Database concepts and fundamentals

¶ … companies such as credit card systems have their backend offices (databases) in India. What are the benefits and risks?

The databasing industry in India is a growing and thriving IT market with credit care companies including Diners Club and Citibank storing their client and potential client information in Indian databases (Vandrevala 15). Clearly, there are extensive benefits from databasing this information offshore. The costs in India are much cheaper, to both develop and maintain complex databases, saving the company finances and labor. In addition, the copyright laws in India have been modified to protect the data, and maintaining ownership of the parent company, rather than the IT company providing services in India. This was a major hurdle to widespread databasing in India, and when the laws were changed, more companies such as credit card companies took advantage of the lower costs in India, and moved their databases offshore. Moreover, the IT industry is burgeoning in India, and as more companies provide IT services, costs will continue to reduce, while efficiency will continue to grow. Many Indian data entry operators are known for their competence and proficient entry skills (Vandrevala 17). The benefits to IT outsourcing in India are many, but there are also risks.

Perhaps the biggest risk is the insecurity of data in Indian databases, and data leakage. Security and precautions tend not to be as high in offshore operations, and there is danger of crucial customer information being sold or stolen for personal gain. Since the financial records of credit card clients are at stake, security must be at a premium, and some Indian companies have fallen down in that regard. In addition, the international copyright laws were insufficient to provide ownership of the data to American companies, and India had to update the laws in order to placate foreign companies. Working with the European Union (EU), many laws have been amended, but there are still some issues to work out, including the length of the ownership, and what (if any) rights the database producers have. Clearly, there are great benefits and great risks involved in the Indian databasing industry, but as American companies continue to worry about bottom line finances, it seems clear more companies will move their databases to India to cut costs and increase efficiency.