating Outsourcing Partners

Selecting an outsourcing partner demands careful consideration. Ensure the chosen service provider possesses the following attributes:

• Technical Capacity: Confirm the provider’s capability, expertise, and resources to effectively execute software development projects.
• Certification: Look for certifications attesting to the partner’s commitment to security, quality, and service excellence. Internationally recognized certifications like ISO 9001:2015 and ISO 27001:2013 carry significant weight.

Read more about our Guide to software outsourcing

Contractual Arrangements

Once the tasks earmarked for outsourcing are identified, establishing a robust outsourcing contract becomes imperative. This contract serves as the cornerstone of the partnership, delineating the responsibilities, obligations, and safeguards pertaining to the transfer of sensitive business data, technological assets, and proprietary applications.

Enterprises should clearly stipulate in the contract (refer to the elements in the Outsourcing contract ) the services to be outsourced and the remedies if the partner violates the general agreement. This will include the responsibility of both parties to conduct thorough due diligence, thereby assessing security and making contingency plans in the event of an incident.

Ongoing Evaluation

Signing the outsourcing contract doesn’t mark the end of the process; rather, it initiates a continuous monitoring phase. Establishing a dedicated team to oversee the outsourced processes is vital. This team should:

• Ensure adherence to predefined Key Performance Indicators (KPIs) by the outsourcing partner and its subcontractors.
• Conduct periodic risk assessments and status reports to maintain visibility into the partnership’s progress and challenges.
• Review backup strategies proposed by the partner to ensure project continuity and develop proactive measures to mitigate potential setbacks.

Security Compliance

Security considerations loom large when outsourcing, as it entails relinquishing some control over sensitive business assets.

This poses heightened vulnerabilities to cyber threats, potentially impacting the company’s market value.

To bolster security posture, businesses should Included types of data that need to be protected are:

• Personally identifiable data (PII)
• Financial details
• Protected health information (PHI)

In addition, some types of sensitive data such as: credit card numbers, social security numbers, IP addresses, records, contracts, etc. After making a list of what needs to be protected, establish a security team to

• risk identification, analysis, and mitigation, along with setting tolerance thresholds.
• Implement robust security measures, including encryption protocols, firewall configurations, password policies, and regular technology updates.
• Maintain vigilant monitoring systems to promptly detect and respond to security incidents.

In addition to avoiding unnecessary fines and legal issues, being securely compliant with data security when outsourcing has many other benefits.

Partnering with entities holding internationally recognized certifications like ISO 27001 demonstrates a commitment to stringent regulatory compliance and robust data security protocols, instilling confidence in the partnership’s integrity and reliability.