Uncover The IP Theft Myth In Offshore Software Development

IP theft is arguably one of the biggest risks for tech organizations when it comes to offshore software development. This concern is further elevated in countries with a more lax attitude toward intellectual property such as China and Russia. 

So it is no surprise that many organizations want to ensure that their offshore tech team in Vietnam will not fall into the same pitfall. 

When Does An Act Considered As IP Theft?

But before we go any further, let’s establish an essential understanding of IP theft in relation to offshore software development. The term “theft” makes people think about stolen projects or source code. However, the culprits in those cases are often hackers with malevolent intent. 

Since offshore software development is all about tapping into the tech talents overseas, the IP risk stems from the new hire members instead. They may make unauthorized use of their company products or reveal confidential information to outsiders.

Simply put, it is about the infringement of a trademark or trade secret.  

The IP Theft Situation In Vietnam

There already are incidents related to IP theft In Vietnam! Thankfully, this has happened within the freelancer community, but never to any of Talent JDI’s hires and customers before, and we remain committed to staying vigilant in our operations, from recruitment to HR management.

Frank Lee, JDI’s Managing Director, shared a story about the IP theft during our last private webinar with his clients and audience. It turns out that the freelancer had access to his client’s source code and got interested in one of their product features. 

After he is done with the project, the freelancer then decides to make his own product based on that feature. The problem was he also copied the client’s source code which is an infringement of trademark and trade secrets. 

It is worth mentioning that the copied feature requires a low level of business skills to operate and sell. In other words, the freelancer deliberately aims at minor features that can be replicated easily with low manpower.

But what should be of con­cern to businesses is the enforcement of contracts and strategic management placed on their offshore tech talents to protect IP. This is why we also recommend our clients build up their own offshore tech team in Vietnam instead of relying on freelancers or outsourcing. In fact, this approach has become a preferred option, as businesses can gain access to a broader talent pool while also taking the benefit of low labor wages.

After all, the freelancer made his malice act due to his lais­sez-faire attitude toward IP licensing and gen­eral rights protection.

How Businesses Should Protect Their IP When It Comes To Offshoring  

There is an old saying that prevention is better than cure. While there is no IP theft case in the software offshoring community yet, we believe that taking preemptive measures is crucial to help businesses protect themselves.

Implement An IP Leak Mitigation Strategy

First and foremost, ensuring a well-established information-sharing system with access rights clearly defined for each remote member. A new hire junior developer should not have the right to access your project source code. 

Create A Culture Of IP Protection

An effective method to prevent IP theft is to require your offshore tech team to follow best security practices. Some key components of implementing a culture of information security are to:

• Clearly outline consequences to employees for not following security protocols.
• Reward employees for good information security and foster a culture of information security (such as bonuses and recognition).
• Ensure the team leader is the one that enforces security and IP protection awareness to the remote team in Vietnam.

IP Confidential And Non-disclosure Agreement  

Having confidentiality in writing and signed by all parties can lend trust to these sorts of negotiations and deter theft of intellectual property. Without such a signed agreement, any information disclosed in trust can be used for malicious purposes or be made public accidentally.

In Conclusion

IP theft can be detrimental to offshore software development, but when businesses can break down protection into more manageable steps, it’s easier to prevent dangerous IP leaks from making it to your organization.

Moreover, if you’re considering harnessing Vietnam’s tech talent pool, it’s vital to gain a comprehensive understanding of the labor market to devise an effective strategy. Alfagomma, through their strategic partnership with Talent JDI, has achieved significant reductions in hiring costs and successfully formed an integrated tech team in no time. Explore their seamless journey today!

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