Experts See Vulnerability as Outsiders Code Software

[InfoSec News <isn () c4i org>]

http://www.nytimes.com/2003/01/06/technology/06OUTS.html

By JOHN SCHWARTZ
January 6, 2003   
 
As American companies increasingly move their software development 
tasks out of their own offices to computer programming companies here 
and abroad, new concerns are being raised about the security risks 
involved.

Some of these concerns over the practice, known as outsourcing, are 
being raised by people with an obvious self-interest — for example, 
programmers who have seen their livelihoods shift to less expensive 
operations overseas. And the companies providing outsourcing services 
argue that they take all necessary precautions to limit risk. But the 
question of whether the booming business in exporting high-tech jobs 
is heightening the risk of theft, sabotage or cyberterrorism from 
rogue programmers has been raised in discussions at the White House, 
before Congress and in boardrooms.

"I can't cite any examples of this happening — but what that means is 
we haven't found any," said James Lewis, director of the technology 
program at the Center for Strategic and International Studies in 
Washington. "It's clearly a temptation for people, and it's a 
concern," he said.

While operations in some countries, like the United States, Britain 
and India, are considered generally safe for such software 
outsourcing, nervousness is beginning to grow at companies and in the 
government about the possibility of abuse by hackers, organized crime 
agents and cyberterrorists in nations like Pakistan, the Philippines 
and Russia.

To Mr. Lewis, the potential for problems in the software design 
process goes beyond the earlier trend of running back-office 
operations and call centers in other countries.

"The banks have done a fairly good job of insulating themselves," he 
said, keeping their call centers overseas from being able to engage in 
unwanted activity. But letting outsiders work on the software that 
runs businesses and financial institutions could be opening up a world 
of trouble, he said. "You're going to have code that will be written 
in countries like India and China," he explained, "and no one's going 
to know what's in it."

David McCurdy, a former congressman and executive director of the 
Internet Security Alliance, an industry group, said that although he 
considered himself a "free trader" with a strong belief in the 
benefits of global commerce, he believed that the risk from offshore 
outsourcing was "the most serious of the industry-based issues that 
this country faces."

The issue has been discussed quietly at the highest levels of 
government, said Howard Schmidt, vice chairman of the president's 
critical infrastructure protection board. At the White House, he said, 
"this has come up as part of a broader discussion of how do we get 
trust and reliability" in computer systems.

He said, however, that the issue was outsourcing itself, not simply 
the overseas kind, and cited spies like Aldrich H. Ames and Robert 
Hanssen as examples of how Americans could do just as much damage to 
the nation from within as outsiders could. "Irrespective of where it's 
done, we need to make sure that our code is clean and protected across 
the board," he said.

It is easy to see why companies find the economics of outsourcing 
compelling; cost savings can be 25 to 40 percent. Forrester Research 
of Cambridge, Mass., predicted in a recent report that the 
acceleration in outsourcing would result in 3.3 million American jobs' 
moving offshore by 2015, an exodus reminiscent of the tide of American 
blue-collar jobs that moved to East Asia in the 1980's. Forrester 
estimates that 70 percent of these jobs will move to India, 20 percent 
to the Philippines and 10 percent to China.

Patrick P. Gelsinger, the chief technology officer of Intel, said the 
cost of one engineer in the United States would pay for the services 
of three Indians, four Chinese or five Russians. But he said he was 
not concerned about the potential for mischief within his own 
company's overseas software development. The software is reviewed, he 
said, to avoid surprises.

"Is it possible?" he said. "Sure, it's possible. Is it a unique risk 
there? No, it isn't." 

Offshore outsourcing got its trial run in preparations for the Year 
2000 changeover, when government and industry had to check every line 
of software for glitches that could make computer networks and even 
building security systems shut down at 12 a.m. on Jan. 1, 2000. 

Much of that work was done overseas, and although industry experts 
warned that foreign programmers might commit crimes or lay the 
groundwork for terrorism, no evidence of sabotage occurred, said Jay 
Ehrenreich, senior manager for cybercrime prevention and response at 
PricewaterhouseCoopers, the consulting firm. After that experience, he 
said, many companies felt comfortable sending software work overseas, 
and now such bespoke programming is done around the world.

