Outsourcing Development? Here’s How to Deal with API Security Risks

Authored By: Invedus
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Accounting for over 70% of the overall internet traffic, application programming interfaces (APIs) keep the digital world up and running. These little connectors power everything from online shopping carts to mobile banking apps. However, everything is not sunshine and daisies in the API land. For API data breaches rose up to 80% in 2024, costing millions of dollars in damage control and something even more precious, lost customer trust and reputation.

APIs connect customer-facing apps back to databases, payment processors to shopping carts, and other third-party integrations your customers need. When these connections are either broken or hacked, the entire business comes to a sudden halt, especially when the development isn’t 100% in-house.

While outsourcing development gives organizations a slice of the global talent pie, its security equation is complex and convoluted. Because your internal team is no longer the only team building and maintaining APIs. Your external vendors will access your code and systems for their development efforts, which come with their own set of API-related risks.

These risks are not a byproduct of outsourcing and apply to an in-house development environment as well. However, it is vital to understand the associated API risks before outsourcing your development process. It helps you build a robust security foundation that stays secure even in the event of an API attack.

You can establish a solid security base that enables you to define security targets and follow best practices for API management while keeping your outsourced development team benefits intact.

What are the security risks in APIs?

The knowledge of API security risks enables you to identify and solve typical security issues that affect both internal and external API development projects.

• The lack of proper authentication verification in APIs enables attackers to pretend to be authorized users through broken authentication vulnerabilities.
• The system allows users to access sensitive data through API responses by sharing more data than what was requested by the users.
• Attackers have the space to execute unauthorized SQL commands through injection attacks, as there is inadequate input validation.
• Some APIs allow users to access restricted fields and data by swapping IDs or Endpoint parameters using broken authorization.
• APIs that aren’t properly throttled regularly become prime targets for credential stuffing and DoS attacks.

How outsourcing exacerbates API security risks

When external teams that don’t understand your governance process or security requirements build and manage your APIs, these built-in security gaps will become even more vulnerable. What’s more, the difference in development cultures may put speed ahead of security, especially when contracts stress delivery deadlines without clear security goals.

Geographic distribution makes things even more complicated. Your data may cross over into different areas, each with its own rules about privacy. During development, vendor teams often use their own infrastructure, which could put your code and test data in environments that you can’t control. Subcontractors whom you don’t know about can make it even harder to hold people accountable.

The main risk factor for the development process stems from its insufficient visibility during the development process. You can neither see how the code is written nor can you review the architectural decisions in real-time. Your desk receives a code delivery that contains every security vulnerability that exists. But that’s not all, fixing the damage at this point is more expensive than preventing it.

Stop API threats with a strong security foundation

Now that you know what could go wrong, the next step is to set up controls that will keep your APIs safe during the outsourced development process.

Tighten security with strict governance norms

Before outsourcing your development projects, set up a strong internal governance framework. This framework will form the basis for a program that assesses risks continuously. It lets you evaluate potential vendors more accurately than a one-time checklist ever could. A clear governance structure makes sure that your security standards are always followed, both inside your company and by your outside partners.

Do a comprehensive risk assessment of your vendors

A comprehensive security review of a potential vendor should be the first step in your risk assessment program. The organization needs to keep security practice records through independent reports, which include SOC 2 Type II and ISO 27001 certifications. The reports will precisely determine the vendors’ API development methods, their security protocols, and their procedures for protecting confidential data.

While you’re at it, also verify that your offshore or onshore development partners abide to data protection rules such as HIPAA, PCI DSS, and GDPR regulations. Vendors also need to know which laws apply when API data is sent across borders. A thorough due diligence process should also look at your own suppliers, like cloud providers and subcontractors, because any weaknesses in their supply chain can have a direct effect on your business.

Make API discovery easier

One of the biggest problems with keeping API security is that you can’t see all of the endpoints that are already there. Your organization faces difficulties in API monitoring because multiple teams inside and outside the organization need to track all APIs that use shared systems. The process results in Shadow APIs and Zombie APIs, which remain undetected during security assessments because they exist outside documented API endpoints.

Your governance framework needs to establish a requirement that makes organizations use automated tools to detect APIs. You and your vendors can use these tools to find and list all of your exposed APIs, giving each one an owner. The security team needs to begin by asking vendors to define API sensitivity levels, which will help them determine which essential interfaces need immediate protection or shutdown. This will greatly reduce the number of entry points an attacker can exploit.

Add security to the development cycle with DevSecOps

Once a strong security foundation is set, you need to move from a reactive to a proactive security stance. Using a DevSecOps approach lets you build security right into the agile development process. By adding security protocols early in the development process, you can find and fix weaknesses sooner, which is much cheaper than doing it after the software is live.

Go beyond zero-trust architecture

The idea behind Zero Trust, which is at the heart of a modern security strategy, is that you shouldn’t trust any system or user by default. This means that every API call must be verified and given permission when it comes to API security. You can strongly identify both users and machines, continuously check each request, and limit access to limit the damage that a compromised contractor account could do by using a Zero Trust framework.

All vendor access requires implementation of the Principle of Least Privilege. The system requires outside developers to receive only the essential permissions that enable them to perform their duties. Role-Based Access Control (RBAC) provides effective access management for standard operational activities. 

The security system of Attribute-Based Access Control (ABAC) enables users to obtain specific access rights that depend on their current circumstances, project types, and data categories. The system enables you to create specific permission rules that control vendor contract access according to your established policies.

Protect the CI/CD pipeline and handle secrets

If security checkpoints are not established as part of the CI/CD security process, then after launch, fixing security issues will most likely be much more difficult and expensive than fixing those same vulnerabilities during development.

Another part of ensuring that your application is secure when working with a third-party developer is that their use of long-lived credentials in the CI/CD process should be prohibited. They should be required to use short-lived identity tokens instead. On top of that, secure communication protocols such as OpenID Connect and OAuth2 make it much less likely that the third-party developer’s credentials will be compromised.

The APIs that your application uses should never include and have hard-coded API keys in their source code. Instead, they should be stored securely in a secrets-management solution and should be rotated regularly.

Securing the extended enterprise from threats

Developers need to have a documented strategy to mitigate any potential API security risks when working with third-party development agencies. As organizations engage more and more with their customers through APIs, they must continue to manage them effectively by being compliant and building trust.

Three key elements of API security include a clear definition of Security Policy, assurance of adherence to technical standards and data protection policies, and third-party vendors’ understanding of their financial responsibilities to you. Using third-party resources to scale your development process is an ideal way to leverage resources. However, you should ensure that security processes, policies, and brand reputation are upheld. Keep in mind that your vendor environment is an extension of your organization’s security perimeter.

Outsourcing APIs does not have to weaken your security posture. As a virtual employee provider, Invedus supplies dedicated engineers who work as a true extension of your in-house team, aligned to your governance, security standards, and development workflows. Operating under ISO 27001–certified controls and secure DevSecOps practices, our virtual employees help you scale API development without losing visibility, control, or trust.