The core objectives of service-based IT companies and product-based IT companies are different but they share common traits in Intellectual property disputes, data privacy violation and cybersecurity issues. Therefore, regardless of the type of contract drafted for IT companies, these three areas should be properly addressed. Contracts define the understanding between parties entering into a business relationship, but they become truly meaningful only when risk allocation, deliverable specification, and accountability are effectively addressed through proper drafting.
The law lays down several protective boundaries for confidentiality, but confidentiality clauses in contracts should be thoughtfully and carefully crafted. Employees, agents, consultants, third party software integration are all different parties involved in a project, therefore maintaining confidentiality requires addressing the risk involved with all these parties. Non-disclosure agreements(NDA) and data processing agreements (DPA) should accompany confidentiality agreements to reduce the significant risk involved in each project. Some times choosing a trusted third-party vendor is also equally important while addressing the confidentiality of the projects. The emergence of data privacy laws like GDPR , CCPA and DPDP provides significant compliance responsibility while dealing personal data.
As per the trend prevailing in major IT companies, around 50-60 percent of the projects are from US and European region contributes the second largest stake in projects but it is remind that many others countries like Canada, Brazil, China have enacted data protection laws. In the era of artificial intelligence, the significance of service based software industry is reducing but the risk of protecting the data privacy and confidentiality is same. Drafting become meaningful only when the agreement address the industry specific issues in its true spirit.