Customer data privacy law to curb outsourcing to India

August 8, 2011: Theft of identity is a crime and thus, punishable!

 On April 13th 2011, an amendment to Information Technology Act of 2008 was passed in India. This prevents electronic transmission of customer data without written consent of customers. Some of the recent scams about customer data loss and fraudulent use have made BPO firms and call centers quite conscious about the privacy nature of customer data.

According to the law in India; call centers, sales centers and support centers cannot perform any unauthorized transfer of personal details and other customer information. A company can gather information about a customer only after the written confirmation from customer by e-mail, fax or letter. There are also restrictions and regulations on the disclosure of the data to a third party, the company can transfer the data to any other firm only if the security system followed by other company is complying to the prescribed Indian standards on customer privacy.

China is also in the process of bringing a similar law. The country is planning to implement new data security standards. The companies in China have to wait a little for the new regulation and policies to be approved and implemented.

The pros and cons of this new law are vivid.

As far as India and China is concerned, it is very beneficial for the customers availing the service of Business Process Outsourcing firms. The law makes the clients more comfortable in doing business with the firms. The lawmakers in India say that, this will also enhance the offshore business in India.

On the other hand, Indian and Chinese companies feel that the law should be more flexible, the authorities should re-work on the rules and regulations. They feel that the major disadvantage of the laws is that it will affect the continuous and flexible functioning of certain types of outsourcing processes like sales support and office processing.

Many top executives of the companies in the Information Technology (IT) sector believe that collecting the personal information from very own employees of the company itself is a big question mark, as the consent of the employees are required for doing that. The companies in India and China also find it very expensive to get consents before processing the data. More over it is also difficult for the company to employ new human resource for the maintenance of data.

The revised law and regulations will enhance the security measures to meet the international standards and make outsourcing free of risk and uncertainty in both countries, but it is up to the companies to decide whether they want to implement this law or not.  

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