New Privacy Laws To Impact Outsourcing to India

June 10, 2011

Though outsourcing has become a standard among businesses, there are some risks associated with it. With drastic improvements in technology, data privacy has become a relevant issue in outsourcing.

This is particularly true with special networks and cloud computing. Against this background, India has introduced modifications to the IT Act of 2000. The objective is to monitor security breaches more closely so that Indian outsourcing takes on a higher degree of reliability.

Although the new regulation has been received with discontent, outsourcing firms are complying with the Reasonable Security Practices and Procedures and Sensitive Personal Data or Information. Most firms are getting ready for the new technology rules in 2011.

The government’s intention is to promote offshoring in India with enhanced data security and privacy. But outsourcing firms will have a tough time obtaining access to sensitive documents. Some executive are of the opinion that the rules are inflexible.

Satya Prabhkar, CEO and founder of was quoted as saying, “The changes to the IT rules give enormous freedom to the government to block any blog or website.  And this is definitely something that is not implemented in print media, for instance.” He added, “The act uses generic terms like being grossly harmful, libelous, harassing, etcetera, as reasons to block or remove any content on the Internet. The government should have a re-look at it,” reports

Some companies say that implementing cyberlaws has been lax in India. Unless the law is executed, people will find a way to get around it.

Sachin Jain, head-IT and CISO, Evalueserve said, “If there are changes which can make our lives easy; and more clarity is brought into it (the new laws), it will be better.” In addition, costs are another factor associated with implementation of privacy regulations. Moreover, it is up to the outsourcing company to determine if they want to implement laws and not the government because it is not compulsory. However, by following the government rules, these firms can bypass the liability involved.


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