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From: InfoSec News (isn_at_c4i.org)
Date: Tue Jan 07 2003 - 03:28:10 CST

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    January 6, 2003
    As American companies increasingly move their software development
    tasks out of their own offices to computer programming companies here
    and abroad, new concerns are being raised about the security risks

    Some of these concerns over the practice, known as outsourcing, are
    being raised by people with an obvious self-interest for example,
    programmers who have seen their livelihoods shift to less expensive
    operations overseas. And the companies providing outsourcing services
    argue that they take all necessary precautions to limit risk. But the
    question of whether the booming business in exporting high-tech jobs
    is heightening the risk of theft, sabotage or cyberterrorism from
    rogue programmers has been raised in discussions at the White House,
    before Congress and in boardrooms.

    "I can't cite any examples of this happening but what that means is
    we haven't found any," said James Lewis, director of the technology
    program at the Center for Strategic and International Studies in
    Washington. "It's clearly a temptation for people, and it's a
    concern," he said.

    While operations in some countries, like the United States, Britain
    and India, are considered generally safe for such software
    outsourcing, nervousness is beginning to grow at companies and in the
    government about the possibility of abuse by hackers, organized crime
    agents and cyberterrorists in nations like Pakistan, the Philippines
    and Russia.

    To Mr. Lewis, the potential for problems in the software design
    process goes beyond the earlier trend of running back-office
    operations and call centers in other countries.

    "The banks have done a fairly good job of insulating themselves," he
    said, keeping their call centers overseas from being able to engage in
    unwanted activity. But letting outsiders work on the software that
    runs businesses and financial institutions could be opening up a world
    of trouble, he said. "You're going to have code that will be written
    in countries like India and China," he explained, "and no one's going
    to know what's in it."

    David McCurdy, a former congressman and executive director of the
    Internet Security Alliance, an industry group, said that although he
    considered himself a "free trader" with a strong belief in the
    benefits of global commerce, he believed that the risk from offshore
    outsourcing was "the most serious of the industry-based issues that
    this country faces."

    The issue has been discussed quietly at the highest levels of
    government, said Howard Schmidt, vice chairman of the president's
    critical infrastructure protection board. At the White House, he said,
    "this has come up as part of a broader discussion of how do we get
    trust and reliability" in computer systems.

    He said, however, that the issue was outsourcing itself, not simply
    the overseas kind, and cited spies like Aldrich H. Ames and Robert
    Hanssen as examples of how Americans could do just as much damage to
    the nation from within as outsiders could. "Irrespective of where it's
    done, we need to make sure that our code is clean and protected across
    the board," he said.

    It is easy to see why companies find the economics of outsourcing
    compelling; cost savings can be 25 to 40 percent. Forrester Research
    of Cambridge, Mass., predicted in a recent report that the
    acceleration in outsourcing would result in 3.3 million American jobs'
    moving offshore by 2015, an exodus reminiscent of the tide of American
    blue-collar jobs that moved to East Asia in the 1980's. Forrester
    estimates that 70 percent of these jobs will move to India, 20 percent
    to the Philippines and 10 percent to China.

    Patrick P. Gelsinger, the chief technology officer of Intel, said the
    cost of one engineer in the United States would pay for the services
    of three Indians, four Chinese or five Russians. But he said he was
    not concerned about the potential for mischief within his own
    company's overseas software development. The software is reviewed, he
    said, to avoid surprises.

    "Is it possible?" he said. "Sure, it's possible. Is it a unique risk
    there? No, it isn't."

    Offshore outsourcing got its trial run in preparations for the Year
    2000 changeover, when government and industry had to check every line
    of software for glitches that could make computer networks and even
    building security systems shut down at 12 a.m. on Jan. 1, 2000.

    Much of that work was done overseas, and although industry experts
    warned that foreign programmers might commit crimes or lay the
    groundwork for terrorism, no evidence of sabotage occurred, said Jay
    Ehrenreich, senior manager for cybercrime prevention and response at
    PricewaterhouseCoopers, the consulting firm. After that experience, he
    said, many companies felt comfortable sending software work overseas,
    and now such bespoke programming is done around the world.

