How to Ensure DPDP Act Compliance During IT Retrenchment with Limited Funds

IT retrenchment is tough. Companies need to cut costs while protecting employee data. DPDP Act compliance is essential. Failing to comply can lead to fines up to ₹250 crore. This guide shows simple, cost-effective ways to stay compliant.

Understanding the DPDP Act Compliance

The Digital Personal Data Protection (DPDP) Act, 2023, ensures personal data is collected, stored, and processed securely. Companies must:

• Limit access to sensitive data.
• Delete employee data after it is no longer needed.
• Communicate clearly with employees about data usage.

Non-compliance can damage reputation and attract severe penalties.

Challenges During IT Retrenchment

IT retrenchment introduces several compliance risks:

• Limited funds: Hiring dedicated compliance staff or buying expensive tools may not be feasible.
• Data volume: Employee records, payroll, and personal information need careful handling.
• Time pressure: Sudden layoffs leave little time for proper data management.
• Regulatory overlap: DPDP Act requirements may intersect with GDPR and other laws.

Strategies for DPDP Act Compliance on a Budget

1. Prioritise Data Minimisation and Deletion

• Need-to-Know Off-Boarding: Limit system access to essential data.
• Immediate Access Revocation: Remove system access as soon as retrenchment notice is given.
• Asset Retrieval Checklist: Collect all digital assets and ensure company data is deleted from personal devices.
• Data Destruction Confirmation: Automate secure deletion of personal data once employment ends, unless legally required.

2. Lean Technology and Process Automation

Use existing or low-cost tools to maintain dpdp act compliance:

• Shared Network Permissions: Apply role-based access controls instead of buying new software.
• HRIS/IT Workflow Integration: Link HR termination workflows to IT access systems to automate revocation.
• Digital Data Inventory: Document all personal data locations using spreadsheets or wikis.

“Privacy cannot live solely in IT. Leadership buy-in and process culture are critical,” notes an industry expert.

3. Upskilling and Governance

• Internal Data Guardians: Train HR, IT, and Legal staff to manage data offboarding and documentation.
• Documentation: Record all steps to demonstrate compliance to regulators.
• Leverage GDPR Knowledge: Build on existing GDPR practices to efficiently comply with the DPDP Act.

Real-World Examples

• Tech Mahindra handled 10,669 layoffs in 2025 by strengthening offboarding processes.
• Oracle India used AI-driven workflows to manage over 100 role reductions while securing data.
• Big four consultancies like PwC improved storage practices post-DPDP to avoid compliance gaps.

These examples show that low-cost audits, automation, and staff training can reduce risks.

Future Outlook

Data privacy rules in India will tighten, with the 2025 Digital Personal Data Protection Rules enforcing stricter consent and breach reporting. Companies that adopt AI tools for monitoring and embed privacy into their culture will maintain competitive advantage while remaining dpdp act compliant.

Actionable Takeaways

• Revoke data access immediately after layoffs.
• Train staff on consent, data minimisation, and retention.
• Map employee data and secure it with low-cost encryption.
• Set up simple breach notification procedures.
• Use offboarding checklists from GDPR best practices.
• Hire affordable consultants for audits if needed.

FAQ

1. What is the DPDP Act?

India’s law protecting digital personal data, requiring consent and secure handling. Only 9% of firms fully understand it (PwC).

2. Why does DPDP Act compliance matter during IT retrenchment?

Layoffs increase risk of insider threats and require secure data deletion.

3. Maximum penalty for non-compliance?

Up to ₹250 crore per violation (PwC India).

4. Is Data Minimisation cost-effective?

Yes, it reduces data exposure and simplifies compliance.

5. DPDP Act vs GDPR accountability?

DPDP places sole responsibility on the Data Fiduciary.

6. What is Purpose Limitation?

Data can only be used for the specific purpose it was collected for.

7. Most effective low-cost action?

Automated HR-to-IT access revocation immediately after retrenchment notice.

Conclusion

Even with limited funds, IT companies can achieve dpdp act compliance through strategic planning, lean technology, process automation, and staff empowerment. Transparent, documented, and proactive compliance strengthens trust, prevents fines, and positions businesses for long-term success.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

For expert legal help, please contact us:

• Email: inquiry@lawcrustbusiness.com