C. Warren Axelrod

IT and Infosec Insourcing: Could You Do It If You Wanted To?

There was an article by Timothy Aeppel on the front page of the June 13, 2008 issue of The Wall Street Journal with the title “Stung by Soaring Transport Cost, Factories Bring Jobs Home Again” (subscription required). The article is about manufacturers bringing back some of their production from China to domestic plants because the rapidly increasing costs of shipping, labor and raw materials exceeded cost savings. A company president related that his company was fortunate to have held on to its manufacturing machinery, saying: “What looked like an albatross a year and a half ago … today looks like a pretty good asset.”

There is an analogy with IT and information security outsourcing. The rationale is not based upon transportation – indeed the cost of electronic message transmissions is going down, not up. No, it is the high inflation, particularly in the compensation of technical and operational staff in countries such as India, which is beginning to shift the balance. But if the economics tips in favor of bringing back IT and business processes and their commensurate security onshore, would we be as fortunate as the manufacturer in still having individuals with the requisite skills and experience to do the task? Or have we already rid ourselves of these former albatrosses.

There are several issues in this regard, many of which I address in my book Outsourcing Information Security. Let me repeat some of them here. They are:

  • Retaining the appropriate staff to oversee the outsourcing relationship
  • Including an exit (or extrication) strategy in the service agreement, and
  • Having in place a dynamic examination process, which regularly evaluates all outsourcing arrangements from a cost-benefit perspective

I also discuss risks related to planned changes, which include outsourcing and insourcing, in an earlier column, Security and Change (pt. 3) – White Knights.

You can overcome aspects of the above areas after the fact, but it can be considerably less expensive if you anticipate the ending of relationships and potential insourcing when you are negotiating the service agreement.

Let’s look at each of these factors in more detail.

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