Nearshore Americas

NSA, Privacy and Social Media: New Set of Worries for Outsourcers

When it comes to government spying, civil rights advocates are usually concerned with the privacy of individuals, and business rarely gets involved. But the recent flood of information from the Edward Snowden leaks indicating widespread spying on the part of the National Security Agency (NSA) has raised concerns on the part of those businesses dependant on outsourcing, particularly when leveraging social media.

“News of the leaks has put the onus on enterprises and outsourcers alike to develop and effectively put forward their messaging to reassure customers of their data privacy and security when interacting with them on social networks,” says Margaret Goldberg, an Associate Analyst at Ovum, an independent analyst and consultancy firm. “That said, I don’t think it necessarily changes best practices when it comes to using social media as a CRM channel.”

Perhaps not, but Goldberg also points out that “best practices” in this space are continuing to evolve, with the very openness of the technology acting as a strength and a weakness.

“There is still some question around just what the best practices are, especially for the engagement piece,” she says. “But ultimately the biggest concern in terms of actual impact on security in social media are not governments with the intention of boosting their national security. The real data security concern comes from non-state actors with less than altruistic intentions.”

Research Indicates Customer Concern

Recent Ovum research has shown that the Internet-based programs from the NSA and the UK’s Government Communications Headquarters (GCHQ) have resulted in customer concerns regarding data privacy in online forums, including social media, with customers becoming less trusting and more skeptical of social networks.

This finding is buttressed by earlier Ovum data indicating that 75% of people online know that companies are mining their data, with 50% believing that companies are not being upfront about data collection and use. Almost two thirds, over 62%, said they would prevent their data from being collected if possible. And though younger people are more open to social media – something that supports the long term adoption trend – significant challenges exist within sensitive and highly regulated industries such as healthcare and financial services.

“Social media as a CRM channel is maturing to the point where parts of the BFSI (banking, financial services and insurance) and healthcare industries are risking more by not embracing social media than being on it,” says Goldberg. “They’re increasingly learning the lesson that first adopter industries figured out years ago: customers are talking about them on social media and you can either be part of the conversation and own it or miss out on opportunities to improve customer experience and drive business value.”

Golberg adds an important caveat, saying that while she has seen these verticals slowly become more active on social channels, they are significantly more inclined to take issues and inquiries out of channel and into webchat or voice. That said, the trend to social media, even in BFSI and healthcare, is in place and not going away.

“These are industries that have been and continue to be preoccupied with data privacy and security, as they should be,” says Goldberg. “But while the leaks further validate these concerns, it’s unlikely they will derail the trend toward embracing social media.”

Outsourcers’ Caution

Ovum expects that although the NSA leaks will not reverse any overall trends toward social media adoption by outsourcers, there will nonetheless be a “noisy group” who will want proof that customer service and resolution via social media do not involve a data or privacy breach. This puts the ball in the outsourcer’s court – as well as with any third party CRM provider – to make sure customer issues are addressed.

Goldberg sees this as presenting an opportunity for outsourcers “to demonstrate their understanding both of client brands and the external market and of the overall social media space,” adding that “they should step in to help from a consulting and strategic-planning angle.”

The risk is that the NSA story won’t go away, and that it will do additional damage to those outsourcers who are leveraging the cloud. Already, a PricewaterhouseCoopers survey has found that 22% of German companies see the risk of using cloud services as “very high,” up from 6% before the leak. And when combining respondents with “high” and “very high” the number rises to 54%.

A Wary Eye in Latin America

So far, the impact on business in Latin America has been negligible, though there could be risks coming to those companies based in a spying country’s of origin, and active in areas of government-sponsored industrial espionage. For example, Canada’s Communications Security Establishment (CSE), which has a similar mandate to the NSA, was exposed via the Snowden leaks as a major culprit with regard to industrial espionage in Brazil, which has since done damage to Canadian oil and gas interests. Brazil has also accused the NSA of spying on its national oil company, PETROBRAS, and the German magazine Der Speigal has reported that the NSA has conducting economic espionage in Mexico.

This is a whole new game, where nation states are not only spying for security purposes, but to gain competitive business advantage. In that context, an outsourcer resident in Latin America with clients across the region, as well as in the United States and Europe, cannot assume its networks won’t be tapped.

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Already, customers in Europe are responding. The PricewaterhouseCoopers survey revealed the risk placed on tech companies that are perceived to be exposed to national intelligence gathering initiatives: 15% of respondents said that they wanted to switch to European tech providers that won’t cooperate with American or British intelligence services.

“There are certainly some countries where negative reactions have been higher,” says Goldberg from Ovum. “It may sound obvious, but data security and privacy concerns are going to be particularly salient when dealing with any potentially sensitive information.”

And for big IT players that rely on privacy to secure their brand, like Google, Yahoo, and Amazon, news of an NSA spying operation could be bad for business. Eric Schmidt, Executive Chairman of Google, has come out swinging against the NSA, registering complaints with the Agency, President Barack Obama and members of Congress, saying that if true the allegations of NSA spying on Google servers would be “really outrageous”. Given that many outsourcers use third party cloud services delivered by tech giants like Google, his voice could become part of a chorus.

Tim Wilson

Tim has been a contributing analyst to Nearshore Americas since 2012. He is a former Research Analyst with IDC in Toronto and has over 20 years’ experience as a technology and business journalist, including extensive reporting from Latin America. A graduate of McGill University in Montreal, he has received numerous accolades for his writing, including a CBC Literary and a National Magazine award. He divides his time between Canada and Mexico. When not chasing down stories, he is busy writing the Detective Sánchez series of crime novels.

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