Outsourcing has been introduced previously but isn’t in the global economy; however, awareness and popularity have increased in recent years. This wide popularity has exponentially accelerated the outsourcing sector, with many companies offering reliable outsourcing services, especially data management. Over time, outsourcing vs. in-house services has been a topic of debate, with both pros and cons considered. As a result, outsourcing offers more benefits and accurate results than in-house services.
Outsourcing is usually referred to as hiring a third party to perform business functions. In the outsourcing and economic realm industry, businesses opt for outsource data management services, especially data processing services, which is defined as turning raw data into usable information for extracting valuable insights. Since every business in the economic realm collects massive amounts of data, it becomes evident that firms should process the information in a usable format. In contrast, businesses usually deal with multiple operational tasks daily, so it is advisable to outsource data processing services.
As we all know, the sheer importance of data and how to make optimum use of it for desirable outcomes. Additionally, outsource data processing partners and their processes is also a known approach. However, what is hidden is the agreement part, as a business offers a crucial set of data to a third party to turn it into a usable format. Here are the concerns for security crises, and, of course, businesses seek utmost data security and be sure their important data isn’t going to leak into the market. In such cases, a data processing agreement (DPA) is signed between the two parties. This agreement falls under the compliance of the General Data Protection Regulation (GDPR), an international organization that manages personal data in the European Union
Ensure Data Security with Our Data Processing Agreement
Any outsourcing business collects data or personal information, and the organization parties are primarily concerned about data security or any other risk factor related to the data shared. Hence, to avoid any risk, a DPA is signed between two parties that involves various aspects and elements that fall under the data privacy legislation. Let’s deeply understand what a data processing agreement is and what its requirements are for businesses.
What is a Data Processing Agreement and What Is Needed?
Data processing services are widely popular in the vast business landscape. Other services related to data management have also become popular due to the extensive amount of collection in businesses. It became evident that organizations could manage, store, and organize data efficiently by hiring a third party. Although the matter of privacy and data security has always remained a significant concern among businesses hiring data management company. Hence, this is where the DPA-data processing agreement comes into the picture. It is a legal contract between an outsourcing firm and the data provider (business) that includes policies, obligations, and data privacy matters.
A data processing agreement is defined as an agreement or contract between the company and the third-party service provider to regulate data processing and its security concerns. The European Union first introduced this agreement in 2018 to ensure security matters and enhance reliability in the outsourcing market. Various binding terms and policies were included to protect the data during the agreement’s creation. Since the introduction of DPA, it has quickly become important in the outsourcing industry and a primary requirement for every outsourcing business. Its integral part protects business information under data privacy laws. As the modern business horizons are growing more digital, data processing agreement holds a powerful position due to several reasons. Business can be held accountable for the outsourcing party’s unlawful acts/practices if it goes against the signed agreement. The matter can also be taken to court for legal solutions and process. Therefore, this sheds light on the importance of such agreements.
Furthermore, a DPA also includes the responsibilities of the business party and the outsourcing service provider, which can ease the process and keep the communication transparent. The terms are also aligned between the two deal breakers for how data is stored, protected, processed, accessed, and used. This also ensures what outsourced data processing firms can and cannot do with data. In fact, DPA also satisfies other data privacy law contracts that a business may require.
Key Elements in Data Processing Agreement
While dealing with a data management company and keeping in mind the sheer importance of binding contracts, it is necessary to understand what serious elements are included that are agreeable to both parties. Moreover, meeting industry standards and data privacy laws secure crucial data shares; some of the following are a data processing agreement’s key elements, making it more weighable and effective.
- Brief information on the parties involved: Both parties, business and third-party operators, and their work practices must be named in the DPA.
- Scope and Purpose: The contract is mentioned with the discussed scope of work and purpose, subject duration, processed data types, and nature of workflow defined for transparency.
- Data Protection Obligations: The part of the agreement highlights the obligations based on data protection laws, regulations and policies for both parties involved.
- Responsibilities and Rights: This section of the DPA defines both rights and responsibilities of parties involved. This ensures that data security is maintained without any breaches or audit permissions while maintaining clarity among parties.
- Security Policies and Measures: According to the previous section, the DPA details the process of implementing technical and other data security measures and the technologies mentioned to avoid data breaches.
These are some of the essential elements of DPA that make it responsive. However, other elements are mentioned; following are some of them:
- Expected duration of such data
- Subject Matter
- Type of data processed
- Return of data
- Data Breach and Prevention Process
Bottom Line
Data processing agreements have become important, especially for MNCs. To eliminate the risk factors for data security or any other breaches, data processing agreements play a crucial role in adhering to privacy laws. Moreover, business and outsourcing data processing services providers comply with the obligations and other terms outlined in different sections of the agreement.
Breaching or not following the agreement guideline, both parties or unlawful practitioners may have to pay a massive amount of fine to the concerned authority or whoever it may concern. Hence, the importance of binding contracts should be overlooked when dealing with the outsourcing industry. This ensures the data processing privacy, purpose, and methods under the data protection privacy laws.
