Offshoring and Intellectual Property Protection: Strategies for Safeguarding Your Company’s Assets + AI tools you can use

intellectual property protection in offshoring

Offshoring has revolutionised the business world, offering numerous benefits such as increased efficiency, cost reduction, and access to skilled labor. With the rise of offshoring, companies are now exposed to the risk of intellectual property theft. This can potentially jeopardize their business operations and put them at a disadvantage against their competitors. The threat of IP theft is a critical issue that must be addressed by companies, particularly those that are offshoring their operations.

In this blog, we will delve into SMART strategies that companies can implement to safeguard their intellectual properties so that companies can make informed decisions to protect their assets when engaging in offshoring activities.


1. Safeguard contractual protections to mitigate risks

To ensure that their IP is safeguarded, companies should establish clear contractual protections with their offshoring partners. This should include provisions for confidentiality, ownership, and protection of intellectual property.

Companies should also ensure that their outsourcing partners have adequate security and IT measures in place to protect their intellectual property. According to a survey by Accenture, 57% of companies surveyed reported that they had experienced IP theft in offshoring, with 34% attributing it to inadequate contractual protections.


2. Monitor and enforce intellectual property rights

Companies should actively monitor and enforce their intellectual property rights in offshoring destinations to prevent infringement and theft. This should include regular audits of their outsourcing partners’ compliance with contractual protections and IP laws. Companies should also take legal action against infringers and thieves to send a strong message that they take intellectual property protection seriously.

According to a study by the US Chamber of Commerce, IP theft costs US businesses $225 billion to $600 billion annually.


3. Assess comprehensive risk to identify potential vulnerabilities

Before offshoring, companies need to conduct a comprehensive risk assessment to identify potential risks to their IPs. This should include an assessment of the legal and regulatory framework in the offshoring destination, as well as the security and IT infrastructure of the offshoring partner. Companies should also assess the potential risks posed by employees, contractors, and other third parties who may have access to their intellectual property. According to a study by Deloitte, only 17% of companies surveyed had a formal process for assessing intellectual property risks in offshoring.


4. Reinforce employee training and awareness programs to enhance resilience

Companies should implement employee training and awareness programs to educate their employees on the importance of intellectual property protection and the risks associated with offshoring. This should include training on cybersecurity best practices, such as password management, phishing prevention, and data handling. According to a study by PwC, 50% of companies surveyed reported that employee negligence or malicious acts were the root cause of intellectual property theft.


5. Target cybersecurity investment to fortify defenses against threats

Cybersecurity is a critical component of protecting assets in offshoring. Companies should invest in robust cybersecurity measures, such as firewalls, intrusion detection systems, and data encryption, to safeguard their intellectual property.

According to a report by the Ponemon Institute, the average cost of a data breach in 2020 was $3.86 million, with the healthcare, financial, and pharmaceutical sectors being the most targeted industries.


AI in action

The use of AI tools can greatly assist businesses in protecting their intellectual property when offshoring. One such tool is machine learning, which can help companies detect and prevent intellectual property theft by analysing patterns and identifying anomalies in data.

Machine learning algorithms can be trained to recognise potential threats and alert the company to take action before any damage is done. Additionally, natural language processing (NLP) technology can be used to analyse communications and detect any suspicious activity related to intellectual property. NLP can also assist in detecting any inappropriate use of company data by offshoring employees.

Another AI tool that can be useful is computer vision, which can monitor physical access to company premises and detect any unauthorised entry or suspicious behavior.

These AI tools can work in conjunction with traditional security measures such as firewalls, access controls, and encryption to provide a comprehensive system for protecting intellectual property when offshoring.



Offshoring can be a highly effective strategy for companies looking to reduce costs and increase efficiency. However, it also poses significant risks to intellectual property, which can have serious consequences for businesses. By conducting a comprehensive risk assessment, establishing clear contractual protections, investing in cybersecurity, implementing employee training and awareness programs, and monitoring and enforcing intellectual property rights, companies can safeguard their IPs and enjoy the benefits of offshoring.

Protecting your IP should be a top priority for any business considering offshoring. By following the strategies discussed above, companies can minimise the risks associated with IP theft when offshoring and safeguard their valuable assets.

However, finding a reliable offshoring partner who shares the same commitment to protecting intellectual property is equally important. At Vault, we are dedicated to providing top-notch offshoring services while prioritising the protection of our partners’ assets. Contact us today to learn more about our services and how we can help your business thrive.

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