10 June 2003

Eversheds e80
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The e-news service from Eversheds
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Privacy Law Outside the UK

We've commented before on e80 about the growing raft of privacy legislation overseas. Traditionally overseas contact centres have been located in areas without great rafts of privacy legislation but the need to take more care when sending work abroad has increased with two unrelated developments this month.

For businesses in the UK and the US India has long been a favourite contact centre location. For some time India has promised its own legislation on data protection and that seems to have come a step closer with news that the Indian Ministry of Information Technology and the National Association of Software and Service Companies' draft Bill is likely to be ready in the next couple of weeks. Reports suggest that a new Act could be law by the end of the year. The authors of the Bill claim it will be modelled on the EU Directive to gain India a place on the EU's approved list of companies for data transfer.

According to a report on Wired News however the tide is turning against India for outsourcing this type of activity. They report that many major US companies, including some of those who process payroll for others, are moving their operations to countries including Romania, Russia, Hungary and the Czech Republic to take advantage of labour costs which are less than those in India. This brings more immediate legal concerns however as all of those countries already have data protection legislation in place, Hungary's being comprehensive enough to satisfy the EU's adequacy requirements already. Romania passed its own laws in November 2001 with the Czech Republic having legislated as long ago as April 2000. Russia first legislated in 1995. Czech and Romanian law again broadly follows the EU Directive with the Czech legislation having been recently reviewed by Spanish, German and Portuguese Information Commissioners.

A recent survey by Forrester estimates that the US alone will lose over 3 million jobs offshore by 2015. For the US privacy problems are likely to be all the more acute given Europe's lead in this area and the fact that US companies are likely to be seen as a soft target for enforcement proceedings with criminal proceedings a possibility in many of these States. Whilst moving jobs abroad may lead to significant cost savings any business moving work overseas should look properly at the extra compliance regimes which may need to be put in place as a result.

Jonathan Armstrong
Eversheds LLP
jonathanarmstrong@eversheds.com
Direct dial: 0113 200 4658
www.eversheds.com

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