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Scots IT companies in frame to protect firms from snooping by US

SCOTTISH IT services companies are reporting an upsurge in demand from customers fearful of data security ­intrusions in the wake of the surveillance scandal surrounding the US National Security Agency (NSA).

Customers are reportedly seeking locally-based data storage and hosting facilities for fear that data held by US companies is no longer secure following the revelations from former data analyst Edward Snowden about widespread and routine accessing of data by American spies.

Having already been unsettled by the arrival in the US of the Patriot Act several years ago, which allowed the NSA to access data held by US companies over matters of national security, this year's revelations have shown how far the authorities have been prepared to tread.

Bill Strain, chief technology officer for Glasgow-based iomart, the ­largest hosting company in Europe, said: "We have definitely seen many more customers approach us because of data sovereignty concerns.

"Clients are coming to us because we are a UK company with data centres that we own and operate, that are on UK soil and subject to the strict laws that the UK has around data protection."

Graeme Gordon, chief executive of Aberdeen-based hosting company IFB, said: "There is a clear uptick from people asking 'Where is my data?' and it's no coincidence this has happened over the last few months. It will affect the big players."

He added: "We've run two or three events off the back of the Snowden events on security and cloud. At every one of the events the key question is 'Where does my data sit and how secure is it?'

"It is positive for the data centre sector, especially for the guys who are operating from the UK. They can say 'Come and touch the box that contains your data'. It will be backed up elsewhere but it will be in the UK and you can come and touch that box too. It has become very relevant for customers. It's a positive thing for the UK players to be making noises about being able to tell clients exactly where their data is."

Eight big-name internet and computer equipment companies including Facebook and Google this week wrote an open letter in the New York Times addressed to ­President Barack Obama and members of Congress calling for reforms to government surveillance practices that would be "restricted by law, proportionate to the risks, transparent and subject to independent oversight".

The companies were acting to head off a predicted global loss in business for IT companies that could amount to as much as $185 billion (£113bn) by 2016 directly attributable to the loss of trust in the security of company and personal data, according to analyst group Forrester Research.

The UK cloud market for small and medium-sized businesses is expected to grow to £2.5 billion by 2016; up from a current annual run rate of £1.4bn. Over and above this the UK is Europe's leading market for software and IT services, with a market value of £58bn per annum.

According to Polly Purvis, ­executive director of technology trade body ­ScotlandIS, considerable damage was caused to trust in placing sensitive data with US vendors when the US introduced the Patriot Act.

"Snowden is making everyone much more aware of privacy issues," she said. "It's interesting to see the large companies push back against privacy infringement. There was certainly an increase in concerns around cyber­security in the last couple of years with the introduction of the US Patriot Act, so it is not Snowden alone that is the cause of it."

Paula Barrett, a partner at ­corporate law firm Eversheds, said: "The full degree of NSA access is still not that well-known in terms of its depth and breadth. The Patriot Act turned out not to be quite what it was feared it would be. But now with the Snowden revelations, demonstrably there is something of a back door to computer systems."

Barrett reports that the Snowden leaks have brought heightened fears from many clients over the accessibility of information to third-parties.

"I am aware US vendors have been in receipt of queries from clients about the security of client data and I am seeing clients approaching me to seek advice," Barrett said.

"Of course this is not just about the US and the NSA. Snowden implicated the UK's GCHQ but it's the Americans getting all the kicking just now."

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