Outsourcing

(2nd ed 2005) Outsourcing to India. ISBN 354023943X. March 2005 also saw Microsoft partner with the Australian government to teach law enforcement officials how to combat various cyber crimes, including phishing.^[20]. 2004. Microsoft hope to use these lawsuits to uncover some of the largest phishing operators. Mark Kobayashi-Hillary. The lawsuits accuse "John Doe" defendants of using various methods to obtain passwords and confidential information. Outsourcing departments like Accounts, Payroll and Procurement is now common practice, as seen in August 2005 at the University of Portsmouth. District Court for the Western District of Washington.

It is argued a malicious implementation of the Higher Education Role Analysis (HERA) in the UK may force Higher Education administrative and support staff to prematurely retire or seek for new employment in other organisations, thus freeing of staff many departments which could then be effectively outsourced. On March 31, 2005, Microsoft filed 117 federal lawsuits in the U.S. presidential candidate John Kerry blasted firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of US taxes during his unsuccessful 2004 campaign, calling such firms "Benedict Arnold corporations," in reference to the infamous traitor Benedict Arnold. Microsoft has also joined the effort to crack down on phishing. Democratic U.S. The federal anti-phishing bill proposes that those criminals who create fake web sites and spam bogus emails in order to defraud consumers could receive a fine up to $250,000 and receive jail terms of up to five years.^[19]. That database contains personal and work-related information, enabling employers to verify a staff member's credentials and allowing police to track the background of workers. In the United States, Democrat Senator Patrick Leahy introduced the Anti-Phishing Act of 2005 on March 1, 2005.

NASSCOM, which is a forum of IT and ITeS companies, has attempted to address these fraud concerns in India by creating the National Skills Registry. UK authorities jailed two men in June 2005 for their role in a phishing scam ^[17], in a case connected to the USSS Operation Firewall, which targeted notorious "carder" websites ^[18]. Intel would not put up with such fraud. Likewise, authorities later arrested a phishing kingpin, Valdir Paulo de Almeida, for leading one of the largest phishing crime rings, which in 2 years stole between $18 and $37 million USD ^[16]. The report concluded that fraudulent practises such as "faking bills to claim your allowances like conveyance [and] drivers’ salaries" were some common malpractices in India. In late March 2005, a 24-year-old Estonian man was arrested for using a backdoor, installed after victims visited his fake website, which included a keylogger that allowed him to monitor users' typing ^[15]. The firings followed from Intel's internal Business Practice Excellence programme of expenses claims. by tracing and arresting phishers.

In 2005, Intel discovered and fired 250 Indian employees after they faked their expense reports. Europe and Brazil have both followed the lead of the U.S. Outright fraud is also a concern. The defendant, a Californian teenager, allegedly created and used a webpage designed to look like the America Online website, so that he could steal credit card numbers^[14]. (See the full report.). On January 26, 2004, the FTC (Federal Trade Commission) filed the first lawsuit against a suspected phisher. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank. The Anti-Phishing Working Group, an industry and law enforcement association, has suggested that conventional phishing techniques could become obsolete in the future as people are increasingly aware of the social engineering techniques used by phishers.^[13] They propose that pharming and other uses of malware will become more common tools for stealing information.

In April of 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when Indian call center workers in Pune, India, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Several companies offer banks and other entities likely to suffer from phishing scams 24/7 services of monitoring, analyzing and taking down phishing websites by legal means. There are also security issues concerning companies giving outside access to sensitive customer information. This (and other forms of two-way authentication and two-factor authentication) are still susceptible to attack, such as that suffered by Scandinavian bank Nordea in late 2005^[12]. With these traditionally "safe" jobs perceived to be endangered, this raises questions regarding whether origin countries can maintain any comparative advantage given the losses in both low and high-value jobs. Sites have also added verification tools that allow users to see a secret image that the user selected in advance; if the image does not appear, then the site is not legitimate^[11]. Proportions of workers trained for Science, Technology, Engineering, and Mathematics (STEM) fields fields in developing nations are viewed to outstrip traditional technology leaders such as the U.S. Many organizations have introduced a feature called challenge questions, which ask the user for information that should be known only to the user and the bank.

