IT contractors should pay close attention to firms' protection of their secret data, according to a new report.

There are two primary types of data that companies store: Custodial data consists of customers' personal information and secret data is company information such as business plans and strategies, claims Forrester Consulting.

Yet most companies are too concerned with complying with legislation governing custodial data and neglect to properly secure their private data, according to the report commissioned by Microsoft and RSA, the security division of EMIC.

Security budgets for protecting the two types of data are usually equal, yet Forrester Consulting claims that 62 per cent of the value of a company's data storage is made up of secret data.

The report goes on to say that while many firms worry about losing custodial data, theft of this data from employees is ten times costlier.

UK companies which lose data in this way may now find it extremely costly, however.

The Information Commissioner's Office now has the power to fine firms who breach the Data Protection Act up to £500,000.