Cybersecurity in Software Outsourcing – Protecting Your IP

In today’s world, data breaches and cyber threats loom over every organization like an impending storm.

High-profile hacks against companies like SolarWinds, Colonial Pipeline, and JBS meat producers reveal a sobering reality – no network is truly safe from a determined attacker. 

While cyberattacks against infrastructure and networks tend to dominate headlines, there is another domain at risk businesses are heavily relying upon software development outsourcing.

The Rush to Outsource Software Development

Outsourced software development exploded in popularity over the last few decades as businesses realized tremendous efficiency gains and cost savings.

The high availability of quality technology talent coupled with the connectivity enabled by the internet made outsourcing an enticing avenue to quickly expand development capabilities.

Software outsourcing took off in the 1990s as companies transitioned call centers and basic technical support overseas.

But over time, tasks grew increasingly complex – today over 85% of Fortune 500 companies rely on outsourced software and advanced IT services. Popular models include:

Onshore Outsourcing 

Onshore outsourcing describes partnering with third-party vendors located in the same country. This offers proximity, cultural familiarity, and ease of collaboration. 

Offshore Outsourcing

Offshore outsourcing locations are outside of the home country – commonly used regions include India, Eastern Europe, the Philippines, Malaysia, and parts of Latin America. Cost savings can be substantial.

Nearshore Outsourcing 

Nearshore outsourcing deploys talent located close enough to share time zones but still overseas. Examples include Canada for U.S.-based companies.

For one-eighth the cost of a U.S. programmer, you can hire a quality software engineer in parts of Eastern Europe or India.

Scaling an in-house dev team also involves lengthy hiring processes and substantial training investments. Simply handing off projects saves enterprises significant time and money.

 But there is a neglected consequence in this rush to outsource: cybersecurity risks explode as projects and sensitive data pass through third-party hands not fully under organizational control or governance. Just look at recent software supply chain attacks for evidence of rising threats.

Cybersecurity Risks in Outsourced Software Projects

Outsourced software development creates major risks across several domains:

Data Breaches

Sensitive corporate data like intellectual property (IP), financial records, infrastructure diagrams, or proprietary source code can fall into the wrong hands if partner networks are compromised. Data can also leak through insider threats when inadequate access controls are in place for remote parties.

Malware Infections

Software backdoors have emerged as a disturbing trend – hackers infiltrate outsourced development teams and plant malicious code that later compromises enterprise networks once integrated. Securing remote access protocols for vendors is critically important to limit exposure.   

Phishing & Social Engineering

External development teams represent prime targets for well-crafted phishing attempts hoping to collect login credentials or drop malware. Remember that outsourced partners have privileged access once they collaborate on projects.

Code & System Vulnerabilities

Developers make mistakes too – it’s why Netflix offers up to $15,000 rewards for discovering bugs. Error-prone code, poor encryption techniques or lax access controls by outsourced teams can introduce devastating vulnerabilities later exploited by attackers.

Critical Infrastructure Exposure 

Many utility companies and public infrastructure entities lean heavily on outsourced software but don’t have mature protocols to vet vendor processes or development practices. This creates unacceptable weaknesses that hackers actively seek to exploit.

Financial Loss & Legal Exposure

Ultimately cyber risk manifests in genuine monetary loss through stolen data and IP, embezzlement, disrupted operations, recovery costs, legal liabilities, and loss of customer trust.  

Best Practices for Securing Software Outsourcing

So what sets elite internal security teams apart when defending software outsourcing? How do they successfully balance risk versus reward? By implementing layered controls that evolve alongside a widening array of threats:

Vendor Vetting

Before partnering, validate offshore resources have sufficient security maturity through audits. Assess development environments, code repositories, access controls, staff screening, compliance processes, past breach history, continuity planning, and communications protocols.

Secure Code Repositories

Store source code and reference materials in access-controlled repositories with detailed activity logging to spot suspicious access. Some agencies maintain private GitLab on-premise clusters accessed only through site-to-site VPNs. 

Encryption Everywhere

Encrypt data in transit and at rest to limit exposure if breaches occur. Control access to keys tightly through a secrets vaulting platform like HashiCorp Vault that enables rich access policies, key rotation, and multi-factor authentication.

Actionable Security Roadmaps with Vendors

Work jointly with vendors to establish ongoing security roadmaps centered on continuous control monitoring, vulnerability testing, and prompt remediation for discovered issues.

Ongoing Assessments

Continuously verify that security controls are performing correctly through SAST, DAST, and IAST systems while evaluating vendor access entitlements to ensure least privilege principles. 

Incident Response Planning

Have an incident response plan in place that clarifies roles, responsibilities, and information-sharing requirements in the aftermath of an actual breach. Run IR scenarios periodically.  

The Human Element 

Conduct security awareness training with vendor teams to spot phishing attempts, enforce strong passwords, and secure coding best practices.

The Way Forward: Shared Responsibility

The future lies in acknowledging universal risk across on-premise and cloud deployments and then implementing pragmatic protections governed by policy.

As software permeates every facet of business, the companies that will thrive long-term are breaking down outdated barriers and finally bringing cybersecurity to the forefront of strategic decisions – especially around outsourced development.

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