Terrorists Target Indian Offshoring Firms

American companies have always had to worry about their overseas facilities being red, white and blue bull's-eyes for terrorists, but now their offshoring partners may be in the crosshairs of subversives, too.

A reported raid last Saturday by police in Delhi, India, in which three men were killed and another arrested, uncovered plans to attack software companies in Bangalore, which has become a technology hub in the country.

The men targeted in the raid were reportedly members of the Laskhar-e-Toiba group, or LeT, which is demanding independence for the Kashmir region of northern India.

Target America

Infosys and Wipro, two large Indian high-tech companies, are located in Bangalore, as are the facilities of some well-known American firms such as Accenture, Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Microsoft (Nasdaq: MSFT), Motorola (NYSE: MOT), Texas Instruments (NYSE: TXN), America Online, Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO).

According to Ira Winkler, a security analyst and author of Spies Among Us, published this month by John Wiley & Sons, U.S. companies have been concerned about their overseas facilities for a long time. "Any symbol of America has been targeted and will be targeted," he told TechNewsWorld.

"What makes this unusual is that this is the first time that this has been detected in a large way proactively," he added. "Usually, it's detected reactively."

Successful Security

Located in the southern part of India, Bangalore has been considered as safe from the terrorist activity that has plagued the country's northern and western states. "There's always a risk that some group may decide to attack on whatever grounds, but it has been a very safe area for most companies that have operations there," said Ton Heijmen, a senior advisor with the Conference Board in New York City and author of the recently released report "Thinking Offshoring Through: A Framework for Decision Makers."

"If you talk to people who have operations in India, they'll tell you you have to have physical security as well as data security," he said. "By and large, those security measures have proven to be successful."

A company doesn't have to be a target, though, to suffer from the consequences of a terrorist attack, maintained Michel Leonard, chief economist and head of political risk consulting for Aon Risk Management in New York City.

Business Interruptus

"It is less likely that you will be affected directly by terrorism than you will be by the side effects of terrorism," he told TechNewsWorld.

Acts of terrorism, he explained, cause a lot of business disruption. "Whether or not you're the victim of a terrorist act, you're going to have to face those costs," he said.

Moreover, he noted, there are forms of risk faced by companies doing business in India that are greater to a company's bottom line than any terrorist act. Regulatory risk, for instance, can tie up a company's assets by limiting money transfers from a country. "That isn't front page news like terrorism, but it's something companies operating call centers in India are facing on a daily basis," Leonard said.

Bigger Name, Bigger Threat

Aon Risk Management is part of Aon, the second largest insurance company in the world, which last month released its annual political and economic risk map of the world. That map rated India as a "medium risk" nation.

Leonard noted, though, that terrorism risks in India varied by region. "If you're in Kashmir, for example, your risk environment is very different from other parts of the country," he said.

He added that some global companies are more at risk from terrorist attacks than others. "If you're a Citigroup, you're exposure is different than if you are a low name-recognition company," he asserted.

Will more terrorists be targeting companies accepting offshoring business from U.S. enterprises? "The only thing that you can expect to be different in the future is that this will be detected more," Winkler said. "This is an ongoing thing."