There is also little incentive given that the jobs in their new field could also be outsourced as well. Spam filters also help protect users from phishers, because they reduce the number of phishing-related emails that users receive. Retraining to their current level in another field may not be an option due to years of study and cost of education involved. The programs work by identifying phishing contents on websites and emails; anti-phishing software may be integrated with web browsers and email clients as a toolbar that displays the real domain name for the visiting website. However, some of these workers are already highly educated and already possess a bachelor's and master's degree. Several anti-phishing software programs are available. One solution often offered is retraining of domestic workers to new jobs. Many companies, including eBay and PayPal, always address their customers by their username in emails, so if an email addresses a user in a generic fashion ("Dear valued eBay member") it is likely to be an attempt at phishing.

Policy solutions to outsourcing are also criticized. A user who is contacted about an account needing to be "verified" could either contact the company that is the subject of the email, or could type in a trusted web address for the company's website into the address bar of their browser, to bypass the link in the suspected phishing message. Dealing with lackluster outsourced service is a negative surprise after the money is already spent. In a June 2004 experiment with spear phishing, 80% of 500 West Point cadets who were sent a fake email were tricked into revealing personal information.^[10]. Customers only experience outsourced service and support after they have spent their money since sales is generally done in-house by the original company. One newer phishing tactic, which uses phishing emails targeted at a specific company, known as spear phishing, has been harnessed to train users at various locations, including West Point Military Academy. However, service and support are often not considered by customers as part of their original purchases. One strategy for combating phishing is to train users how to deal with phishing attempts.

Defenders of outsourcing say if this were true, then companies would experience market forces compelling them to return service and support handling back from the outsourced company. There are several different techniques to combat phishing, including legislation and technology created specifically to target phishing. Criticism of outsourcing from the public and media sometimes tend to concentrate on lackluster customer service and technical support being provided by either local workers who are not actually employees of the company, or by overseas workers attempting to communicate with Americans in broken or incomprehensible English. In March 2005, the amount of money lost in the UK was approximately £12 million GBP.^[9]. Thus, outsourcing is criticized as it represents a new threat to labor, contributing to rampant worker insecurity, and reflective of the general process of globalization where the United States government fails to mediate business-labor relations in a way conducive to prevailing values that places the American middle class worker as a central priority. businesses lose an estimated $2 billion USD a year as their clients become victims.^[8] The United Kingdom also suffers from the immense increase in phishing. Outsourcing appears to work contrary to the claim that “free trade” will create the “jobs of tomorrow” in America when high-tech or high paying white collar jobs are transferred to or created in foreign countries. U.S.

This is especially true for high-tech workers who were promised the “jobs of tomorrow”- a phrase Bill Clinton iterated in 1994 to justify his conservative position on NAFTA. It is estimated that between May 2004 and May 2005, approximately 1.2 million computer users in the United States suffered losses caused by phishing, totaling approximately $929 million USD. Outsourcing appears to threaten the livelihood of domestic workers and the American Dream. Once this information is acquired, the phishers may use a person's details to create fake accounts in a victim's name, ruin a victim's credit, or even prevent victims from accessing their own accounts. The poll of over 1,000 Americans was conducted in August 2004 (See Zogby International survey results online at zogby.com). This style of identity theft is becoming more popular, because of the ease with which unsuspecting people often divulge personal information to phishers, including credit card numbers and social security numbers. A Zogby International poll reports that 71% of American voters believe that “outsourcing jobs overseas” hurts the economy and another 62% believe that the US government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. The damage caused by phishing ranges from loss of access to email to substantial financial loss.

