Jewish World Review May 11, 2004 / 20 Iyar, 5764

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Consumer Reports

Outsourcing of jobs leads to information leaks | Millions of American jobs are at risk of being outsourced overseas. And with those jobs, we are also exporting proprietary records, intellectual property and business intelligence. As more industries shift work to cheap foreign-labor markets, foreign workers gain access to some of the most private information about American citizens and businesses.

Tax experts estimate that 150,000 to 200,000 American tax returns were prepared in India this year. As financial firms continue to accelerate the pace with which they are outsourcing work, more and more sensitive financial records will become susceptible to exposure overseas. The consulting firm A.T. Kearney predicts that 500,000 additional financial services jobs will be shipped abroad in the next four years. With those jobs go financial records, documents and statements - and consequently, more low-wage foreign workers could have access to Americans' credit card numbers, social security numbers and bank records.

In addition to those financial records, private medical records are also at risk. Last October, a disgruntled worker in Pakistan, subcontracted to transcribe medical files from the University of California San Francisco Medical Center, threatened to post patient files on the Internet if she was not given the back pay she was owed by her employer. The same month, a Toledo, Ohio, company that outsources medical transcription experienced an extortion attempt by some of its workers in India. The employees involved were turned over to Indian authorities within a day, but the company chose not to inform customers that the incident had occurred.

Then there is the question of who has jurisdiction when something goes wrong. The privacy and intellectual-capital laws in many foreign countries simply are not strict enough. Recently, a U.S. software company, SolidWorks Corp., found that a worker employed by its Indian outsourcing partner tried to sell the SolidWorks' intellectual property to a competitor. The FBI worked with the Indian Central Bureau of Investigation, and the employee was arrested. The trial should be held before the end of the year and will be very closely watched since it is the first case of its kind.

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Last week, however, the Office of the U.S. Trade Representative released a report citing several countries, including India, for failing to protect U.S. intellectual property rights.

Unfortunately, current federal privacy laws do not protect individuals when foreign companies misuse their personal information. Several lawmakers, including U.S. Sens. Dianne Feinstein, D-Calif., and Hillary Clinton, D-N.Y., are pushing legislation to protect American consumers against such abuses. Sen. Bill Nelson, D-Fla., has promised to introduce federal legislation to better safeguard information sent overseas.

"We cannot tolerate the outsourcing of Americans' privacy," Nelson told the Consumer Federation of America last month.

Nelson's legislation would, among other things, require that American companies inform individuals if their information is sent abroad, and it would also require that foreign contractors follow U.S. privacy laws.

California state Sen. Liz Figueroa has introduced a bill that would require any company doing business in California to comply with the state's strict privacy and confidentiality law, regardless of where the work is done. Figueroa says she is concerned about the problem and contends that the legislation has a good chance of passing.

"In California, we have been placing a great deal of attention on the privacy situation, especially financial and medical," Figueroa said. "With so much emphasis put on this discussion, I think our customers are educated and well enough equipped to understand the severity and the consequences that could occur if we continue with this form of doing business, the outsourcing without any protections for privacy."

As lawmakers work to stop the threat of outsourcing millions of American jobs to cheap overseas labor markets, they may be aided greatly in their effort by imposing strict limits on the export of private individual and business records and data.

As the saying goes, there ought to be a law.

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Lou Dobbs is the anchor and managing editor of CNN's "Lou Dobbs Moneyline." Comment by clicking here.

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04/27/04: Outsourcing the jobs debate
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