Millions of data points flow to and from BPO companies and their clients through the BPO’s own processes and systems. Payroll, accounts, customer service, and back office services to clients are part of the service. BPOs are an extension of their client’s business and therefore are highly sought after by cybercriminals. For BPOs, SOC 2 Compliance is the foremost credible way to demonstrate that their outsourcing clients can safely manage their client’s data.
What does SOC 2 mean for BPOs?
The AICPA created SOC 2 to address specific internal control systems that are independent of dollars and cents. For BPOs, the value of your SOC 2 Report is that you can demonstrate that you have made the necessary investments to safeguard the data.
This framework is extremely valuable to numerous industries, however, for BPOs, SOC 2 Compliance is leading the charge. Most of your clients in BPO services are highly regulated organizations like banks or healthcare service providers. Hence, your clients have the right to be as confident as you are in their regulation.
Why is SOC 2 Compliance essential for BPOs?
– Trust and Transparency: Clients have to be assured that their data is secure. A SOC 2 report is a transparent, unbiased, third-party view of your backend processes.
– Market Expansion: Most offshore BPOs servicing Fortune 500 companies do so with SOC 2 Compliance. It is often a gateway to valuable business contracts.
Considered Workflow: Most BPOs tend to grow quickly. SOC 2 makes you standardize your processes. This streamlines error reduction and quality of services.
Working of a Framework: The framework helps find weak spots and gaps around your remote working and call center setups.
Five Trust Services Criteria for BPOs under SOC 2 Compliance
When thinking about how to get BPO SOC 2 compliance, it is important to know that you will need to address each of the Trust Services Criteria (TSC) to get SOC 2 compliance.
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Security (The Common Criteria)
This is the mainstay of all BPOs. Firewalls, two-step verification, and encryption fall under this category. There is also the physical aspect, which can include badge access to your call center or floor where processing takes place.
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Confidentiality
When it comes to customer lists or intellectual property, BPOs come into play. This criterion is about the people, and only people, that need that data to do their jobs.
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Privacy
The Privacy criterion applies to businesses when their BPOs process Personal Identifiable Information (PII). It deals with everything regarding the collection, processing, and disposal of client/customer data.
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Availability
This criterion looks at your internet redundancy, power backups, and plans for responding to incidents. If your customer support is 24/7, your systems have to be operational.
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Processing Integrity
For BPOs that do data entry and financial processing, this criterion ensures the data you create meets the requirements for being complete, valid, and accurate.
SOC 2 Type 1 and Type 2 for BPOs
Type 1: This report outlines your systems for a certain time. It is a good starting report to show clients that you are engaged with their security.
Type 2: This report assesses the effectiveness of your controls over a span of time (typically 6 to 12 months). For a BPO, SOC 2 Compliance Type 2 is the gold standard. It demonstrates that you are compliant with your security measures daily.
Important Steps to Achieve SOC 2 Compliance for BPO
- Determine your Scope
Which locations participate? For BPOs with multiple locations, will the audit be site specific or multi site? Scope decisions impact time and cost efficiencies.
- Perform a Gap Analysis
Evaluate existing deficiencies in your security posture. For example, is there a formal offboarding process? Could remote work VPNs be more secure? Identifying deficiencies in security posture early is critical to SOC 2 compliance.
- Use Access Control Mechanisms
BPOs face high Turnover/Attrition rates. Access controls must be automated. Access should only be given to employees for data that is necessary for their specific role.
- Document Training
Your employees are the biggest threat. For SOC 2 compliance, BPO employees must engage in regular security awareness training. They should all know about phishing and social engineering attempts.
- Audit
You will be partnered with a CPA firm. As your auditor, they will need “evidence” to support the control you have in place. Evidence may include logs, signed policies and documents, and screen shots of your security configuration. Once the auditor is satisfied, you will receive a final report.
Outsourcing Challenges in SOC 2 Compliance
Security of Remote Work: Employees of BPOs now work from home. As a BPO, make sure their home networks are safe and that the right device controls are in place.
High Employee Turnover: Managing user permissions during frequent recruitment and dismissal cycles is tricky. Here’s where you will need a lot of automation.
Diverse Clients, Diverse Needs: Clients/compliance frameworks have different needs. Most of the time, SOC 2 Compliance is an all-rounder.
Importance of Automation
Automation is an answer to the ongoing challenge of compliance. Automation, in real time, for ongoing compliance people. No replica of last minute audit is possible.
When a control fails, continuous monitoring provides your organization with an integrated culture of compliance and the staff with the ability to control all voluntary rights of freedom.
Conclusion
In outsourcing, security is the strongest selling point. SOC 2 Compliance for BPO shows your opponents that securing data is a major priority. It will ensure the longevity of your reputation while also securing larger and more expensive contracts.
There is a lot of work involved for a BPO to be SOC 2 Compliant, but the benefits SOC 2 Compliance can provide a business are considerable. With the information in this guide, the BPO will be able to show that security can be a competitive advantage instead of a cost center.
FAQs
- Why do BPOs value SOC 2 more than other certifications?
As much as other certifications such as ISO 27001 have their benefits, SOC 2 demonstrates compliance in a more preferred manner for North American clients. BPOs operate under what we call a “black box” approach for client data. There’s no visibility or accountability, and SOC 2 reports give them greater visibility and accountability. Reports explain what controls are in place to manage client data. It can be the deciding factor for a client’s auditors to provide approval to subcontract confidential business operations.
- Does a BPO lose the ability to gain SOC 2 Compliance due to the fact employees are working from home?
While this may come as a surprise, it is a “yes” answer. However, this will be more demanding with regard to the controls needed. SOC 2 Compliance will, remotely, be upheld using strict and secure tools, the likes of Company-issued devices, VPNs with Multi-Factor Authentication (MFA), Endpoint Detection and Response (EDR) and the likes. The auditor will need evidence demonstrating that your security policies have been extended to the employee’s home office.
- When should a BPO renew its SOC 2 report?
A SOC 2 report is typically valid for 12 months. As a result, BPOs are subject to annual audits for Type 2 reports, because of the “look-back” period, which identifies any coverage gaps. Continuous SOC 2 Compliance is critical for BPOs, because a report that has been out of date for a month may prompt a client to break a contract due to security concerns.
- What are the BPO Common Criteria?
The BPO Common Criteria are the most basic security requirements that apply to any audit. In the context of a BPO, they are broken down into Access Control (who is able to physically enter the facility or log into the system remotely), Change Management (the processes that surround the testing of software updates), and Risk Assessment (the processes that are in place to detect newly emerging threats). These minimum security requirements must all be met to achieve SOC 2 Compliance for a BPO.
- Does SOC 2 include coverage for BPO’s sub vendors?
Yes. If your BPO uses cloud services (like AWS) or third-party payroll software, you need to keep an eye on them. This is Vendor Risk Management. With your SOC 2 compliance, you have to obtain and review the SOC 2 reports of your sub service organizations to see how they protect your customers’ data.
Moreover, if you need any further guidance on SOC 2 Compliance, please feel free to contact our business advisors at 8881-069-069.
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