DPDP Countdown: Why employee data is India Inc.’s next big compliance test
With Aadhaar, PAN and payroll records at stake, the Digital Personal Data Protection Act is forcing companies to rethink governance, security, and trust in the workplace.
ADVERTISEMENT
As India gears up to notify the final rules of the Digital Personal Data Protection (DPDP) Act, 2023, a new compliance flashpoint is emerging- not customer privacy, but employee data protection. From Aadhaar and PAN details to payroll information, even a small leak can expose workers to fraud, harassment, and identity theft.
For organizations, lapses won’t just be seen as IT glitches- they will be legal violations carrying financial penalties, reputational loss, and broken trust.
“Employee data is as sensitive as customer data. With the DPDP Act, the risk of leaks is no longer just a technology lapse but a compliance breach,” warns Vijender Yadav, CEO and Co-founder of Accops.
Until now, most companies treated employee data protection as a secondary IT task. The DPDP Act changes that calculus. The law sets out strict obligations for data fiduciaries, with limited exemptions for employers in cases like protecting trade secrets or preventing corporate espionage.
“Beyond these purposes, fiduciaries must safeguard employees’ digital personal data against leaks and comply with reasonable safeguards,” explains Kamesh Shekar, Associate Director, The Dialogue.
“For smaller companies and start-ups, this transition may increase operational costs, but privacy-enhancing technologies can ease the shift. A phased approach is likely, giving industry time to adapt.”
The High Cost of Leaks
Experts underline that the consequences of mishandling employee data are devastating.
“When employee data leaks, it doesn’t remain a minor privacy lapse, it becomes a chain of high-risk exposures,” says Amit Relan, CEO & Co-founder of mFilterIt.
“Identity details like Aadhaar or PAN can fuel KYC fraud, SIM swaps, and forged IDs. Payroll records turn into social-engineering weapons. Even contact details can enable doxxing, stalking, or harassment. For organizations, this translates into regulatory penalties, reputational loss, and legal liabilities.”
Relan’s point echoes a growing realization across industries: employee data leaks are a national security-level concern, not just corporate slip-ups.
Security by Design, Not as an Afterthought
Preventing such disasters means organizations must overhaul their data governance models.
“Sensitive data like Aadhaar, PAN, and payroll must be encrypted both at rest and in transit,” notes Tarun Wig, Co-Founder & CEO of Innefu Labs.
“Tokenization and data masking should be applied wherever possible. Access must be tightly controlled with role-based permissions and multi-factor authentication. Continuous monitoring and automated alerts can help detect unusual activity before it causes damage.”
For Wig, compliance is not a checkbox exercise but an organization-wide responsibility: mapping personal data, auditing systems, and maintaining accountability logs.
Others see the DPDP Act as a turning point to rebuild workplace trust.
“The DPDP Act isn’t just a storm to weather- it’s a rulebook for creating a safer digital workplace in India,” argues Vikas Singh, Chief Growth Officer at Turinton AI.
“The path forward is practical: collect only what’s necessary, explain why you need it, retain it only as long as useful, limit access, encrypt by default, maintain tamper-proof logs, and give employees the right to challenge automated decisions.”
At Turinton, Singh adds, privacy drills and human checks are becoming as important as delivery metrics.
Similarly, Amin Habibi, Co-Founder & COO of VergeCloud, says this is an inflection point: “Protecting sensitive employee data is no longer just a technology issue- it’s a compliance and governance imperative. Adopting a privacy-by-design approach means embedding controls, encrypting data, and enforcing strict access policies so security becomes the default.”
AI, Automation, and the Future of Compliance
The DPDP Act is also expected to accelerate technological innovation in the compliance space.
“India’s DPDP Act will forever change the way organizations approach data security architecture,” says Harsha Solanki, VP GM Asia, Infobip.
“We expect a rapid shift toward AI-driven consent management, automated privacy impact assessments, and integrated platforms that unify compliance with customer engagement.”
For many, the biggest shift is cultural.
“This is about showing employees that we genuinely value and protect their privacy,” stresses Dhiraj Udapure, CTO at SCS Tech India Pvt. Ltd. “That means solid governance plans, ensuring third-party vendors follow the same standards, and being transparent with employees about what’s collected and why. Ultimately, it’s about trust as much as it is about compliance.”
The DPDP Act marks a paradigm shift in India’s digital workplace. Companies can no longer afford to treat employee data protection as an afterthought. Encryption, governance, zero-trust access, audits, and transparency are becoming baseline expectations.
As Yadav of Accops puts it, “When governance and technology go hand in hand, companies not only stay compliant but also safeguard employee trust.”