    Programmers say the confidence is not justified.

    "Anyone tells you that `offshoring' computer systems does not put the
    infrastructure at risk is lying," said Ken O'Neil, a programmer who
    lives on Long Island. He and other programmers talk of "sleeper bugs"
    that could be set to go off at a later date, or back doors that would
    let intruders in to shuttle money around, steal fractions of a penny
    from millions of transactions or shut down the system entirely. They
    warn of risks from political instability, organized crime and terror
    cells, and even from governments that might demand the ability to spy.

    Such talk could be dismissed as the grumblings of disgruntled
    white-collar workers who have seen their high-paying jobs move
    elsewhere. "Nobody is going to cry for people who make $75,000 or
    $100,000 a year," said Marc Alan Fink, who lost his programming job
    more than a year ago.

    In fact, some of the newly expressed concern is part of a long-running
    and acrimonious fight by programmers to hold on to their jobs in the
    face of relaxed immigration standards for technical workers and
    increased outsourcing. They attack the rise in special visas for
    immigrant engineers, known as H1-B visas, and the trend toward sending
    jobs overseas.

    The companies that provide software outsourcing services say that they
    take rigorous precautions to ensure that their employees are
    trustworthy and their code is secure.

    Arup Gupta, president of Tata Consultancy Services, an Indian company
    that is part of a conglomerate, said he had gotten worried calls from
    clients after the recent F.B.I. raid on Ptech, a software company in
    Quincy, Mass. The agents were looking for connections between the
    company and Yasin al-Qadi, a Saudi Arabian financier suspected of
    financing terrorism, but early speculation in news reports focused on
    questions about whether the company, which provides software used by
    many government agencies, including the F.B.I., was secure.

    Mr. Gupta assured his clients that his company used exacting
    background checks and multiple reviews of company-written software
    based on industry standards. "With all these in place, we can
    guarantee, basically, that the code we deliver will be bug-free and
    will perform to specifications and will not have holes in it," he

    He said he could speak for only his own company, but he added that
    since the Sept. 11 attacks, security fears and economic troubles had
    shrunk his industry and brought about the consolidation of the major
    Indian software houses. "The top five or six companies, you can be
    assured that they are conforming to these standards," he said. "The
    others, you cannot be sure but maybe they are."

    United States technology services companies are also expanding their
    overseas outsourcing offerings. Electronic Data Systems provides
    outsourcing services in 93 "solution centers" that it has opened
    around the world since 1990. Paul D. Clark, the chief information
    security and privacy executive for the company, said E.D.S. understood
    that the threat of sabotage in outsourcing is real. He said, "To say
    that it isn't is to deny the realities." That is why the company
    adheres to security and testing standards wherever code is written, he
    said, adding, "whether it's India or Indiana, it doesn't make any

    The company is careful about what code it releases to which countries,
    said Dan Zadorozny, president of application services for EDS
    Solutions Consulting; some federal government work, he said, is done
    only in the United States and Britain, and "we're not going to move
    that anywhere." But E.D.S. insists that its standards are high enough
    that its outsourcing sites offer "a more secure environment than you
    can provide yourself."

    Some programmers, however, argue that reviews are less thorough than
    companies say. "If code runs, I assure you, nobody ever looks at it,"
    said one, who said conducting a line-by-line review would be like
    having an electrician tear into walls to check wiring even though the
    lights were working. "It never gets done in practice."

    Mr. Ehrenreich, the crime consultant, said that it was up to companies
    to demand that kind of security, even if it cost more. He recalled a
    case in which he was asked to investigate the possibility of illegal
    activity on an Indian outsourcing contract and discovered that it was
    nothing more than run-of-the-mill overbilling fraud.

    What struck him, however, was that the company had no idea how big the
    problem was. He said far-worse crimes could have been committed
    without anyone's knowing. "The risk was there that more could have
    been done," he said. "They clearly did not have the controls in place
    to mitigate it, control it."

    "You can outsource the work," he said, "but you can't outsource the

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