Legal Requirements of Outsourcing

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Legal Requirements of Outsourcing Firms must ensure legal protections of information, privacy of employees and customers, and safeguard trade secrets, as well as comply with global requirements that present legal issues of taxes, labor laws, and safety regulation requirements (Jones). For publicly held companies, SOX controls the reporting requirements of these companies (Hall, 2007). Other laws, such as HIPAA and identity theft laws, also apply to the legal requirements of outsourcing. Companies can also be held liable for negligent entrustment, where personally identifiable information is outsourced to an insecure back-office operation (Rustad, 2007). Companies are held legally responsible for direct liability for facilitating or paving the way for cybercrime by direct negligence. Liability centers on the organizations with the direct liability to consumers and businesses. US companies have an independent duty of care to ensure third world back-office operations comply with reasonable data security standards. The US also has international standards for protection of intellectual property. Planning is the first step to successful outsourcing (Chinn). Planning should define the scope of the project, work to be done in detail, hardware and software, and the exact nature of the work. The scope of the project should include a timeline, including milestones and delivery dates, including performance, acceptance, quality management standards, contract terms, and an exit
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