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What Is DPA and Why Is It a Must in Software Development Outsourcing?

by Vitaliy Podoba
Vitaliy Podoba avatar

More than $20 million.

This is what you may lose in case you violate GDPR data protection requirements.

This number is much higher than the budget of some startups. 

Imagine paying a fine that is 100 times higher than your budget just because you fail to handle protected information properly!

To avoid such a catastrophe, you should be more than careful while handling sensitive data. 


A tried and trusted way is to delegate handling all the data to the most reliable partners. 

And, of course, signing an appropriate contract is also vital.

In this article, we will tell you about DPA (Data Processing Agreement), which is a vital contract that secures you from many legal concerns and fines. 

Do you want to know what is DPA is, why it is so important, and how you should approach the signing of this contract? 

Then, you’re in the right place. 

Read this article, to know what is DPA, all of its dos an don’ts, and secure your startup from the main data security concerns.

So, let’s start with a general overview of the DPA meaning and its main points to consider. 

What Is DPA?

The DPA legal contract is a document that regulates the conditions of personal data protection agreement and processing. 

According to it, there is a data controller and a data processor.

Both work with the personal data of EU citizens.

For those who want more clarifications, personal data is any information that helps you identify a person.

The name of your favorite writer is not your personal data, contrary to the information on your place of residence. 

Just like most of those really valuable legal docs, the DPA agreement has a certain template.

It also has a fixed list of things covered.

These are:

  • the scope and the purpose of data processing;
  • information on what data is processed and how it will be protected;
  • clearly defined relationships between the controller and the processor.

As a document, the DPA agreement should include some essential details. 

It goes about:

  • General information. It goes about basic definitions and activities related to the protected data. The better you define the general terms, the smaller the ground for misinterpretations. 
  • Responsibilities. It goes about the roles of agreement participants and the way they share responsibility for handling data.
  • Technical and organizational requirements. How will the data be encrypted? What safeguards will be introduced to protect it? All these and many more requirements should be mentioned in the DPA.

And don’t forget about one more critical part of DPA agreements.

Let’s also clarify the difference between a data controller and a data processor. 

These are the two most valuable entities that interact with data. 

In simple words, a data controller is a person or a company that defines how data should be processed or used. 

And a data processor is someone who processes data on behalf of a controller. 

Do you need more clarity? 

In a typical software development case, the client will become a data controller, while the software development company will go as a data processor. 

For you, as a data controller, finding a truly reliable data processor is really critical. 

Otherwise, you may face some unprecedented problems. 

What are they? Let’s take a closer look. 

Why Does DPA Really Matter? 

Most probably, you’ve heard of GDPR (General Data Protection Regulation). 

In brief, it is a regulation that obliges all EU corporations to protect the private data and privacy of their clients. 

What you should really know as a software founder, is that you will have problems if you violate GDPR. 

Let’s overview these principles by mentioning the questions to which they respond. 

These are: 

  • Lawfulness. Do you collect, process, and apply data without violating any regulations? 
  • Fairness and transparency. Do you inform involved people about how you will collect and use their personal data? Are you fair with these people? 
  • Purpose limitation. Do you collect and use protected data only for a specified and lawful purpose? 
  • Data minimization. Do you collect only the exact amount of data you really need or do you try to collect even more potentially private information? 
  • Accuracy. Are your data archives and the information stored in them clear and accurate?
  • Storage limitation. Do you consider data storage capacity while collecting and processing data? 
  • Integrity and confidentiality. Do you keep the collected data confidential and use it according to the basic integrity principles? 
  • Accountability. Are you capable of some quality data reporting? 

Probably, you find these principles rather general. 

We must disappoint you, it isn’t about “water” without any specific meaning. 

According to the GDPR, there are very specific and clear mechanisms for defining their violations. 

And, believe me, your data protection faults will not be missed. 

The outcomes may be truly critical.

First of all, it goes about damage to your reputation. 