Criticism of outsourcing, from the perspective of US citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. Despite the publicity surrounding the flaw, known as IDN spoofing^[6] or a homograph attack^[7], no known phishing attacks have yet taken advantage of it. This debate did not center on problems of declining quality of customer services but on the threat to US jobs and work. A further problem with URLs has been found in the handling of Internationalized domain names (IDN) in web browsers, that might allow visually identical web addresses to lead to different, possibly malicious, websites. The 2004 US presidential election race focused on outsourcing to some degree. In this attack method (known as Cross Site Scripting) users may receive a message saying that they have to "verify" their account, by following a link to what appears to be an authentic website; in reality, the link is crafted to carry out this attack, although it is very difficult to spot without specialist knowledge. It has been therefore argued that quality levels of customer service and technical support of outsourced tasks are lower than where they have remained 'in-house'. These types of attacks are particularly problematic, because they direct the user to sign in at their bank or service's own web pages, where everything from the web address to the security certificates appears correct.

Because "outsourced" workers are not actually paid agents of the company, it has been argued that there is less incentive for the agent to show loyalty or work ethic in its representation of said company. In another popular method of phishing, an attacker uses a bank or service's own scripts against the victim. In December 2005, nearly 50 people were indicted in connection with a scheme that bilked at least $200,000 from Katrina relief fund at Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims. This is done either by placing a picture of the legitimate entity's URL over the address bar, or by closing the original address bar and opening a new one containing the legitimate URL. (See the full story.). Some phishing scams use javascript commands in order to obfuscate the address bar. For example, 40 million credit card numbers were stolen in June 2005 at CardSystems Solutions in Tucson, Arizona. This method has since been closed off in the Mozilla^[4] and Internet Explorer^[5] web browsers, while Opera provides a warning message and the option not to follow the link.

Advocates of outsourcing also claim that outsourcing-related fraud is insignificant, averring that such malpractices can occur in any country. For example, the link http://www.google.com@members.tripod.com/ may deceive a casual observer into believing that the link will open a page on www.google.com, whereas the link actually directs the browser to a page on members.tripod.com, using a username of www.google.com; were there no such user, the page would open normally. ^[3]. One other method of spoofing links used web addresses containing the @ symbol, which were used to include a username and password in a web URL (contrary to the standard^[3]). Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. Misspelled URLs or the use of subdomains are common tricks used by phishers, such as this example URL, http://www.yourbank.com.example.com/. ^[3] Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. Most methods of phishing use some form of technical deception designed to make a link in an email appear to belong to the spoofed organization.

Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. In this second example, targeted at SouthTrust Bank users, the phisher has used an image to make it harder for anti-phishing scanners to detect by scanning for text commonly used in phishing emails. That in turn makes us all richer.” ^[2]. In an example PayPal phish (right), spelling mistakes in the email ("no choise but to temporaly suspend your account"), and the presence of an IP address in the link visible in the tooltip under the yellow box ("Click here to verify your account") are both clues that this is a phishing attempt. ‘Creative destruction’ is a discovery process where we find ways to produce goods and services more cheaply. In general such targeted versions of phishing have been termed spear phishing. The automobile cost the jobs of people who took care of horses or made saddles, carriages, and horseshoes.” ^[1] Walter Williams, another economist, said “we could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past--jobs such as elevator operator, TV repairman and coal deliveryman. While the first such examples were sent indiscriminately in the hope of finding a customer of a given bank or service, recent research has shown that phishers may in principle be able to establish what bank a potential victim has a relationship with, and then send an appropriate spoofed email to this victim^[2].

Economist Thomas Sowell from the University of Chicago said “anything that increases economic efficiency--whether by outsourcing or a hundred other things--is likely to cost somebody's job. More recent phishing attempts have started to target the customers of banks and online payment services. Because outsourcing allows for lower costs, even if quality reduces slightly or not at all, productivity increases, which benefits the economy on aggregate. The shutting down of the warez scene on AOL caused most phishers to leave the service, and many phishers — often young teens in their heyday — grew out of the habit. the firm is trying to maximize the quality of its product given cost (its productivity). Phishers temporarily moved to AOL Instant Messenger (AIM), since they could not be banned from the AIM server. A firm's motivation for replacing workers with machines is identical to the motivation for outsourcing, i.e. AOL simultaneously developed a system to quickly deactivate any account involved in phishing, often before their phishes (a term for the victims of a "phish") could respond.

