Security Breaches in IT

Interesting new item here-

http://www.consumeraffairs.com/news04/2007/09/ct_accenture.html

The state of Connecticut is suing technology consulting company Accenture over the loss of a data tape containing personal information on 58 taxpayers and nearly 460 state bank accounts.

"Accenture deserves censure -- to be held accountable for allowing valuable secret data to be stolen and putting at risk state taxpayers, bank accounts and purchasing cards," Blumenthal said.

"Transferring this data to Ohio is inexplicable and inexcusable," Blumenthal said. "Confidential information can have the value of cash -- especially in the wrong hands -- but Accenture treated it like scrap paper. Its breach of contract and negligence exposed state taxpayers to identity theft and other harm."

A $98 million contract to develop this payroll, inventory and accounting system ought to have been better monitored for security. Even with security measures that are robust and mature in place such as at most Indian or global IT giants' offshore delivery centers,occasional slip-ups such as the breach at MPhasis are a major concern for clients. Incidents such as the Accenture-Connecticut case point to such breaches even when the information is kept onshore; and call into question giving away contracts upwards of $5 million without ensuring necessary conditions against breach, such as the inadmissibility of storage devices in associates' laptops, policies against accessing client resources except under monitoring or in a 'time and material' billing without attached SLAs and so on.

Independence Day Insights (or Shadows of the Indian Economic Miracle)

I recently came across this article in the Telegraph (UK) about Phusi, a young girl whose poverty kept her from India's economic miracle and eventually led to her murder by her frustrated mother. This is from the prolific pen of Peter Foster (his blog here), the South Asia correspondent of the Telegraph.

When I started reading this I was happy to see the disclaimer that stories trump statistics- a phrase which I thought was meant to caution India and not beat it with. Phusi's story brought tears to my eyes and I grieved for those that in my country the economic resurgence had not touched- until I reached the middle of the article.

Then the author turned to statistics. When it comes to statistics the way he plays around with it is either deliberately misleading or being ignorant of facts. The 1.3 million people employed in the IT industry are direct employees of IT companies- this industry creates a hardware industry, a construction industry, administrative, clerical, managerial and unskilled-labour type jobs that are usually contracted out (I know because I work for an IT company). The IT industry also provides for market capitalization that allows groups like the Tatas to give away just a little equity and bring in billions of dollars to buy firms like Corus. The IT industry also spawns the growth of the airline industry meaning more construction work and several other service industry type work.

While it's true that Phusi couldn't have found work outside of education, we are seeing more and more jobs being funneled out of India's growth industries. The mistake the author makes- and he is not alone in this- is presuming that the $50 billion IT industry is all we are rooting for. IT is only a conduit for growth, an excuse to develop infrastructure if you will, and an example to others that we can do better. In each field- whether politics, defence, manufacturing, negotiating with China, whichever- we get better and better partly as a result of this confidence.

That said, I still grieve for Phusi. Her death was a crying shame and a stark reminder of human sin more than anything else. It was not simply a result of our fast and unequal economic progress (as Foster seems to imply) but clearly of parental neglect. Criminal and dangerous behaviour needs to take the blame for itself and not blame it on poverty or lack of opportunity. Do all impoverished people behave like this? Of course not! I do hope more insightful articles than this come up when covering her story.

Happy 60th independence day, India! You may have miles to go before you sleep, but let noone belittle your accomplishments on this glorious day!

Deconstructing Wipro

We've heard it before- complaints about Indian companies not making big ticket US acquisitions, excelling in infrastructure services but not going the whole hog by providing hosting, being too risk averse and India-centric, not being global enough to establish high end services locally in the US, Europe and Japan.

One wonders what to make of Wipro. Wipro's acquisition of Infocrossing for $600 million out of cash reserves of $750 million changes the paradigm. With the acquisition Wipro gets complementary services (hosting) through 5 US datacenters, 900 US employees and reasonably well known senior management from the US (who are also not originally Indian). Will this pay off? I hope so. This was after all Vivek Paul's dream for Wipro- to make it a $ 4 billion company by 2002- half of it coming in through acquisitions.

This is another positive fall-out of the rising Rupee. Time to buy. When and if the Rupee falls again it will pay off much more. Wipro is also not interested in restructuring its acquisitions. Which is why its talks with other big US companies to acquire them have not taken off. The 900 Infocrossing employees will remain on board. The 12 percent net margin is much smaller compared to Wipro's (mid 20s), but Wipro is planning to move a lot of existing work into the datacenters which are now run mid-capacity, a move which should improve their net margins substantially. All in all a satisfying acquisition. I hope Wipro and Infocrossing have the apetites to digest it.

India's Technology Numbers- Can Companies Help?

For a decade India has been meeting the need for outsourced information technology work. The numbers have been incredible. The top five companies have all grown at compounded annual rates of over 40 in the past six years. TCS, Infosys, Wipro, Cognizant, HCL and Satyam are billion plus companies. The recent quarter's earnings were well on track with the 40 percent growth rate continuing. All this amid reports that the talent may be in short supply. Is this true?

The alarm bells have been ringing for a year now, first from NASSCOM, then from the analysts and now the press. How does this measure up against the realities that I see when I go to India, so many bright young people who would still rather be employed at the good salaries that IT companies turn out? Infosys' Gopalakrishnan had mentioned in the press a month ago that it is not the dearth of people but the dearth of quality people that is a problem.

So many strategies have been put forward. The top companies have been building up development centers outside of India, in China, Eastern Europe and Latin America, thus strengthening numbers for multilingual development and support. They have also been developing centers in smaller towns in India such as Chandigarh, Cochin and Vizag. Wipro has been investing in the US, in lower cost regions such as Idaho and Virginia, establishing connects with local universities. True to their nature, the companies have been thinking and acting fast. This is commendable.

I do have a pet gripe, though. Though the IT companies have generally been socially conscious (especially their founders), I am disappointed at the low level of grassroots development they are fostering to improve the quality of educated young people in India. The Azim Premji foundation and the Infosys Foundation are initiatives aimed at basic education. This is noble indeed and arises from the philanthropic proclivities of their top managements. I strongly believe, though, that these companies would do well to invest in improving education at the university level from which they could tap into the resource pools. Nothing compels charity as direct returns, and I am more than a little disheartened to see very little of such nexus between the IT industry and the local education system.