Next time business process outsourcing firms hire new staff, they may not be able to get away with just checking the background of the prospective employee based on the two references given.
With the rising incidences of frauds among Indian BPOs, insurers are insisting on proper employee checks as undertaken overseas.
"BPOs also need to have proper risk management cells in place and proper legal vetting of contracts defining the terms of indemnity limits," said V Ramakrishna, managing director, India Insure, an insurance brokerage firm.
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Further, BPOs will have to conform to the international security standards of the BPO industry, defined as 7799, he added.
Insurance companies are beefing up their legal teams in India in the face of rising threat of litigation from litigious countries.
Both AIG and Chubb, world leaders in liability insurance, have a large panel of lawyers sitting in their US and UK offices, said senior insurance officials.
ICICI Lombard, leading in the Indian market for the sale of liability insurance, has established a specialised liability team in the country, they added.
Internationally, high end calling centres and BPOs scrutinise their staff by hiring private security agencies to do a thorough check on employees in terms of their background, their families and their criminal records if any.
Indemnity policies do not pay claims if a fraud is committed by an employee with a criminal record.
BPOs today hire large number of employees mostly fresh graduates and undertake a check on their credentials based on the information and references given.
This could become a thing of the past following a recent example of a call centre employee selling personal data of 1,000 British customers.
At the same time while the Indian insurance industry has decided to ensure greater risk management of BPO and IT companies and the BPO industry itself is looking at self-regulation, Ramakrishna said what has happened in India is not uncommon.
"Identity thefts and misuse of information is common across the West," he said.
This explains why cost of buying professional indemnity cover has not increased.
"On the contrary, premium rates have fallen by 30 per cent and some clients have been able to increase their coverage at the same premium amount," Ramakrishna said.
