Security and privacy considerations
Last, but not least, are the changing security and privacy aspects of third-party relationships. Those very same threats, such as disgruntled employees, also exist inside the outsourcer to some degree when customers transfer from one service provider to another or switch from outsourcing to an in-house operation.
For example, financial regulators are putting increasing emphasis on the need for financial institutions to not only monitor primary service providers but also monitor and account for subcontractors. With each stage of the chain, security and privacy concerns must be addressed under increasingly difficult circumstances. Not only must the institution oversee primary vendors but also ensure that primary vendors are suitably monitoring and controlling the security and privacy postures of one or more levels of subcontracting. I happen to be aware of an upcoming publication, sponsored by financial services organizations, which will address these very same points. I’ll let you know where to find it when it comes out.
Conclusion
Changing situations can lead to opportunities to change the relationships with outsourcers thereby reducing costs and increasing effectiveness. However, poor planning and inadequate contractual arrangements can preclude a firm from realizing the advantages of such changes or greatly increase the cost of doing so. Organizations need to anticipate these changes and plan accordingly.
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