Information Security - At the Heart of the KPO Industry

chillibreeze writer — Somsubhra Banerjee

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Information security is crucial for the world of business and finance to function and thrive. It is appropriate at this point to throw some light on the terms KPO and BPO since information security is central to both these industries. The knowledge process outsourcing (KPO) industry deals with substantial technical and analytical skills and falls toward the higher end of knowledge related work. A business process outsourcing (BPO) organization relies more on process expertise. Information security is therefore critical for both these sectors.

KPO market in India
According to various estimates, the KPO market in India is worth between USD 2-3 bn and is expected to grow at a CAGR of approximately 50% to reach around USD 7 bn by 2010, which forms a 70% share of the global KPO market. This includes both captive centers and pure plays KPOs, with the latter witnessing a high degree of activity in investments and M&A transactions in recent times. Herein, the KPO sectors drawing attention are legal and financial services.

The gradual rise of the KPO industry especially financial services stems from an increased demand from small and medium financial institutions (SMFIs) in the US and Europe. High standards of quality comparable to the finest and largest institutions in the world but at a considerably lower cost attract these SMFIs.

Quality standards
The third party model (buy model) is likely to outgrow the captive model (make model) by 2010 because of the cost and time advantages in implementing a third party vendor solution. The captive model was the original choice due to the strategic nature of information being handled, but as the industry started showing signs of maturity and capability to deal with confidential information, pure play KPOs are now at par with their captive counterparts and in-fact offers a true benchmark of competitiveness.

According to estimates, by 2010, 90% of KPOs are expected to be third party models. About 5-10% of the US and European SMFIs are expected to benefit from these KPOs.

Data security
In such a dynamic scenario, the ability of the vendor to secure client’s data and information will play a pivotal role. Security does not only mean physical custody of information but includes upholding the levels of confidentiality and integrity of the data so that it does not get corrupted, altered or lost. Putting in place appropriate internal control systems will help in systematizing the end to end flow of information. Lack of this ability can lead to major embarrassments and even loss of credibility for the vendor. An example is the incident that happened in a BPO in Mumbai where confidential credit card information of clients was being stolen by some of its employees.

In an interview, Mr. Sandesh (name changed), VP Operations at ABC Outsourcing (name changed), said “We have a complete range of services for the financial sector in order to provide end to end ‘sticky’ solutions to clients. Our clients are some of the large financial institutions in Europe and the US. Therefore, we need to secure sensitive financial information in order to gain the customer’s trust. One way of achieving internationally credible levels of information security is to get an ISO 27001 certification”. The acronym CIA as promulgated by ABC Outsourcing in the context of information security stands for Confidentiality, Integrity and Availability of information to the right user and at the right time.

Increase in organizational size leads to increase in complexity and the best way to make the pieces fall in the place from the start is to have a robust system of information security in place, which will help in mitigating people and system risk.

A sincere approach towards information security will see this industry garner good business potential in the years to come, thereby opening up huge opportunities for earnings and employment in India.

 

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Chillibreeze's disclaimer: This is a contributed article and was published on Chillibreeze in May, 2010. The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article. The relevance of the facts and figures cited (if any) could change after a period of time.

 

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—About our writer: Somsubhra says, "An MBA grad, I have catered to a gamut of global clients for research and research based consulting projects. I possess good research, business and financial writing skills and have experience iin writing white papers, investors' handbooks, equity/sector research reports, business plans and more."

 

 

 

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