Tech Industry

Indian police make arrests in outsourcing fraud

Financial scam involving Indian call center workers raises security concerns about outsourcing work overseas.

NEW DELHI, India--Police have arrested former employees of an Indian call center that handles U.S. customer accounts for allegedly stealing consumers' funds.

The suspected gang members arrested by police in Pune included three ex-workers of Mphasis BPO.

Police said the employees allegedly stole customers' personal account information and transferred around $350,000 to fake accounts in Pune. Sanjay Jadhav, the assistant commissioner of police, said about $23,000 (1 million Indian rupees) of the fraud money has already been recovered. The call center workers left their jobs last December.

"The detection systems worked, and there was swift, coordinated information exchange between the affected parties," an Mphasis representative told CNET from Mumbai. "We are in close contact with the police and are working with them in their efforts towards law enforcement."

Security issues have been a growing concern for companies that outsource work overseas. In particular, companies have become concerned about the leakage and misuse of consumers' personal financial information in offshore call centers. The National Association of Software and Service Companies, an Indian trade group, has set up an Indo-U.S. security forum to make its members aware of security and privacy issues when they handle sensitive information from foreign companies.

"India is fast becoming the outsourcing capital of the world, and this kind of incident, while unfortunate in itself, when successfully dealt with highlights and reaffirms the existence of an effective framework of laws and a commitment to enforcing them in India," Nasscom President Kiran Karnik said in a statement.

Nasscom recently launched a security initiative in Pune with local IT companies and police.

"Distressing as this incident has been, it is a sad but realistic fact that no system can be 100 percent foolproof. The deterrence of prompt action is, therefore, critical," Karnik noted. "In this context, the proactive efficiency and the prompt success of the police reinforces the reputation of India as a country with a strong legal and enforcement framework."