If you fail to conform to the GDPR rules and someone announces it, your actual and potential partners or clients will know. 

Needless to say that a failed reputation will be a catastrophe for you and your business. 

Another great problem is fine

We’ve already mentioned those horrific $20 million. 

Usually, it goes about much less significant costs. 

However, don’t expect that you will go away without extra expenses if you fail to protect data that has to be protected.

Fines are clearly measurable and inevitable if you don’t comply with GDPR data protection requirements.

In the most radical cases, you may even have your product banned from the market. 

Probably, there’s nothing worse for a software founder than finding your prohibited on the most popular application marketplaces. 

To some extent, it is a typical “end of a dream story.” 

And I must say, you should never underestimate this threat. 

If your app is involved in a really significant data leak or is considered a threat to user privacy, the biggest application markets, such as AppStore and Google Play, will definitely ban it.

So, the only way to avoid such catastrophes is to make your application truly secure. 

And that’s when we come back to the question of GDPR DPA security as your safeguard from data-related problems. 

Why Is DPA Important in Outsourcing?

I have already explained the DPA meaning with the example of a typical software development project.

Now, let’s take a look at how this principle works in software outsourcing and when is a data processing agreement required. 

As you may suggest, the client that outsources the development of their dream app to the third party takes the role of a data controller.

Meanwhile, this third party that takes the outsourced project becomes a data processor according to any data privacy agreement. 

Suppose, a large EU customer asks an IT outsourcing company to develop a data management system that will store private client information, organize, and process it. 

The developers from the outsourcing company will need to access the private data of these clients during the product development process

At least, they are obliged to develop this system in a way that makes data leaks and security faults impossible. 

Surely, GDPR says that the organization that defines the purpose of data processing (in our case, it is the data controller) takes more responsibility for data and its protection. 

Still, it doesn’t mean that the data controller will go away without any troubles in case of data regulations violations. 

What does it mean? A data processor is also very interested in making the product secure. 

That’s why the best software outsourcing companies pay much attention to data protection principles.

And GDPR DPA data privacy agreement plays a key role in secure data processing during outsourcing projects. 

It goes not only about their reputation, but also about their responsibility for any fault that may occur. 

So, if you seek a truly reliable software outsourcing partner that will secure you from data safety issues, consider the following aspects: 

Are there Enough Guarantees?

GDPR says that a data controller may take responsibility for a data breach even if it is, actually, a fault of a data processor.

What does it mean to you as a software founder?

Make sure that your data processor provides enough guarantees.

Yes, in case of any data privacy agreement fault, you will be not the only party to face the punishment.

But will it make this punishment easier for you?

I doubt it. 

So, ask your data processor whether they have all the bandwidth required for protecting your data and securing you both from any unpleasant surprise. 

How Will the Processor Use the Data?

Typically, a data processor has a clearly defined extent to which they interact with data.

Make sure that your data processor doesn’t exceed it.

This means, working with sensitive or potentially sensitive data only when it is really needed.

Clearly define the purposes and the cases when your outsourcing company will be able to use the protected information. 

If you find the right partner, you won’t need to check and control everything all the time.

Just find the right one. 

Is there any Room for Interpretation? 

Sometimes, you may interpret specific contract theses and parts differently.

This is definitely not the case of the DPA contract. 

DPA meaning should be crystal clear and don’t give you or your tech partner a possibility for misinterpretation. 

The more straightforward and specific your DPA business document text is, the better. 

Consider the example of laws and amendments.

They often have many seemingly odd words and a detailed description of cases and exceptions.

But such an approach helps legal systems ensure that no person will go away with a crime just because of legal formulation faults. 

And, for sure, the clarity and the straightforwardness of your DPA document is a great way to make your partner understand the situation much better.

If you are satisfied with the answers to all these questions, let me congratulate you: you are in for signing an excellent DPA contract with a reliable partner. 

How to find such a partner? 

The next subchapter will give you the answer. 

