To enable “Network Encryption” between ArcGIS Desktop and the Database, use “direct-connect” as your method of connection to the ArcSDE Geodatabase.

If the Oracle database has already configured for Network Encryption (which is not part of the Oracle Advanced Security License), you need to install Oracle Client 11g on your machine where ArcGIS Desktop is installed in. There is no extra configuration required on the client level.

As a consequence, this will also make all your map services encrypted (while creating MXD files based on SDE direct connection) and installing Oracle 11g Client on the server.

Reference Resource: http://resources.arcgis.com/content/enterprisegis/10.0/encryption_mechanism