It's ironic that we rely on the global Internet for the transmission of vast amounts of accurate real-time information and yet we can't get reliable information about the infrastructure that enables it. We still don't know how it happened, but it seems at this point one may safely say that two undersea cables were cut off the coast of Egypt in the Mediterranean, and one off the Emirates in the Persian Gulf. A fourth cable appears not to have been cut but taken offline owing to damage to its power supply.

That even two cables in different geographies should be cut in so short a period of time is suspicious, especially as they occurred on either side of a well-defined block of territory, namely the Arabian Peninsula. What made the incident most interesting to the financial services industry, of course, was its effect on connections to Indian outsourcing partners.

Reliable information is in short supply in this regard as well, but there's enough information to draw some conclusions. Some companies, such as Satyam, have owned up to minor latency problems, while other claim say they experienced no problems whatsoever. At least one outsourcer (who shall remain nameless) stalled when I asked more specific questions. However, some people are talking in India.

The ISP Association of India reported a 50 to 60 percent cut of bandwidth to Europe, owing to the fact that the affected cables are the chief conduits for Europe-bound Internet traffic from India. That country's The Economic Times reports that:

…firms like Delhi-based Jindal Intellicom saw almost 100% of its internet traffic hit on Wednesday. The company, though, reduced it later to 50% through backups. "There is still a slight delay in traffic but the impact is only about 10%," said a company executive. "Between 20-25% of the 1,300 companies that make up India's $11-billion outsourcing industry was cut off. For small firms, the revenue loss will pinch," according to an industry insider.

Perhaps even more revealing than the article are comments on the excerpt published at the ISPAI's site, including this one:

Oops.... probably this is a kind of news that would never get published as it never happens that way! I guess, that is the fundamental difference between USA and India. Despite a fact that we control over 65% of the outsourced market of USA, we are never geared up for eventualities that lead to break down of Internet in India. Either a small earth quake in Indonesia or a fiber cut in Mediterranean puts 50% of Indian Internet business out of Network; then comes a situation where we go ga ga ga all over the World and the issue dies on its own.

In the end the effect of the outage on outsourcing customers was fairly mild, according to David Appasamy, a spokesman for Sify Technologies, a Chennai-based network and e-commerce services provider. "The cable outage caused shortage of bandwidth, increasing latency t o Europe and the U.S. East Coast for many carriers," he says. "But for those with circuit restoration capabilities and enough spare capacity there was minimal impact and latency."

However, the incident was a "wake-up call" in the opinion of a senior technology executive at a major Northeastern bank who wishes to remain anonymous. His company was not hit hard, by his account, but it was hit: "Some of the companies servicing us were somewhat impacted," he acknowledges. "Nothing mission-critical that would impact our end clients but there has been some sluggishness."

The source did not identify his India-based partners but did say that his company has diversified its outsourcing footprint and works, for example, with Dextrys (formerly DarwinSuzsoft) in China. He said that the cable failure provided "a good lesson for all of us to draw when we look for global locations."

However, the more urgent lessons, according to the source were focused on flow rather than locations of operations. "Certainly we have to think about issues having to do with the transport medium itself, but also in terms of how we route our traffic, not just in anticipation of scenarios like this, but also in the event of excess or overload of a given network," he says.

The protean nature of the Internet may distract sufficient attention from the "transport medium," since there is no single road that a given e-mail need take, let alone the total communications associated with something like a BPO relationship. And yet, the virtual reality is sustained by real-world material. In the end, in the view of Matt Josefowicz principal of Novarica's insurance practice, the recent failure of Internet-bearing fiber optic cables, "underscores some of risks of offshore outsourcing and the relative fragility of the global information infrastructure. In a virtual info economy we tend to forget that these signals travel over a physical infrastructure vulnerable to accidents and volatile political situations."

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