Face the Risks of Outsourcing: Guarantee Your Data Privacy

Outsourcing has become a very common practice for businesses of all kinds. But one very important downside to outsourcing is the security risks it might entail. Hiring a third-party provider can be quite daunting when it means sharing inside business information and data. It’s vital that you assess the risks of outsourcing and evaluate the potential providers. Here you’ll find a checklist of the most important things you can look for guaranteeing safe outsourcing.

data privacy and outsourcing security


What Is Outsourcing?

Every business has common “secondary” tasks that are not part of their main production process. Things like social media marketing, accounting, IT, web development are common tasks that many (if not most) companies have to go through, even if it’s not the main focus of their business. Companies can hire people to work in these areas, but depending on the task, it might mean a big investment in equipment, specialized workers, and even office space.

Outsourcing is a great option for companies looking to unburden themselves from these secondary tasks. In short, outsourcing consists of delegating secondary tasks to a third-party provider in order to focus all their energies and resources on their own product.

what is outsourcing infographic

According to Forbes, the best tasks to outsource are infrequent tasks that require highly specialized training. Most likely, this kind of task is not worth having an in-house specialist all the time.

Another great option for outsourcing are repetitive, menial tasks take time from your employees’ more important assignments. For example, PowerPoint presentation design. An average executive spends around 4 hours a week working on PowerPoint presentations. This might not sound as much, but it sums up to 188 hours a year -probably over $10,000! Outsourcing allows you to leave these tasks in hands of professionals that will be able to work on them better and allows you to focus on your own areas of expertise.

risks of outsourcing


The Risks of Outsourcing

But since it means employing a third-party provider, there are some very obvious risks that come with outsourcing. Outsourcing has become such popular business practice that you’ll find hundreds, if not thousands, for any possible service a third party can provide. In such a huge array of options, it might be difficult to decide not only what to outsource, but also how to pick a company to provide said services.

The risk of outsourcing is that, by definition, it implies sharing inside information of your business. For example, if you’re looking to outsource accounting, then you’ll definitely have to share financial information concerning your business with an outsider. Even something as simple as outsourcing presentation design might entail sharing sensible information on how is your company running and your production process.

According to Deloitte’s 2016 Global Outsourcing Survey, the cybersecurity outsourcing risks are considered very seriously by a high majority of companies that use outsourcing services (73%). However, as long as services and regulatory issues are actively and constantly being evaluated, most companies seem to agree that outsourcing benefits highly outrank these possible issues. Over 75% of companies that outsource are confident in the service providers to tackle these risks.


Outsourcing Security Checklist

So how to mitigate the risks of outsourcing? How to make sure you can trust your third-party provider with sensitive information? Unluckily, there’s no easy solution for that. If you’re planning to outsource, you must be willing to put some effort into researching potential companies and services. Only by putting some work into it, you’ll be able to evaluate if a company is really reliable and trustworthy.

This is no easy task, but consider that only you know what exact kind of services you’re looking for, and what security requirements it should cover. However, there are some basic general things that might be a good sign that an outsourcing company is reliable and that the risks of outsourcing are being taken care of.

risks of outsourcing


1. Data Security Policies

Being upfront with its data security policies is a good sign that a company takes the risks of outsourcing seriously. Especially if it is a service provider that will likely work with sensitive information! Acknowledging these dangers and having guidelines on how they deal with them show they are prepared to face them.

A security and privacy page is a great starting point to assess if an outsourcing service is trustworthy or not. Look for keywords like server security (in case it is a service provided online), data encryption, data ownership, and privacy policies. Look for confidentiality policies to make sure that any information you share will not be used without your explicit permission.

If you can’t find what you’re looking for, or can’t see a policy that you consider important when tackling the risks of outsourcing, ask! A trustworthy company should have a customer service prepared for answering security questions and to put your mind to ease.


2. Freelancers Policies

Freelancers are a great option for businesses looking for specific, occasional tasks to get done. From web designers to translators, hiring freelancers offers a whole world of possibilities. When hiring freelancers on your own, you’ll be able to negotiate the work transaction on your own. This includes making all the security requirements you may feel necessary. You’ll be able to determine their trustworthiness by yourself, and decide if you want their services or not.

However, many outsourcing companies rely on external freelancers, especially when the workload becomes too much for them. Working with companies that work only with in-house employees definitely lowers the risks of outsourcing. Their workers will have probably have the training and privacy policies they must comply with. But if they hire external freelancers, you’ll have no control over the security policies they’ve been given. While it’s unlikely that a company will let its image be damaged by subcontracting an external freelancer they don’t trust, it is still a good thing to look for if you’re concerned about outsourcing security.


3. Reviews

Finally, one of the easiest ways to find out if a company is trustworthy is through other users’ reviews. Websites like Trustpilot allow you to look up companies and businesses and read other users’ experiences. When looking for past reviews don’t look only for positive ones, but take extra care to also see what the most negative ones say. Things like communication issues and delays can happen occasionally. However, reviews complaining about security and data privacy issues are definitely a huge red flag. Take your time to go through the comments and evaluate yourself the risks of outsourcing with that specific company.

data security


Extra: Communication is key!

While this is not a safe outsourcing requirement, it can be a big help for ensuring a positive experience. When researching a company, it’s also a good idea to review their communication policies. What platform or channel they usually use for their clients? What is the normal response time? Their policies concerning customer satisfaction? If it’s a service, do you have to pay in advance? If it’s a product, what are the delivery options and prices? The more knowledge you have about how the service works, the easier it’ll be for you to pick something that really fits your needs.


Outsourcing is a great option for businesses of all kinds and sizes looking to unburden themselves from secondary tasks. However, it’s up to you to decide not only what you’re going to outsourcing, but how you’re going to face the challenges that inevitably arise with it. The risks of outsourcing are very real and must be taken into consideration. Hopefully, these tips will help you assess if a third-party provider is reliable and worth considering for safe outsourcing!


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