Americans Increasingly Concerned About Outsourcing Personal Data, Survey Reveals

June 9, 2006

News Release

A new survey sponsored by global law firm White & Case LLP, and developed by independent privacy think tank Ponemon Institute, found that the majority of American consumers do not want US companies sharing personal information with outsourcing companies overseas.

Fifty-one percent of those US adults surveyed said that they did not want a US organization to send sensitive personal information such as social security or driver's license numbers to a local company in another country. Opposition was higher when it came to sharing even more sensitive information: 60 percent didn't want their credit or debit card account numbers shared with an offshore company; 64 percent opposed having their employee records shared; 73 percent opposed having their banking or home mortgage information shared; and a whopping 83 percent opposed having their health records shared with a local company in another country.

"That so many Americans are concerned about sensitive personal data going overseas isn't surprising given the growing threat of identity theft and general misperceptions about outsourcing itself," said White & Case partner Steve Betensky, who regularly advises companies on outsourcing issues. "But what makes this so challenging for US companies is that while consumers don't want their information sent oversees, 73 percent of US adults surveyed also said they are unwilling to pay higher prices for products or services if that would ensure that their personal information would not be outsourced offshore."

Betensky adds that the problem is further compounded by the fact that 82 percent of survey respondents felt that new US regulations were needed to ensure that offshore companies had adequate security and privacy safeguards in place -- despite the fact that many industries such as healthcare and financial services are already strongly regulated.

"When customers aren't willing to pay more for security safeguards, they automatically turn to government for relief. That leads to increased regulations, which generally leads to higher costs for companies in order to comply or risk fines. So the real message I take away from this survey is that companies better be prepared to pay more one way or the other. The best thing that companies can to do is negotiate their outsourcing contracts carefully so that the offshoring entity assumes some of the risk and costs associated with privacy safeguards and takes responsibility for ensuring that those privacy safeguards are effective," said Betensky.

Larry Ponemon, CEO and founder of Ponemon Institute, said that the survey also revealed that Americans do not view all countries equally when it comes to offshoring. When asked to select from 47 countries where outsourcing operations occur, US adults felt most comfortable with Canada, Ireland and India, giving them highest overall trust rankings with respect to local companies taking steps to protect or safeguard personal information. Philippines, Mexico, Haiti and Russia received the lowest trust rankings.

"Those statistics seem to confirm what we see in the global market place. India and Ireland have increasingly become some of the most attractive places for outsourcing ventures -- not only due to a well-educated workforce and lower salaries, but because those jurisdictions have made an active effort to establish strong regulations when it comes to outsourcing issues, including privacy," said Ponemon.

The study randomly surveyed 11,729 US adults via the Internet. In total, 1421 respondents completed the survey during an 8 day-research period. Of those, 127 were rejected because of incomplete or inconsistent responses -- results were thus drawn from a total of 1,294 people from every region of the United States.

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