UK: Key Data Protection Issues In An Outsourcing Context

Last Updated: 28 November 2006
Article by Bridget Treacy

Many of us heard about the recent theft of data by an employee at an HSBC call centre in India. The resulting publicity was unrelenting, partly driven by consumer concern, but also by those with a vested interest in undermining the off-shoring and outsourcing markets. However, such incidents highlight the significance of data protection and security in an outsourcing context.

Sometimes regarded as overly protectionist, the European data protection regime was developed to encourage the free (and secure) flow of personal data across borders. In this article we consider some of the data protection issues which must be addressed by businesses preparing to outsource.

Data Protection Act

The UK’s Data Protection Act 1998 (the "Act"), governs the processing of personal data by data controllers. "Personal data" is any data, or combination of data, from which a living individual can be identified. A business’ staff records, customer details and supplier details would all amount to personal data. The Act imposes obligations on "data controllers" who determine the purposes for which, and the manner in which, personal data will be processed. A business will be the data controller in relation to its staff, customer and supplier personal data. If that business decides to outsource some of its functions, whether they be IT or business process activities, personal data will probably be transferred to the outsource vendor as part of that transaction. In most circumstances, the business transferring its data will remain the data controller which means that even though the data will be processed by the outsource vendor, the business will remain responsible, under the Act, for how those data are processed.

What data protection issues should a business take into account in planning its outsourcing activity?

Issue 1: Know Your Data

The business must first identify what personal data will be processed as part of its proposed outsourcing activity. Due diligence should establish exactly what those data consist of, how they were collected, what the business is entitled to do with them (including whether there are any constraints on transferring the data to third parties or abroad), how the data are processed and what security measures are in place. Most outsource vendors require customers to warrant both (i) the quality of the personal data to be transferred; and (ii) that existing processing activity complies with the Act. Most businesses do not know enough about their internal data protection compliance to be able to provide such warranties.

Issue 2: Identify What Data Needs To Be Transferred, When And How

It is necessary to determine: what personal data needs to be provided to the vendor as part of the outsource transaction; what the capacity of the parties will be in relation to those data (i.e. controller or processor); and how to effect the transfer of the data in compliance with the Act’s "fair and lawful processing" principle. Setting up an outsource may involve multiple points of data transfer: at due diligence; and at various stages after the contract is signed. Different considerations may apply to each transfer.

Issue 3: Transfer Outside The EEA?

Will the transfer to the outsource vendor involve the data being sent outside the EEA? Such transfers are prohibited by the eighth data protection principle, unless the importing jurisdiction has "adequate" data protection. Adequacy may be established in several different ways, but careful consideration and expert advice should be sought in order to determine which route is the most appropriate for a particular transaction. (See BLG’s Data Protection Update - August 2006).

Some outsourcing deals involve an initial rationalisation or transfer of data within the business before it moves across to the outsource vendor. Such intra-group transfers may themselves involve crossborder transfers of the data outside the EEA.

Alternatively, the data may be transferred, at the outset, to an outsource vendor based off-shore. A third possibility is that the transfer is initially made to a local vendor who subsequently transfers the data to its off-shore operation, which may involve the vendor’s affiliates or even a third party processor.

Issue 4: Vendor Due Diligence And Security

Data protection and security considerations must feature in the initial vendor due diligence which should be supplemented by audit rights exercisable during the life of the outsource so that the business may reassure itself that personal data is lawfully processed and protected by adequate security.

It is increasingly common for businesses to impose detailed security obligations on outsource vendors. These may cover technical security measures relating to the systems over which data may be transferred, accessed, manipulated and stored, as well as organisational security measures governing access to premises such as a prohibition on staff bringing data storage devices on the premises (e.g. mobile phones and memory sticks).

Issue 5: Contract Terms

It is key to establish the capacity in which the outsource vendor will process the data. If the vendor is a mere processor, it will have no obligation to comply with the Act and the business must seek to flow down into the outsource contract certain of its obligations as controller under the Act. In addition, the business must, as controller, evidence the processing arrangements by a written contract, require the vendor to process data only in accordance with the business’ instructions, and ensure that the processor has in place adequate technical and organisational security measures. These detailed requirements should be drafted with expert input.

The Information Commissioner is currently investigating allegations that mobile phone call centres in India are being targeted by criminals seeking access to UK citizens’ financial records. In this context, the ICO has reminded businesses that they remain responsible for the security of their customers’ data, even where they outsource aspects of the processing. Amongst the ICO’s enforcement powers for breach is the ability to order a business to stop processing personal data outside the UK.

Conclusion

As European data protection regulators focus increasingly on outsourcing, so individuals are becoming more aware of their data protection rights. Failure to deal adequately with data protection issues at the outset of a transaction could result in long lasting damage to a business’ reputation in the event of a breach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.