5 Steps to Getting a DPA Compliant Product

So, here is a step-by-step guide for building your DPA-compliant product with the most reliable software outsourcing partners. 

1. Find a Reputable Partner

There are many software outsourcing companies that offer their services in the market. But are all of them reputable? 

The first thing you should do is to find a company that is well-known for its responsible approach and quality.

The best way to understand that you are talking to the right guys is to consider numerous things that really matter. 

It goes about their reviews, their portfolio, expertise displayed on the website, and their team.

And don’t forget about communication.

Interviews with the company’s key managers and specialists will tell you a lot. 

How does it work? We at SoftFormance are here to show you a great example.

Contact us, explain your needs and ideas, and see how a great software outsourcing company responds and dives into your project.

2. Check them for a DPA Template

If your potential partner doesn’t understand the DPA meaning, they should not become your actual partner.

And, for sure, never rely on the company that doesn’t know what is DPA.

Although GDPR and its information protection requirements have been around for a while, not all software development vendors take them really seriously.

And even less among them pay attention to the DPA document template as an extremely valuable safeguard. 

An interesting fact is that a company that doesn’t have a DPA contract template is, basically, not GDPR compliant. 

So, make sure to check for a DPA document template before you outsource your software development dreams to a specific company. 

But if you see something like this, then you’re in the right place. 

Please, don’t use it like it is there one-to-one. Different project conditions mean different DPA document points and implications.

Every specific project and case needs a review by a legal representative.

This is something we usually do for our clients with our own lawyer.

3. Review their Data Processing and Security Practices

Now, it’s just about time to review the information processing and security practices of your potential partner. 

These guys should clearly understand the most relevant security concerns and have a detailed list of digital safety measures and practices.

How can you check it? There are two ways.

The first one is about a tech interview in which your potential tech partner explains the best security practices that they are going to apply.

If you are more of a tech-aware person, you will probably understand the main points and make your expert conclusions.

If you are a little bit more away from modern software security trends or you just don’t have enough time for such interviews, research the reputation of your potential partners.

Review their projects, precisely analyze everything, and make conclusions.

For example, you may check the portfolio of SoftFormance to find projects similar to your software development idea.

Believe us, if we mention them on our website, they are completely successful and have been completed without any security concerns 🙂

And it means that we can build on this experience to create brand new secure and multifunctional applications for our clients. 

And, for sure, you can be sure that we know what is DPA and the basics of the DPA meaning. 

4. Sign a DPA Agreement

There’s nothing challenging about this step. You complete it instantly even though it is vital.

Actually, you and your software outsourcing partner just sign a document that obliges you to follow the specified information protection and processing rules.

And don’t forget to print it in at least two copies!

Surely, having such a valuable document lost is also not the best idea. 

After all, the DPA serves as one of your most valuable security guarantees. 

5. … and that’s all

A great partner will handle all the rest.

Your software outsourcing dream team will implement your perfect product without asking you for any involvement.

It’s just like ordering a professional construction team to design a custom vehicle for you (yes, we know that it sounds too cool). 

You tell them about some basic requirements, but you are not involved in the construction process. At least, if you are not an obsessed construction geek.

You just receive a result in some time.

And you are very confident about its quality.

In the case of outsourcing app development to your dream partner, the situation is quite similar. 

Wrapping Up

It is impossible to overestimate the value of compliance and security in software development.

Data regulations often become a challenge that prevents you from making your dreams a reality. 

Does it apply to you?

Do you have a perfect software development idea that you fear implementing because of safety regulations?

Then contact us, share your idea, and we will show you our best practices for GDPR compliance.

Also, share your DPA data protection template with us so that we will perfectly understand all your needs and security concerns.

Our Softaware Consulting company will provide you with a step-by-step guide on regulation compliance.

We will also show you why signing a DPA contract with us is your key to data security. 

Write a message to us, and let’s start working on your product. 

In a legally safe manner.  

Don’t let security concerns ruin your dream that has all chances of becoming a market sensation.

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