updated 6/30/2005 1:57:59 PM ET 2005-06-30T17:57:59

India will tighten laws to prevent cyber crimes and ensure data secrecy after a call center employee allegedly sold personal data on 1,000 British customers, an official said.

The scandal has shaken India's booming outsourcing industry, which provides telemarketing services, call center operations, payroll accounting and credit card processing for hundreds of Western companies.

Prime Minister Manmohan Singh told representatives of India's software companies at a meeting Tuesday that laws would be tightened to prevent cyber crimes such as the illegal transfer of commercial information.

Violators will be prosecuted, the prime minister's spokesman, Sanjaya Baru, said Tuesday.

The government's actions follow a report last week by a British newspaper that an Indian call center employee allegedly supplied details on the Britons' bank accounts, credit cards, passports and drivers' licenses to an undercover reporter for the Sun newspaper.

Karan Bahree was sacked from his job at Web designer Infinity eSearch on Saturday after the tabloid said it paid Bahree 3 pounds ($5.40) for each person's details, which included phone numbers, addresses and pass codes.

Bahree denied any wrongdoing, but the case has revealed the vulnerability of Western companies that outsource back office functions to countries such as India where skilled professionals can do the work for a fraction of what it would cost in a developed country.

Kiran Karnik, head of the National Association of Software and Service Companies, or NASSCOM, said the Indian data processing industry was committed to ensuring "the highest standards of data privacy."

However, at the meeting with Singh, Karnik also expressed concern that the recent scandal "may well have been a sting operation directed to give Indian industry a bad name against the background of growing competitiveness," Baru said.

NASSCOM said it is building a central database of all outsourcing industry employees to prevent criminals from getting jobs in the sector and threatening the data security of global companies.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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