Some economists suggest that government training programs be provided. Around the same time phishing was so prevalent on AOL that they added a line on all instant messages stating, "no one working at AOL will ask for your password or billing information". However, economists do concede that labor is not always perfectly mobile and that some workers may have difficulty getting new jobs. In 1997, AOL's policy enforcement with respect to phishing and warez became stricter and forced pirated software off AOL servers. Some argue that greater profits to the labor owners lead to higher consumption, which leads to further job creation, allowing those who lost jobs to gain jobs in other sectors of the economy. Both phishing and warezing on AOL generally required custom-written programs, such as the colorfully named AOHell. Although workers’ jobs were lost from this replacement of workers with machines, the Ford Motor Company made more money by lowering costs (or increasing quality, thereby increasing revenue). Once the victim had submitted his or her password, the attacker could then access the victim's account and use it for various criminal purposes, such as spamming.

Economists argue that machines on the car assembly line must have a higher quality to cost ratio than workers because, if they didn’t, there would be no incentive for the firm to replace workers with machines. In order to lure the victim into giving up sensitive information the message might include text such as "verify your account" or "confirm billing information". Today these workers are replaced by machines because they are cheaper in the long run, produce better quality products, or a combination of both (the firm is trying to increase its quality to cost ratio, quality being defined by the consumer and inferred from revenue). A cracker might pose as an AOL staff member and send an instant message to a potential victim, asking the victim to reveal his or her password^[1]. American Motor Company Ford relied heavily on workers in the past to assemble car parts. Phishing on AOL was closely associated with the warez community that exchanged pirated software. Some economists have argued that outsourcing is a form of technological innovation analogous to machines on a car assembly line. AOL eventually brought in measures in late 1995 to prevent this, so early AOL crackers resorted to phishing for legitimate AOL accounts.

That many large businesses outsource and continue to outsource suggests that in many cases outsourcing is successful in that it increases product quality, lowers costs substantially, or both. Those who would later phish on AOL during the 1990s originally created accounts on AOL with fake, algorithmically generated credit card numbers — these accounts could last weeks or even months until new ones were required. Proponents of outsourcing believe that arguing that outsourcing leads to lower product quality is pointless because if it were true, consumer demand will force firms to shift back to producing the good or service in-firm rather than out-firm. The term phishing was coined by crackers attempting to "fish" for accounts from unsuspecting AOL members; ph is a common hacker replacement for f, and is a nod to an older form of hacking known as "phone phreaking.". If the company does it correctly, it benefits from higher profits. The first recorded mention of phishing is on the alt.2600 hacker newsgroup in January 1996, although the term may have appeared even earlier in the printed edition of the hacker newsletter "2600 Magazine". The decision to outsource is like the decision to expand a business overseas, to incorporate computer technology, or to hire new workers. .

Critics of outsourcing often talk about outsourcing failures without mentioning instances of outsourcing success. Attempts include legislation, user training, and technical measures. The decision to outsource is like any other business investment decision in that there is risk. With the growing number of reported phishing incidents, additional methods of protection are needed. In fact, many American companies like Dell have moved customer service divisions back to America as a result of poor quality ^[2]. The term phishing arises from the use of increasingly sophisticated lures to "fish" for users' financial information and passwords. But the outsourcing firm has freedom to move a firm department or division back home if its profits are suffering as a result of poor quality. In computing, phishing is a form of social engineering, characterized by attempts to fraudulently acquire sensitive information, such as passwords and credit card details, by masquerading as a trustworthy person or business in an apparently official electronic communication, such as an email or an instant message.

One criticism of outsourcing is that product quality suffers. ^[1]. A recent poll of economists by the Wall Street Journal found that only 16 % of them saw outsourcing as having a significant impact on the overall job picture. "Offshoring”, on the other hand, represents a relocation of an organizational function to a foreign country, not necessarily a transformation of internal organizational control.

