Will new regulations kill outsourcing?

India’s Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (i.e. data protection regulation and privacy rules) could have a profound effect on companies that

– maintain operations in India, or
– outsource to Indian service providers.

Article source – Will new regulations kill outsourcing?

What are the regulations about?

These regulations apply to all organizations in India that collect and/or use personal data and information, including service providers or intermediaries that collect and process information on behalf of other organizations.

Some of the requirements are very rigorous:

– a company must get written consent by letter, fax, or email for the collection of data,
– people can later opt out and withdraw their consent,
– disclosure of information to third parties is significantly restricted,
– in cases of data transfer (requires prior consent, whether necessitated by contract or not), companies may only transmit data to organizations with security meeting the new Indian regulations, and
– people have the right to review and/or correct their data.

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India – Information Technology (Amendment) Act, 2008 – 2011-04-13 – final regulations (THE GAZETTE OF INDIA, EXTRAORDINARY, Part II, Section 3, Sub-section (i) dated 11 April 2011)

Bottom line and take-aways

The government of India has issued final privacy regulations that could make outsourcing difficult. The new privacy rules are tougher than the Gramm-Leach-Bliley Actin the US and the EU Directive. Accordingly, complying with US or EU privacy rules will no longer meet the more stringent Indian laws.

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The regulations apply to all personal information, whether belonging to foreigners or Indian nationals. If they are strictly enforced, even handling a benefit-related call from a client in Germany means that written consent must be obtained by the outsourcer from the client before their data can be processed in India.

More resources

Policy, standards and guidelines: Not sexy, but necessary
Resilience of public electronic communications – good practice
6 steps to proper risk assessment and management
2011 trends: Risk management and social media ROI
Cloud computing and cyber-wars
ComMetrics weekly review: 2010 in numbers

Have you adjusted your company’s outsourcing procedures accordingly? Could these regulations slow the outsourcing boom in India? As always, the comments are yours!

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Tagged as: best practice, business ethics, compliance, data protection, government regulation, identity theft, privacy management, risk assessment, risk management, ROI / KPI, Social Media Marketing, social networking