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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39130054,00.htm

Offshore data protection law flounders
Indian government drags its feet despite privacy and IP concerns...

By Andy McCue

Published: Tuesday 03 May 2005

Indian government promises of tighter laws to boost data privacy and intellectual property protection for western companies that have outsourced IT and call centre operations to the country are still in limbo - some seven years after first being mooted.

New Indian data protection laws were actually on the verge of being passed last year after being agreed by the then-ruling BJP Party and the Indian IT industry, as revealed by silicon.com at the time. But the incoming Congress Party dropped the legislation after ousting the BJP in a surprise election victory last April.

UK firms that offshore IT and customer service call centre operations to countries such as India are required to treat these operations with the same data protection and regulatory process they would if they were based in the UK. But while they are accountable to UK regulators there is currently little in the way of protection under Indian law.

Speaking to silicon.com at the Offshore Customer Management conference in New Delhi last week Dan Sandhu, CEO India and head of offshore business at United Utilities' business process outsourcing arm Vertex, acknowledged that the lack of data protection laws is still an issue.

"Before this government, the legislation was ready and approved. But it was shelved when the new government came in," he said.

But Sandhu said it is now being looked at again by the politicians and he urged the Indian government to adopt the tougher EU-based data protection model that was agreed last time around, as opposed to a more relaxed US-based one.

Industry analyst Gartner warned just last month that security and privacy concerns are fast becoming the biggest issue for companies considering outsourcing to lower cost offshore locations.

Other measures aimed at improving security and reassuring western businesses have also failed to get off the starting blocks, although the recent Citibank account thefts by Indian call centre agents has re-ignited proposals for a national register of Indian software professionals and call centre agents to ease the vetting and tracking of employees by firms.