Below is an interesting article on the risks involved in outsourcing... Worth thinking about! Janet Krueger Rochester http://www.nytimes.com/2003/01/06/technology/06OUTS.html January 6, 2003 Experts See Vulnerability as Outsiders Code Software By JOHN SCHWARTZ As American companies increasingly move their software development tasks out of their own offices to computer programming companies here and abroad, new concerns are being raised about the security risks involved. Some of these concerns over the practice, known as outsourcing, are being raised by people with an obvious self-interest for example, programmers who have seen their livelihoods shift to less expensive operations overseas. And the companies providing outsourcing services argue that they take all necessary precautions to limit risk. But the question of whether the booming business in exporting high-tech jobs is heightening the risk of theft, sabotage or cyberterrorism from rogue programmers has been raised in discussions at the White House, before Congress and in boardrooms. "I can't cite any examples of this happening but what that means is we haven't found any," said James Lewis, director of the technology program at the Center for Strategic and International Studies in Washington. "It's clearly a temptation for people, and it's a concern," he said. While operations in some countries, like the United States, Britain and India, are considered generally safe for such software outsourcing, nervousness is beginning to grow at companies and in the government about the possibility of abuse by hackers, organized crime agents and cyberterrorists in nations like Pakistan, the Philippines and Russia. To Mr. Lewis, the potential for problems in the software design process goes beyond the earlier trend of running back-office operations and call centers in other countries. "The banks have done a fairly good job of insulating themselves," he said, keeping their call centers overseas from being able to engage in unwanted activity. But letting outsiders work on the software that runs businesses and financial institutions could be opening up a world of trouble, he said. "You're going to have code that will be written in countries like India and China," he explained, "and no one's going to know what's in it." David McCurdy, a former congressman and executive director of the Internet Security Alliance, an industry group, said that although he considered himself a "free trader" with a strong belief in the benefits of global commerce, he believed that the risk from offshore outsourcing was "the most serious of the industry-based issues that this country faces." The issue has been discussed quietly at the highest levels of government, said Howard Schmidt, vice chairman of the president's critical infrastructure protection board. At the White House, he said, "this has come up as part of a broader discussion of how do we get trust and reliability" in computer systems. He said, however, that the issue was outsourcing itself, not simply the overseas kind, and cited spies like Aldrich H. Ames and Robert Hanssen as examples of how Americans could do just as much damage to the nation from within as outsiders could. "Irrespective of where it's done, we need to make sure that our code is clean and protected across the board," he said. It is easy to see why companies find the economics of outsourcing compelling; cost savings can be 25 to 40 percent. Forrester Research of Cambridge, Mass., predicted in a recent report that the acceleration in outsourcing would result in 3.3 million American jobs' moving offshore by 2015, an exodus reminiscent of the tide of American blue-collar jobs that moved to East Asia in the 1980's. Forrester estimates that 70 percent of these jobs will move to India, 20 percent to the Philippines and 10 percent to China. Patrick P. Gelsinger, the chief technology officer of Intel, said the cost of one engineer in the United States would pay for the services of three Indians, four Chinese or five Russians. But he said he was not concerned about the potential for mischief within his own company's overseas software development. The software is reviewed, he said, to avoid surprises. "Is it possible?" he said. "Sure, it's possible. Is it a unique risk there? No, it isn't." Offshore outsourcing got its trial run in preparations for the Year 2000 changeover, when government and industry had to check every line of software for glitches that could make computer networks and even building security systems shut down at 12 a.m. on Jan. 1, 2000. Much of that work was done overseas, and although industry experts warned that foreign programmers might commit crimes or lay the groundwork for terrorism, no evidence of sabotage occurred, said Jay Ehrenreich, senior manager for cybercrime prevention and response at PricewaterhouseCoopers, the consulting firm. After that experience, he said, many companies felt comfortable sending software work overseas, and now such bespoke programming is done around the world. Programmers say the confidence is not justified. "Anyone tells you that `offshoring' computer systems does not put the infrastructure at risk is lying," said Ken O'Neil, a programmer who lives on Long Island. He and other programmers talk of "sleeper bugs" that could be set to go off at a later date, or back doors that would let intruders in to shuttle money around, steal fractions of a penny from millions of transactions or shut down the system entirely. They warn of risks from political instability, organized crime and terror cells, and even from governments that might demand the ability to spy. Such talk could be dismissed as the grumblings of disgruntled white-collar workers who have seen their high-paying jobs move elsewhere. "Nobody is going to cry for people who make $75,000 or $100,000 a year," said Marc Alan Fink, who lost his programming job more than a year ago. In fact, some of the newly expressed concern is part of a long-running and acrimonious fight by programmers to hold on to their jobs in the face of relaxed immigration standards for technical workers and increased outsourcing. They attack the rise in special visas for immigrant engineers, known as H1-B visas, and the trend toward sending jobs overseas. The companies that provide software outsourcing services say that they take rigorous precautions to ensure that their employees are trustworthy and their code is secure. Arup Gupta, president of Tata Consultancy Services, an Indian company that is part of a conglomerate, said he had gotten worried calls from clients after the recent F.B.I. raid on Ptech, a software company in Quincy, Mass. The agents were looking for connections between the company and Yasin al-Qadi, a Saudi Arabian financier suspected of financing terrorism, but early speculation in news reports focused on questions about whether the company, which provides software used by many government agencies, including the F.B.I., was secure. Mr. Gupta assured his clients that his company used exacting background checks and multiple reviews of company-written software based on industry standards. "With all these in place, we can guarantee, basically, that the code we deliver will be bug-free and will perform to specifications and will not have holes in it," he said. He said he could speak for only his own company, but he added that since the Sept. 11 attacks, security fears and economic troubles had shrunk his industry and brought about the consolidation of the major Indian software houses. "The top five or six companies, you can be assured that they are conforming to these standards," he said. "The others, you cannot be sure but maybe they are." United States technology services companies are also expanding their overseas outsourcing offerings. Electronic Data Systems provides outsourcing services in 93 "solution centers" that it has opened around the world since 1990. Paul D. Clark, the chief information security and privacy executive for the company, said E.D.S. understood that the threat of sabotage in outsourcing is real. He said, "To say that it isn't is to deny the realities." That is why the company adheres to security and testing standards wherever code is written, he said, adding, "whether it's India or Indiana, it doesn't make any difference." The company is careful about what code it releases to which countries, said Dan Zadorozny, president of application services for EDS Solutions Consulting; some federal government work, he said, is done only in the United States and Britain, and "we're not going to move that anywhere." But E.D.S. insists that its standards are high enough that its outsourcing sites offer "a more secure environment than you can provide yourself." Some programmers, however, argue that reviews are less thorough than companies say. "If code runs, I assure you, nobody ever looks at it," said one, who said conducting a line-by-line review would be like having an electrician tear into walls to check wiring even though the lights were working. "It never gets done in practice." Mr. Ehrenreich, the crime consultant, said that it was up to companies to demand that kind of security, even if it cost more. He recalled a case in which he was asked to investigate the possibility of illegal activity on an Indian outsourcing contract and discovered that it was nothing more than run-of-the-mill overbilling fraud. What struck him, however, was that the company had no idea how big the problem was. He said far-worse crimes could have been committed without anyone's knowing. "The risk was there that more could have been done," he said. "They clearly did not have the controls in place to mitigate it, control it." "You can outsource the work," he said, "but you can't outsource the risk."