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The business process outsourcing (BPO) industry bears a hefty responsibility to its clients and stakeholders due to the sensitive data it processes daily. BPO companies must actively work to block data breaches and ensure data security across the whole organization or face penalties.
However, data breaches and violations hurt more than the BPO provider’s potential revenue. Thus, this article explores the importance of consumer data protection in the industry.
A look into BPO and consumer data protection
Most people’s concept of “what is BPO” often goes back to call centers and customer support, affirming that data is the lifeblood of the BPO industry. For example, personal data and financial information are necessary to resolve customer concerns for financial institutions like banks.
BPO firms involved in supply chain management and logistics handle sensitive information such as supplier and vendor lists and customer addresses. Leaving these exposed goes against most disclosure agreements because it harms the client’s competitiveness and reputation.
Additionally, government officials and information technology (IT) experts in major BPO hubs such as the Philippines agree that few organizations can provide robust data protection. This is due to the lack of security experts and the rapid rise in attacks in recent years. About 75% of the Philippine’s $23 million BPO market is vulnerable if such gaps remain unaddressed.
The above illustrates the importance of data security within BPO organizations. Vulnerabilities in the provider’s infrastructure can expose its clients and its client’s customers. Thus, many third-party vendors continuously apply specialized expertise and cutting-edge technology to protect consumer data.
How BPO firms protect consumer data and users’ privacy
BPO providers must first understand what regulations and practices to follow to ensure consumer data protection. Building an effective information security strategy is incredibly complex unless you organize it into a framework of smaller and more manageable steps.
For example, basic data security measures might include integrating security software into the company’s server to protect existing data. The next step would be to review the data types needed to provide goods and services and carve them to the minimum justifiable amount.
Last, scale the strategy to each department until it encompasses the entire organization. Failure to adhere to data privacy regulations can also result in fines and criminal prosecution. Google, for instance, was fined $93 million for misusing location data after users opted out of the feature. Empowering individuals with the right to opt-out of data collection is crucial for regaining control over personal information and mitigating privacy risks.
The concepts are covered in more detail below to further illustrate the practical approach to consumer data protection.
Study and apply basic data protection measures
Information is easy to weaponize, especially in the hands of malicious actors. The Identity Theft Resource Center reports that in 2023, there were 3,205 data breaches and over 353 million ID theft cases.
Knowing how to properly safeguard personal data should be the standard, but many individuals still fall short. Even with public reminders over the past decades, social engineering and phishing remain viable tools for hackers and thieves. BPO firms minimize these threats through the following strategies:
- Identify vulnerable data within the organization and who is responsible for them.
- Study local and international laws and standards for consumer data protection.
- Consult regulatory bodies on security training, implementation, and certification.
- Catalog security risks and draft disaster recovery and business continuity plans.
- Know relevant penalties and design information security strategies around them.
- Implement data encryption, access controls, and other data security measures.
- Conduct regular audits to maintain regulatory compliance.
Define the scope and purposes of the required data
Another fundamental legal aspect of consumer data protection is transparency in defining what information to collect and process and upholding users’ rights to manage personal data. At its core, consumer data protection requires express consent to collect and process user data.
Facebook and its parent company, Meta, are perfect case studies of companies that publicly failed to comply with data protection laws. In 2018, Facebook faced lawsuits for how it implemented facial recognition to automatically identify users in photos posted on its app.
The company also faced controversy for creating a cache of data through tracking cookies that follow users and non-users off-site. Facebook neither notified the public of this activity nor gave people access to data collected this way. It has since introduced new methods to track users.
To avoid lawsuits worth hundreds of millions of dollars, BPO companies conduct the following:
- Ensure customers provide data with express consent.
- Define the exact purpose and limitation of user data.
- Notify consumers of breaches and planned responses.
- Inform users of their rights and how to manage data.
- Understand cross-border data protection regulations.
Train employees to follow data security protocols
Employees at every level bear responsibility for handling security breaches in BPO firms, such as adhering to non-disclosure agreements to safeguard sensitive information. For instance, an organization’s IT department should prioritize data security when designing its IT infrastructure.
IT executives and managers collaborate to identify data risks in the organization, assign data owners, and set access restrictions following company policy. Employees must undergo regular training sessions with HR and security experts to ensure everyone knows the security protocols.
HR handles employee training on company security protocols and enforces penalties to ensure accountability and compliance. BPO security training also involves understanding local and global consumer data protection standards, such as:
- The U.S. Privacy Act of 1974
- General Data Protection Regulation (GDPR)
- ISO 27001:2022
- Health Insurance Portability and Accountability Act of 1996 (HIPAA)
- NIST Cybersecurity Framework (CSF)
- California Consumer Privacy Act (CCPA)
- Gramm-Leach-Bliley Act (GLBA)
Future trends in BPO consumer data protection
As seen in the Facebook example, companies adapt their data collection methods in response to new regulations. Legislators, in turn, continually review company practices and enact updates to existing laws. The GDPR, for instance, has influenced many U.S. companies with EU clients.
The BPO industry is currently catching up to consumer data protection practices, and U.S. states are slowly rolling out enhanced laws to counter unethical data collection measures. Artificial intelligence (AI) in BPO processes is also beginning to shape data security legislation and standards.
Regulations related to data storage and management, such as the use of cloud services, local data centers, and BPO offerings, are also likely to strengthen. Enforcement, including audits, fines, and investigations, is likewise expected to become stricter and harsher.
The bottom line
Inadequate consumer data protection in the BPO industry means more than financial penalties; it also adversely affects companies’ reputations and ability to operate. BPO companies must manage data at every step to prevent breaches and potential damage to their clients’ businesses.
BPO firms must follow applicable laws, such as the ISO 27001:2022, to reassure clients of their integrity. Training employees to adhere to security protocols is also necessary and should be at the core of every data protection plan.
Let’s connect and discuss how your organization can bolster its data protection strategy.
