I suggest some research so you can become keenly aware of the valid reasons people will reject the idea of your service. Because there have been so many scams of this nature, so much theft of trade secrets, and so much total disregard for intellectual property rights by offshore vendors, you will have a tough fight.

How can you assure your clients that you can protect them legally?

Business owners are not only leery because of the horror stories that have happened to others, they are understandably hostile to anyone who might leak sensitive information offshore. Offshore vendors will sometimes even sell their stolen goods as if they owned it (let the buyer beware as they say). You must offer a viable solution or you can be viewed as part of the problem.

The other challenge you probably face is addressing all the legal vulnerability issues and still offering a cost advantage.

This might not be the kind of response you enjoy reading, but maybe it will help you understand why you are getting the reactions you are getting. You may not have caused this problem, but your business model will require you to deal with it.