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India to Tighten Data Secrecy Laws After Call Center Scam

India plans to toughen existing laws dealing with cyber crime. The plans were announced after reports that a call center employee in India sold the personal data of British bank customers.

The Indian Prime Minister's office recently announced that it will tighten laws to prevent cyber crime such as the illegal transfer of commercial information.

The announcement came on the heels of a report by a British newspaper, The Sun, that an Indian call center employee allegedly sold details such as bank accounts and credit card numbers of a thousand British customers to an undercover reporter for about $5,000.

The report got wide publicity, and raised a question mark over the security of data of overseas clients in India.

In recent years, many U.S. and British-based companies have moved work such as customer support to India in order to cut costs, resulting in a booming back-office outsourcing industry for the country.

Both the Indian government and the information technology industry played down the data theft scandal, dismissing the case as a "freak incident". They pointed out that client information has been leaked or sold from companies all over the world. The man who allegedly sold the information to the newspaper has been fired, and a criminal investigation is underway.

Sujoy Chohan, a consultant at IT research specialists the Gartner Company says there is no evidence that the danger of data privacy being breached in India is greater than in Western countries.

"If there is any industry which is investing in security tremendously, it is the offshore industry, whether it is India or elsewhere," he said. "So this particular incident, where you are trying to apply to the whole industry probably is incorrect. This could really happen anywhere."

Nonetheless, the report rattled the Indian outsourcing industry, and led to strident assertions that the industry and the government would cooperate to ensure the highest standards in protecting data.

Experts say India might consider a new data protection law to deal with crimes such as leakage of information from call centers.

Mr. Chohan says rules will emerge gradually to cope with an industry that is relatively new to the business world.

"Pretty much these companies were doing these services internally first, and now they are beginning to get it done from a third-party supplier," he added. "So there will be an inherent evolutionary curve around that where companies learn how to deal with this… And as they learn they will put into place more robust processes."

Some industry experts say the data theft case received particular attention because the booming outsourcing industry is an emotive issue in Western countries, where it is perceived as taking away local jobs.

The outsourcing services industry is growing at a scorching rate in India. Revenues topped $5 billion last year, and are expected to grow by 40 per cent this year. The work force has grown nearly tenfold in the last four years -- from 40,000 in 2000 to nearly 400,000 at present.