In short, “outsourcing” means sharing organizational control with another organization, or a process of establishing network relations within an organizational field. “Offshoring”, in contrast, represents the transfer of an organizational function to another country, regardless of whether the work stays in the corporation or not. When this third party is located in another country the term “offshore outsourcing” makes more sense. To be consistent, “outsourcing”, in corporate context, represents an organizational practice that involves the transfer of an organizational function to a third party.

Note that “outsourcing”, “offshore outsourcing” and “offshoring” are used interchangeably in public discourse despite important technical differences. In some cases, the agents are not allowed to even give out their real name. The agents were often not able to tell the customer they did not actually directly work for the original manufacturer. These agents generally worked in call centers where the information needed to assist the calling customer was indexed in a computer system.

In some cases these companies hired technical writers to simplify the usage instructions of their products, index the key points of information and contracted with temporary employment agencies to find, train and hire generally low-skilled workers to answer their telephone technical support and customer service calls. The term "outsourcing" became more well known largely because of a growth in the number of high-tech companies in the early 1990s that were often not large enough to be able to easily maintain large customer service departments of their own. This usually involves continued direct or indirect management and decision-making by the client of the out-tasking business. A related term is out-tasking: turning over a narrowly-defined segment of business to another business, typically on an annual contract, or sometimes a shorter one.

Many companies, most notably Dell and AT&T Wireless, have gained significant negative publicity for their decisions to use non-US labor for customer service and technical support; one of the most prominent complaints being the expectation that the replacement staff will have more trouble communicating with customers. Due to this demand call centers have sprung up in Canada, China, Eastern Europe, India, Israel, Ireland, Pakistan, Philippines and even the Caribbean. The logical extension of these decisions was of outsourcing labor overseas to countries with lower labor costs, this trend is often referred to as offshoring of customer service. The overhead costs of customer service are typically less where outsourcing has been used, leading to many companies, from utilities to manufacturers, closing their in-house customer relations departments and outsourcing their customer service to third party call centers.

Outsourcing business is characterized by expertise not inherent to the core of the client organization. Many companies also outsource customer support and call center functions, manufacturing and engineering. Business segments typically outsourced include Information Technology, Human Resources, Facilities and Real Estate Management and Accounting. Many companies look to employ expert organizations in the areas targeted for outsourcing.

In theory, this business segment should not be mission-critical, but practice often dictates otherwise. Organizations that deliver such services feel that outsourcing requires the turning over of management responsibility for running a segment of business. Outsourcing always involves a considerable degree of two-way information exchange, co-ordination, and trust. Likewise, buying services from a provider is not necessarily outsourcing or out-tasking.

Buying products from another entity is not outsourcing or out-tasking, but merely a vendor relationship. Outsourcing and/or out-tasking involve transferring a significant amount of management control to the supplier. Outsourcing is defined as the management and/or day-to-day execution of an entire business function by a third party service provider. .

EDS was the first company to establish the outsourcing business. Outsourcing became a popular buzzword in business and management in the 1990s. Offshoring is similar to outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country. A related term, offshoring, means transferring work to another country, typically overseas.

Outsourcing is a business decision that is often made to lower costs or focus on core competences. Outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specializes in that operation. ^  "Outsourcing is the Kool" (kOOL PEOPLE). 3.

^  Should we “Save Jobs”? by Walter Williams. 2. ^  “Outsourcing” and “Saving Jobs” by Thomas Sowell. 1.

Universities in the European Union granted 40 % more science and engineering doctorates than the United States, with that figure expected to reach nearly 100 % by about 2010 according to Freeman's paper. were in science and engineering compared with a world average of 27 % and 52 % in China. He found that in the year 2000, 17 % of university bachelor degrees in the U.S. ^  This view is borne out by a recent study by Richard Freeman at the National Bureau of Economic Research in Washington.