All sales and marketing teams, whether at consumer-facing businesses or business-to-business enterprises, rely heavily on data to effectively target consumers. Without data, these teams and their organizations would find it quite challenging to find the right audience for their products and services, and generate leads and sales.

However, it is equally important for businesses of all stripes to use data responsibly. With increasing instances of data being misused, or sold, or stored in a less-than-secure manner leading to breaches, governments and policymakers across the world are recognizing the need for data protection laws. Data breaches are becoming one of the toughest challenges for the entire ecosystem to deal with.

A list of the 15 biggest data breaches in recent history by CSO features some of the world’s largest and most well-known companies and brands, from Facebook and LinkedIn to Adobe, Marriott, and even Aadhaar. Data breaches that affect millions of users have become far too common in recent times, as the CSO article adds. It is incidents like these that underscore the importance of data protection and data privacy regulations and best practices. That’s where India’s Digital Personal Data Protection (DPDP) Act also comes in.

The DPDP Act was introduced in August 2023 to protect an individual’s data privacy rights and promote responsible data management practices. The Act balances an individual’s right to privacy and a business or organization’s legitimate need to process data. It defines personal data as any information that can directly or indirectly identify an individual and places the responsibility of compliance on Data Fiduciaries (i.e. organizations or companies who are collecting the data).

How will the Act impact the way businesses in the B2B space function, and the way they store and use data? Do businesses in the space need to brace for a huge shift? The next section provides a guide on what B2B businesses need to bear in mind in preparation for the Act.

Compliance Impact

The most immediate question on anyone’s mind will, of course, be how the DPDP Act will change compliance processes for businesses. Some say the current version of the Act is not as expansive and all-encompassing as the older framework. The previous versions of India’s data privacy law from 2018 and 2019, for example, created significant compliance requirements that would have affected large and small firms alike.

Previous versions had also proposed the creation of a Data Protection Authority (DPA) with significant regulation-making and supervisory powers. Whereas, the 2023 Act proposes the creation of the Data Protection Board of India (DPB), which will not be a regulatory entity. The DPB’s focus will be preventing data breaches, remedial action in case of breaches, and conducting inquiries and issuing penalties for non-compliance.

However, there will be several changes that B2B companies are potentially required to make to remain compliant with the Act’s rules once it is implemented. Companies that have been proactive about their data collection, use, storage, and purging policies may find it relatively smoother to transition under the new Act.

But, in general, B2B enterprises will likely find that their compliance process must include the following:

Data Mapping & Inventory: B2B firms might need to undertake comprehensive data mapping exercises that help them identify all personal data they collect, store, process, and share. These should include data related to employees, clients, vendors, and/or partners.

Consent Mechanisms: Per the DPDP Act, organizations need lawful bases for processing personal data. To do this, they may have to seek explicit consent from individuals while collecting their data, particularly if it involves sensitive personally identifiable information (PII). Being transparent about what data a company is collecting, how it is storing it, etc, is a good approach to adopt.

Data Security Measures: It goes without saying that the Act may require B2B companies to beef up their data security measures to protect PII from unauthorized access, disclosure, alteration, and destruction. This might involve encryption, access controls, regular security audits, and employee training on data security best practices.

Data Protection Officer (DPO): The DPDP Act might require companies of a certain nature or size to appoint a DPO. This individual will be responsible for overseeing compliance with the Act.

Data Processing Agreements: Under the Act’s provisions, it is B2B companies themselves who will be held responsible for ensuring their vendors comply with requirements. To do that, B2B firms might have to review and update vendor agreements to include specific data protection clauses.

Data Transfer Mechanisms: In case companies are transferring PII outside India, they should ensure that the transfer is compliant with the DPDP Act’s requirements. As with vendors and other third parties, this too might involve reviewing contracts and implementing appropriate safeguards by adding data transfer clauses.

Data Breach Response Plan: All enterprises need to develop and implement solid data breach response plans to address any potential incidents in the most immediate and effective manner possible. This may include procedures to determine the nature and severity of the breach, notify affected individuals and regulatory authorities, and take remedial actions to mitigate harm.

Regular Compliance Audits: Periodic compliance audits must be conducted by B2B companies to make sure their data protection practices are up to date and align with regulatory requirements.

Ultimately, when it comes to data protection and data privacy compliance, adopting a proactive approach is the best way forward for all companies, regardless of whether they are consumer-facing or B2B. Organizations would also do well to consider investing in employee training and awareness to ensure compliance across all teams and departments.

Overall, B2B companies must be proactive about compliance under the DPDP Act, integrating data protection principles into their business processes, policies, and culture. By implementing the necessary changes and prioritizing data privacy, B2B companies can mitigate regulatory risks, build trust with stakeholders, and uphold their obligations as responsible custodians of personal data.

Benefits of DPDP for B2B firms

While the Act will impact the compliance process at B2B enterprises, it could also bring about opportunities that benefit firms.

• Enhanced Data Security: Given the DPDP Act requires more robust data protection measures, B2B companies that comply with it will likely have enhanced data security measures and be better protected from the risk of unauthorized access, data breaches, and potential financial losses.
• Mitigation of Legal and Regulatory Risks: When B2B companies are compliant with the Act, they also mitigate legal and regulatory risks, including the likelihood of facing fines, penalties, litigation, or reputational damage.
• Improved Trust and Reputation: B2B enterprises that prioritize data privacy and transparency could likely end up improving their reputations as trustworthy and reliable business partners. This, in turn, could lead to stronger relationships, increased customer loyalty, and improved brand perception.
• Competitive Landscape: Companies that prioritize data protection and transparency might find themselves gaining an edge and could, in turn, attract partners and clients who also prioritize ethical conduct. It could also further facilitate access to international markets for B2B companies. On the other hand, non-compliance or data breaches could lead to reputational damage, and even potentially eat into a company’s market share and profitability.
• Innovation: To remain compliant under the DPDP Act, and to try to gain a competitive edge in terms of data privacy and protection, B2B companies may also find themselves boosting their innovative capabilities, especially around data governance.

In conclusion, while the DPDP Act will bring about potential shifts in the way B2B businesses access, store, use, and transfer or purge data, it also brings benefits and opportunities. Companies may have to increase their spending on compliance processes initially, but, the long-term benefits of being data privacy compliant could outweigh those costs. The Act could also give B2B firms a chance to adapt, innovate, and gain a competitive edge in the quest for ethical data governance and management.