American companies have always had to worry about their overseas facilitiesbeing red, white and blue bull’s-eyes for terrorists, but now their offshoringpartners may be in the crosshairs of subversives, too.
A reported raid last Saturday by police in Delhi, India, in which three menwere killed and another arrested, uncovered plans to attack softwarecompanies in Bangalore, which has become a technology hub in the country.
The men targeted in the raid were reportedly members of the Laskhar-e-Toibagroup, or LeT, which is demanding independence for the Kashmir region ofnorthern India.
Infosys and Wipro, two large Indian high-tech companies, are located inBangalore, as are the facilities of some well-known American firms suchas Accenture, Hewlett-Packard, IBM, Intel, Microsoft, Motorola, TexasInstruments, America Online, Google and Yahoo.
According to Ira Winkler, a security analyst and author of Spies Among Us,published this month by John Wiley & Sons, U.S. companies havebeen concerned about their overseas facilitiesfor a long time. “Any symbol of America has been targeted and will betargeted,” he told TechNewsWorld.
“What makes this unusual is that this is the first time that this has beendetected in a large way proactively,” he added. “Usually, it’s detectedreactively.”
Located in the southern part of India, Bangalore has been considered as safe fromthe terrorist activity that has plagued the country’s northern and westernstates. “There’s always a risk that some group may decide to attack onwhatever grounds, but it has been a very safe area for most companies thathave operations there,” said Ton Heijmen, a senior advisor with the ConferenceBoard in New York City and author of the recently released report “ThinkingOffshoring Through: A Framework for Decision Makers.”
“If you talk to people who have operations in India,they’ll tell you you have to have physical security as well as datasecurity,” he said. “By and large, those security measures have proven to besuccessful.”
A company doesn’t have to be a target, though, to suffer from theconsequences of a terrorist attack, maintained Michel Leonard, chiefeconomist and head of political risk consulting for Aon Risk Management inNew York City.
“It is less likely that you will be affected directly by terrorism than youwill be by the side effects of terrorism,” he told TechNewsWorld.
Acts of terrorism, he explained, cause a lot ofbusiness disruption. “Whether or not you’re the victim of a terrorist act,you’re going to have to face those costs,” he said.
Moreover, he noted, there are forms of risk faced by companies doingbusiness in India that are greater to a company’s bottom line than anyterrorist act. Regulatory risk, for instance, can tie up a company’s assetsby limiting money transfers from a country. “That isn’t front page news liketerrorism, but it’s something companies operating call centers in India arefacing on a daily basis,” Leonard said.
Bigger Name, Bigger Threat
Aon Risk Management is part of Aon, the second largest insurance company inthe world, which last month released its annual political and economic riskmap of the world. That map rated India as a “medium risk” nation.
Leonard noted, though, that terrorism risks in India varied by region. “Ifyou’re in Kashmir, for example, your risk environment is very different fromother parts of the country,” he said.
He added that some global companies are more at risk from terrorist attacksthan others. “If you’re a Citigroup, you’re exposure is different than ifyou are a low name-recognition company,” he asserted.
Will more terrorists be targeting companies accepting offshoring businessfrom U.S. enterprises? “The only thing that you can expect to be differentin the future is that this will be detected more,” Winkler said. “This is anongoing thing.”
I agree with Mr. Mello that security situation in India is deteorating:
1) I think Foreign companies have to be extremely careful in India. With terrorism on the rise not just in Northern India and Maoist rebels in the State of Andhra Pradesh, the Indian metros are not being spared either. Americans should take extra precautions.
2) Wide-spread riots is also nothing new in India.
3) Some of the British Firms have reported having stolen credit card and other private information of users from their Indian facilities.