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An ambassador for the Indian software industry has been trying to wipe up the dirt that was smeared on his compatriots last month after an HSBC call-centre worker was arrested for allegedly defrauding UK customers.

Visiting the UK last week, Nasscom (National Association of Software and Services Companies) vice president Sunil Mehta wanted to correct the perception that as Indian workers were paid less money, they were more likely to commit fraud.

In June, an Indian worker was arrested for allegedly defrauding £233,000 from the accounts of about 20 HSBC customers. However, the Royal Bank of Scotland lost nearly 100 times that amount of money (£21m) to a man working for the bank in Edinburgh.

The story of his being jailed for 10 years broke almost simultaneously with that of the comparatively minor Indian fraud. But that was not all that was overlooked.

HSBC had insisted that its Indian centres suffered less fraud than those based in the UK. The Financial Services Authority (FSA) said British banks are more reluctant to report or prosecute their inhouse fraudsters, as doing so could tarnish their reputations.

The under-reporting of fraud of all types is "chronic" in the UK, according to the Attorney General's review of fraud published yesterday. Part of the review's remit is to determine the true extent of fraud in Britain.

According to Ernst & Young, three quarters of all fraud occurs in developed markets.

BDO Stoy Hayward said reported incidents of fraud in UK banks totalled £1bn in 2005.

Whatever the amount of unreported fraud, "mounting fraud losses" had become so problematic for Britain's financial institutions last year they decided they could no longer sweep it under the carpet, the FSA said in January.

Indian services firms, on the other hand, have had to try harder to prevent fraud. They went as far as a biometric database of employees working in the Indian offshore services industry. The Reserve Bank of India could end up vetting outsourcing arrangements.

The trade for personal data has become so rife in the UK that the government is now officially considering a two-year prison sentence for anyone caught flogging personal data.

The Department for Constitutional Affairs was forced this week, following the advice of the Information Commissioner, to open a consultation on the matter.

Few have noted this despicable irony. At least Forrester Research analyst Sudin Apte has reported that "media glare" will harm India's offshore industry, even though its outsourcing firms take more precautions to protect themselves from fraud. ®

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