DPA — Data Processing Agreement Explained in Detail
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, the outsourcing concept offers more benefits and accurate results than in-house services.
Speaking of outsourcing- it is usually referred to as hiring a third party to perform functions of the business. 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. Although 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. A data processing agreement (DPA) is signed between the two parties in such cases. This agreement falls under the compliance of the General Data Protection Regulation (GDPR), an international organization that manages personal data in the European Union.
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. As a matter of fact, 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) including policies, obligations, and privacy matters for data.
A data processing agreement can be defined as an agreement or a contract between the company and the third-party service provider to regulate data processing and its security concerns. This agreement was firstly introduced in 2018 by the European Union to ensure the security matters and enhance the reliability in the outsourcing market. During the making of the agreement, various binding terms and policies were included to protect the data.
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 serves as a protection of the business information under data privacy laws. In modern business, without a data processing agreement signed, the business can be held accountable for the outsourcing party’s unlawful acts/practices. 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 outsource 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 of 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 for both parties involved.
- Responsibilities and Rights: This part of the DPA outlines both parties’ rights and responsibilities, ensuring that data security is maintained without any breaches or audit permissions.
- Security Policies and Measures: Coherent to the previous section, the DPA details the process of implementing technical and other measures of data security along with the technologies mentioned to avoid any data breaches.
These are some of the essential elements of DPA that make it responsive. However, there are other elements that 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
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.
Originally published at https://www.uniquesdata.com on April 22, 2024.
