Although outsourcing HR activities like payroll is relatively common, it does come with one hitch – payroll data security. Employees provide a wealth of information to their employers, including contact information, address, bank account information, PAN number, and more.
And when you outsource your payroll to a third-party provider, you are sharing sensitive employee data with them. According to reports, during the third quarter of 2022, about 15 million data records were exposed worldwide through data breaches. Given the increasing threat of hackers, it is essential that you choose a payroll provider who puts paramount emphasis on data security.
How to Find A Payroll Outsourcing Partner That Protects Payroll Data?
Identity theft and data breaches can be a nightmare for any company. When it comes to protecting your employee data, especially when you outsource payroll operations, you need to look for a provider who has high security standards, best-in-class technology infra, constantly evolving encryption methods, adhereance to various certifications, and low human error.
Here are five things to look for when scouting for a payroll partner:
1. Physical Security
Physical security is one of the most overlooked factors when it comes to payroll data security. For one, you need to find a payroll provider who is located in a secure space. Companies based out of co-working spaces or those who share their workspace with other businesses might pose a data security risk. Also, pay attention to the security on the premises, round-the-clock surveillance and perhaps a guard or two.
2. Certifications and GDPR Compliance
Check if your payroll provider has earned security certifications. For instance, ISO 9001 and ISO 27001 are common security protocols that are globally recognized. At Alldigi, we ensure to fully comply with the security standard of ISO 27001 which is considered to have the highest level of security and offers a management system for implementing data security. We also strive to comply with relevant GDPR articles and rules.
3. Cybersecurity
This may go without saying, but in today’s world, where all information is stored online or on cloud, it is imperative that your payroll provider has top-notch cybersecurity measures in place. Apart from the best-in-class malware and antivirus software, ensure that your outsourcing partner employs the latest and best-of-breed software tools and security technologies. After all, you are trusting them with critical information. For instance, at Alldigi, we install a strong firewall in every device of our company. Additionally, the network is protected with intrusion prevention system (IPS) and monitored with intrusion detection system (IDS).
4. PoLP Rule
One of the best ways to verify if your payroll provider will keep payroll data secure is to check whether they implement the “principle of least privilege” rule. This means that only those team members whose responsibilities involve accessing the data can access it. Access rights should be limited and monitored. It would also help if the information was stored on a centralized system rather than being locally available on multiple systems.
5. Legal Backup
It helps to implement and sign legal contracts that can augment your data security. For instance, under the agreement, you may disallow your payroll provider from transferring data to physical storage, require that all data transferred online is encrypted, all data transfers are recorded, allow access to employee data only through VPNs (virtual private networks) in case of remote connectivity, among other things.
Five Questions to Ask Your Payroll Provider
Here are some examples of the kind of questions you can ask your third-party payroll provider to get a better understanding of their data security practices:
- Where will our payroll data be hosted, and who has access to it?
- Will the server be owned or leased, and how will the network be structured?
- Do you have security reporting that tracks inconsistent access patterns, analytics & alerts to notify potential breaches?
- Can you discover, restrict and monitor privileged identities?
- What firewall and antivirus protection do you use?
- What security certifications do you have?
- Does your company fulfill data privacy acts requirements apart from compliant with information security controls
We hope you now have a well-rounded understanding of the importance of securing payroll data and the steps to take to ensure data security.