Programmers say the confidence is not justified. 

"Anyone tells you that `offshoring' computer systems does not put the 
infrastructure at risk is lying," said Ken O'Neil, a programmer who 
lives on Long Island. He and other programmers talk of "sleeper bugs" 
that could be set to go off at a later date, or back doors that would 
let intruders in to shuttle money around, steal fractions of a penny 
from millions of transactions or shut down the system entirely. They 
warn of risks from political instability, organized crime and terror 
cells, and even from governments that might demand the ability to spy.

Such talk could be dismissed as the grumblings of disgruntled 
white-collar workers who have seen their high-paying jobs move 
elsewhere. "Nobody is going to cry for people who make $75,000 or 
$100,000 a year," said Marc Alan Fink, who lost his programming job 
more than a year ago.

In fact, some of the newly expressed concern is part of a long-running 
and acrimonious fight by programmers to hold on to their jobs in the 
face of relaxed immigration standards for technical workers and 
increased outsourcing. They attack the rise in special visas for 
immigrant engineers, known as H1-B visas, and the trend toward sending 
jobs overseas.

The companies that provide software outsourcing services say that they 
take rigorous precautions to ensure that their employees are 
trustworthy and their code is secure. 

Arup Gupta, president of Tata Consultancy Services, an Indian company 
that is part of a conglomerate, said he had gotten worried calls from 
clients after the recent F.B.I. raid on Ptech, a software company in 
Quincy, Mass. The agents were looking for connections between the 
company and Yasin al-Qadi, a Saudi Arabian financier suspected of 
financing terrorism, but early speculation in news reports focused on 
questions about whether the company, which provides software used by 
many government agencies, including the F.B.I., was secure.

Mr. Gupta assured his clients that his company used exacting 
background checks and multiple reviews of company-written software 
based on industry standards. "With all these in place, we can 
guarantee, basically, that the code we deliver will be bug-free and 
will perform to specifications and will not have holes in it," he 
said. 

He said he could speak for only his own company, but he added that 
since the Sept. 11 attacks, security fears and economic troubles had 
shrunk his industry and brought about the consolidation of the major 
Indian software houses. "The top five or six companies, you can be 
assured that they are conforming to these standards," he said. "The 
others, you cannot be sure — but maybe they are."

United States technology services companies are also expanding their 
overseas outsourcing offerings. Electronic Data Systems provides 
outsourcing services in 93 "solution centers" that it has opened 
around the world since 1990. Paul D. Clark, the chief information 
security and privacy executive for the company, said E.D.S. understood 
that the threat of sabotage in outsourcing is real. He said, "To say 
that it isn't is to deny the realities." That is why the company 
adheres to security and testing standards wherever code is written, he 
said, adding, "whether it's India or Indiana, it doesn't make any 
difference." 

The company is careful about what code it releases to which countries, 
said Dan Zadorozny, president of application services for EDS 
Solutions Consulting; some federal government work, he said, is done 
only in the United States and Britain, and "we're not going to move 
that anywhere." But E.D.S. insists that its standards are high enough 
that its outsourcing sites offer "a more secure environment than you 
can provide yourself."

Some programmers, however, argue that reviews are less thorough than 
companies say. "If code runs, I assure you, nobody ever looks at it," 
said one, who said conducting a line-by-line review would be like 
having an electrician tear into walls to check wiring even though the 
lights were working. "It never gets done in practice."

Mr. Ehrenreich, the crime consultant, said that it was up to companies 
to demand that kind of security, even if it cost more. He recalled a 
case in which he was asked to investigate the possibility of illegal 
activity on an Indian outsourcing contract and discovered that it was 
nothing more than run-of-the-mill overbilling fraud. 

What struck him, however, was that the company had no idea how big the 
problem was. He said far-worse crimes could have been committed 
without anyone's knowing. "The risk was there that more could have 
been done," he said. "They clearly did not have the controls in place 
to mitigate it, control it."

"You can outsource the work," he said, "but you can't outsource the 
risk."




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