SECURITY

Security

Before outsourcing an organization is responsible for the actions of all their staff and liable for their actions. When these same people are transferred to an outsourcer they may not change desk but their legal status has changed. They no-longer are directly employed or responsible to the organization. This causes legal, security and compliance issues that need to be addressed through the contract between the client and the supplier. This is one of the most complex areas of outsourcing and requires a specialist third party adviser.
Fraud
Fraud is a specific security issue that is criminal activity whether it is by employees or the supplier staff. It can be argued that fraud is more likely when outsourcers are involved. In April 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when call center workers, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank.
Responses to criticism
Insourcing
Outsourcing, as the term is typically used in economics, is not necessarily a job destroyer but rather a process of job relocation and may not impact the net number of jobs in a nation or in the global economy. Contrary to the critics, rampant unemployment is not occurring in the United States. Logically, "outsourcing" cannot occur without a recipient that "insources" and, according to economists, "outsourcing" means an export in services which renders "insourcing" an import. Hence, economists insist on viewing the outsourcing/insourcing debate as a debate on trade, adequately analyzed with trade theory and recorded through official national data. For example, Mary Amiti and Shang-Jin Wei claim more jobs are insourced, or imported, than outsourced, or exported, in the United States and the United Kingdom, as well as other industrialized nations. They report that the U.S. and the UK have the largest net trade surpluses in business services. However, some other countries, such as Indonesia, Germany and Ireland have a net deficit in business services.[26][27] Similar reports state that "while [the U.S. is] exporting some jobs to other countries, the greatest beneficiary of outsourcing is the U.S. itself."[28].
Work, labor and economy
International outsourcing is a form of trade. As such, mainstream economists argue that the basic principles of comparative advantage and the gains from trade apply. The 'threat' to overall employment or the economy is thus no more valid than the so-called 'threats' from imports or migration.
Economist Thomas Sowell from the Hoover Institution said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.”[29] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as lift operator, TV repairman, and coal deliveryman. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. That in turn makes us all richer.”[30] Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period.[31]
Most economists do not view outsourcing as a threat to the economy of any country. Food malls (and even malls in general), for example, may cease to exist were it not for outsourcing. Capitalist trading often involves interactions among different people, which means often tasks and services are delegated to others. Lack of outsourcing may see deficiencies in specialization and division of labor, important elements in the law of comparative advantage, which is seen by many as the basis for why capitalist free-markets are successful in generating economic growth.