The Background-Check Challenge - InformationWeek

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7/15/2005
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The Background-Check Challenge

Outsourcers protect themselves from identity theft by finding out all they can about employees, but gathering information can be challenging

When the British tabloid the Sun blared the headline "Your Life For Sale" a couple of weeks ago, the most shocking detail likely was a photo of a reporter and an alleged Indian fence purporting to depict the exchange of $5,000 for stolen credit-card data. This was yet another blow to the offshoring community. It follows closely on the heels of perhaps the most infamous identity-theft case in India, one that resulted in nearly $500,000 in bank losses and a whopping 17 arrests. While the world waits to see how the Indian police and courts handle these landmark investigations, both outsourcing customers and providers are examining what changes, if any, should be made to hiring practices in global delivery centers.

In April, call-center workers at a Pune, India, subsidiary of Mphasis, an IT services and business-process outsourcing firm, talked four Citibank customers into revealing their personal identification numbers, and then the call-center workers transferred nearly $500,000 into their personal accounts. Police arrested six Mphasis workers, plus 11 outside accomplices, and recently said the investigation is continuing, with even more arrests possible. Citibank replenished the customers' accounts, but Mphasis has yet to erase the concern that the problem won't be repeated here or overseas.

The industry itself is reacting, too. "The Indian BPO industry is in its infancy, and when one tends to hire 400 to 500 people every month, we often fail to scrutinize the employees closely," conceded Mphasis chairman Jerry Rao at a National Association of Software and Service Companies summit in June. Rao endorses s proposal by Nasscom, a trade group representing the IT software and services industry in India, for a national employment registry where potential employees' backgrounds are registered and updated.

The goal is to develop a system in which employees voluntarily allow information about their educational backgrounds and employment histories to be entered into a database, Nasscom VP Sunil Mehta says. When employees are considering changing jobs, they can simply authorize the registry to release the information to a potential employer.

In addition to speeding up the process of background checks, Mehta says the new system, which an impartial third party will administer, would make background checks easier to accomplish, less expensive, and more accurate. Although largely believed to be a positive step toward averting a repeat of the Mphasis case, some think it simply won't be enough.

"Extensive reference checking is employed throughout the world, as well as motor-vehicle abstracts, media searches, and in-depth interviewing, but much more is needed," says Bill Greenblatt, president of Sterling Testing Systems Inc., a provider of outsourced pre-employment background screening and checking.

Very large IT services and business-process-outsourcing companies have become more rigorous in their background-checking procedures. Tata Consultancy Services Ltd., a large Indian IT-services company, is one of them. To mitigate rising concerns, TCS recently began insisting that every new associate supply a passport when applying for a job.

"So to increase customer confidence in our verification process, we insist that they produce a passport, which involves precertification by the local police and a criminal records check," says R.K. Raghavan, TCS's consulting adviser for security. The new procedures are especially important in India, which lacks a national identification card or a driver's license, Raghavan says.

In many cases, simple reference checks aren't enough. Hiring offshore workers in today's world means researching their backgrounds as thoroughly as possible, and that takes an understanding of the laws, customs, and language of the country, as well as knowledge of how to obtain verification and validation of certifications and information.

Because of these difficulties, many business-process outsourcers and other types of companies hire a company that specializes in background checks. They have the knowledge and expertise in various countries and tend to know human-resources departments, large employers, and their processes. The sophisticated methods they employ make background checks a reasonable hedge against problems of all sorts.

In general, a reputable background-checking company will do everything Greenblatt mentions. Depending on the country, other types of background checking may include criminal conviction information, civil claims and suits, credit history, work history, educational background, and driving records.

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