secure outsourcing engagement, how to protect data in outsourcing

How To Protect Sensitive Data When You Outsource

Although IT outsourcing is a common practice widely embraced by many companies from startups to IT giants, many entrepreneurs still associate it with a number of challenges. Quality and remote team management issues are just some of them, while the greatest concerns related to outsourcing are security and data protection. For many business owners, security threats are the main reason behind trying to keep their software R&D in-house. Plus, the PR implications of your clients’ classified data being accidentally revealed to the public could be quite dramatic. 

Yet, reducing R&D expenses and bridging the IT talent gap are solid arguments for forging partnerships with IT Outsourcing (ITO) companies. So, as you start collaborating with an outsourcing partner, how do you ensure your personal or business data stays intact?  

These are understandable concerns, but this road has been traveled many times before. When it comes to ensuring safe outsourcing, many companies have extensive expertise. 

Data Protection in Outsourcing: Best Practices

Below is a list of best practices for data breach prevention in outsourcing that you can apply to secure your sensitive data. 

Regulatory compliance

Chances are, your local laws are already protecting you. For example, if your company is operating under the EU legislation, you are legally not allowed to transfer data to countries that fail to ensure the level of data protection deemed adequate by the EU. Under these rules, the rights and freedoms of people the data in question relate to should not be compromised in any way. Although perceived as a safer endeavor, the local level of data protection may be significantly lower than offshore data security level.

Legal backup

Even though agreements alone cannot guarantee complete data safety, do sign a contract covering data transfer specifics. For example, under these agreements, the data in question may not be transferred to hard media (terminals with CD writers are strictly prohibited), all data transferred online has to be encrypted, all data transfer instances have to be recorded with all logs completely visible and transparent, etc. Also, some companies allow third parties to access their data strictly through VPNs (virtual private networks), which ensures the actual data stays in-house. 

Typically, the parties sign a non-disclosure agreement (NDA), ensuring all data remains classified. You may sign such agreement with every member of an outsourcing team, and, separately, with executives. 

Physical security

Surprisingly, a few people take into account the fact that remote servers may be prone to physical damage. Floods, earthquakes, fires, and other acts of nature, as well as terrorist attacks, may inflict serious damages. Even industry giants may suffer from such events. Back in 2012, severe floods in West Virginia caused by Hurricane Sandy resulted in power failure resulting in Amazon server outages and blocking access to some of the popular web services. Make sure the outsourcing company you are partnering with has a consistent security strategy and a data recovery plan, should any of these disasters take place.  

Physical security measures taken by the ITO company are also an integral part of this strategy. Does your outsourcing company have a 24/7 security guard? All in all, physical security measures should comply with international standards: card and number-pad access, increased server-room security, fire alarms. Checking security level may imply you will have to pay an onsite visit to your outsourcing location, but if you want to protect your sensitive data, it could be well worth the hassle. 


As technologies evolve, they also demand more advanced security solutions, and the market responds accordingly. Make sure your outsourcing partner uses the latest and best-of-breed software tools and security technologies before you trust them enough to grant access to your sensitive data. This step is critical to ensure adequate data protection in outsourcing. Make sure the ITO provider you are partnering with has necessary sets of tools to prevent viruses, spyware, and malware from infecting their system, and has an action plan in case of cyber attacks. Regular penetration tests to detect security loopholes are mandatory.   

Administrative measures

Sadly, employee negligence remains the main reason for security concerns, according to the Global Information Security Survey of 2017-2018. A general rule of thumb in safe outsourcing is making sure your potential partner has a coherent and working security policy, which should include information protection policy, Internet usage policy, password policy, as well as system access and corporate email policy.  Also, make sure the ITO company asks its employees to sign non-disclosure agreements (NDA) protecting clients’ data. 

PoLP rule

One of the best data protection practices involves assigning different access rights to members of your offshore development team. PoLP stands for “principle of least privilege”. Under this principle, only those team members whose job responsibilities demand working with data may access it directly.  For others, access is limited in proportion to their job responsibilities, and access rights are subject to regular reviews and reassessments. 

Security audits 

Speaking of reviews – these should be done regularly. Establishing a system for data breach prevention in outsourcing is a complex task in itself and requires a set of consistent measures. Maintaining it at the highest possible level demands consolidated efforts, and regular audits help detect security loopholes and flaws in the existing security system. This approach allows you to respond to issues and fix them quickly; it also helps you to make sure your outsourcing partner is capable of providing you with an adequate level of data protection. 

Safe Outsourcing: How To Tell If Your ITO Provider Is Secure 

So how do you know your ITO partner is dedicated to protecting your data? Summing up all said above, here are some checkpoints for your consideration. 

A reliable outsourcing company will build its security on three solid foundations:

  1. Physical security: an action plan in case of physical disasters and a well-protected office location (24/7 guards, fire alarms, electronic access, etc.);
  2. Technological security: adequate hardware and software tools put in place for data protection and prevention of cyber attacks. This includes antiviral software, firewall, intrusion detection and prevention systems, email filters, and DLP (Data Loss Prevention) software. Today’s best practices require using security incident and event management software (SIEM) to monitor the entire company IT system for suspicious activity in real time;
  3. Administrative security: coherent security policy regulating system access, internet use, corporate emails, information protection, PoPL, passwords, and NDA agreements to prevent classified information from being disclosed because of employee negligence. Make sure the company in question is willing to sign an NDA agreement with you, if necessary. You have the right to demand all your project-related data stays concealed even long after the project has been completed.

Secure ITO providers also run regular audits of all integral parts of their corporate security system, and, all in all, approach the subject of security seriously. They also support security education initiatives to raise the level of employee skills and general awareness about existing security threats. Choose an established ITO provider with a proven track record of successfully completed projects and request client testimonials to build trust. 

Last but not least, it’s always a good idea to start in-house. Assessing the security protection level of your outsourcing provider will come naturally to you if you implement the same security approaches and policies in your company environment. Imposing administrative rules will help you rest assured you have done all it takes to prevent data leakages on your part. Make high-security standards a hallmark of your company and demand that your outsourcing partner does the same. 

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