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Outsourcing has revolutionized the way digital products are built. It's a practical solution to create Web and mobile applications in a short time and for less than employing a team of in-house developers. But with opportunity also comes risk, notably in the protection of proprietary information and intellectual property.
In this article, we'll review five of the most common security mistakes in outsourcing and provide actionable solutions to prevent them, based on real-life experience and industry best practices.
Poor Vendor Screening
Finding a good outsourcing partner is the recipe for success, but most organizations cut corners on this step and sacrifice low cost for security. Lack of effective vendor screening can lead to doing business with organizations that have low levels of protection, which can result in data breaches or non-compliance with regulations such as GDPR or CCPA.
We've seen organizations put their trust in contractors whose flashy portfolios or lowest bid won out, only to discover that they lack certifications like ISO 27001 or use security protocols that are many years out of date. For example, in 2020, Blackbaud suffered data breaches due to the lack of security procedures for a third-party cloud vendor who was responsible for the loss of client data.
How to Avoid It
Due diligence is key for secure white label outsourcing:
- Certification audits: Depending on your industry, look for ISO 27001, SOC 2, or HIPAA certified suppliers. These certifications show a serious interest in security.
- Requests for auditing: Seek current security audit reports or case studies of how the contractor secures data.
- Pilot projects: Run small pilot projects before committing to a large-scale contract to test reliability and security processes.
Full screening takes a lot of time, but it's a small price to pay for the security of your project. For example, our team has weekly syncs with partners to ensure that all security aspects are on point.
Poor Data Protection and Encryption
Outsourcing typically means exporting sensitive data — from client information to proprietary software code. Without being secured by strong encryption and strict data handling policies, such assets invite compromise.
For instance, up to 58 percent of organizations identify API security as their greatest concern, and about 33 percent of web app breaches last year were brought about by unencrypted data transmission.
A common mistake is to rely on the default contractor security without asking for specifics. When API endpoints are not shielded with TLS 1.3 or data is not stored in AES-256, the risk of compromise increases.
How to Avoid It
To safeguard your data, require contractors to install:
- End-to-end encryption: Encrypt data in transport (TLS 1.3) and at rest (AES-256);
- Secure APIs: Ensure that the API endpoints are secured using OAuth 2.0 or equivalent standards.
- Access policies: Request that RBAC (Role-Based Access Control) be enforced to control data access.
Following all these steps, our suggestion is to conduct frequent penetration testing to identify the loopholes even before the hackers. Sign NDAs and clearly outline encryption requirements in your contract. For example, a software development company uses robust encryption practices and is audited frequently to secure client information.
Poor Access Control and Authentication
Failure of proper access control is a common issue in outsourcing, and as many as 68 percent of data breaches are due to compromised credentials. Either a contractor should not implement MFA or allow weak passwords in such situations. Unfortunately, developers still sometimes share accounts to access repositories or databases, which is extremely dangerous.
How to Avoid It
To minimize risks:
- Install MFA: Implement two-factor authentication for all members in a project.
- Use IAM: Ensure the contractor uses access management systems like AWS IAM or Azure AD;
- Limit access: Apply the principle of Least Privilege so that employees only use resources they truly need.
Once access control has been applied, check logs often to spot suspicious activity.
Ignoring Regular Patches and Updates
Another open door is through the use of obsolete code bases and not keeping our components updated in a timely fashion. Web application exploits from third-party libraries and frameworks make up nearly 27 percent of all web application exploits. Contractors who don't update dependencies and don't ignore security patches compromise projects.
We have had situations where a contractor used an older version of WordPress, resulting in an XSS (Cross-Site Scripting) vulnerability. Not only did this hurt client trust, but it also demanded immediate action to correct the effects.
How to Avoid It
To steer clear of this trap:
- Demand an update plan: Ensure the contractor has a clear schedule for applying security patches and updating libraries.
- Use CI/CD: Automated pipelines should include vulnerability checks.
- Monitoring: Utilize tools to track out-of-date components.
The following table shows which tools facilitate maintaining software up to date:
| Tool | Purpose | Benefit |
|---|---|---|
| Dependabot | Automated dependency updates | Identifies outdated libraries |
| Snyk | Vulnerability scanning | Detects and suggests fixes for exploits |
| OWASP Dependency-Check | Component vulnerability analysis | Ensures third-party libraries are safe |
After setting up these precautions, we recommend frequently checking how the contractor complies with the updated plan so that there are no shocks in store.
Not Enough Protection Against Supply Chain Attacks
Supply chain attacks are all too common, and last year, around 24 percent of cyberattacks targeted supply chains, such as third-party contractors. If your outsourcing partner uses external libraries or plugins without strict screening, it can become a vulnerability.
How to Avoid It
In order to shield yourself from such attacks:
- Check dependencies: Require the contractor to use only screened and up-to-date libraries sourced from trusted places.
- Code reviews: Perform code reviews to detect suspicious elements.
- SBOM: Ask for a Software Bill of Materials to understand precisely which elements are utilized in the project.
A few companies have been adversely affected as a result of hijacked third-party plugins that were added by contractors without thorough checks, and the SolarWinds attack in 2020 demonstrated very well how such supply chain weaknesses can influence thousands of organizations.
Final Thoughts
We believe the right way to outsource starts with open procedures and high security standards. To limit risks, choose partners who share your level of commitment to security. Start small with pilot projects, and stay alert by keeping a check on compliance with security standards. Or just give a call at ECO & Tech to ensure safe and dependable development!