NDA in IT Outsourcing

Your business has come up with an extremely innovative and new idea of how unique software can make or break your business. Millions of businesses around the globe are embracing the benefits of software and technology for their businesses. Every business has an opportunity to collaborate with every other business and help each other grow. When your business contract with an IT Outsourcing Company, there is numerous confidential information that comes into the picture when businesses decide to collaborate. So, how should a business trust another business while working together?

Table of Content

  1. What is a Non-Disclosure Agreement?
  2. Key Elements of Non-disclosure Agreement
  3. Purpose of NDA
  4. Types of NDA in IT Outsourcing
  5. Conclusion

To bring a resolution, businesses were introduced to a new term called NDA. NDA is an acronym for a Non-disclosure Agreement which is a legal document signed between two organizations under certain clauses. In this blog, we intend to provide a clear idea about what NDA is, why is it important for your business to create NDA, what type of benefits will it provide?

So, to start with, we will first understand what NDA is and how much impact will it play on businesses. Without any ado, let dive into the basics of NDA.

1. What is a Non-Disclosure Agreement?

A non-disclosure agreement is the most common disclosure agreement that is normally signed between two companies before comprehensive negotiations begin (NDA). This is a formal agreement that establishes a contractual trust between a person who keeps a trade secret (such as the idea). And the person to whom the secret will be revealed (i.e., the company you want to outsource development too). Because of the benefits of IT Outsourcing services, many companies are looking to outsource their IT projects and this is the moment when NDA comes into the picture.

An NDA is a contract that allows a corporation to protect its confidential documents. It’s a non-disclosure arrangement that may be exclusive, meaning the information flow is only in one direction. In that situation, only the receiver party is obligated to keep the confidential information about the contracted company secret.

A trade secret, a copyrighted method, future project or product specifics, financials, marketing plans, technological feats, or some other confidential knowledge may all be considered proprietary material. A software development company is mostly the recipient of information. But there are occasions when they share their proprietary expertise or technology with others.

2. Key Elements of Non-disclosure Agreement

Businesses must have analyzed that if you peacefully want to do business, you need to develop a non-disclosure agreement. These agreements are a rescue to what businesses can include in the software development process and whatnot. When you design a non-disclosure agreement, there are few aspects that are of key importance and should be taken into consideration before drafting a contract. Some of the below are the most important aspects of non-disclosure agreements:

  • The parties must be identified.
  • The extent of the receiving party’s secrecy duty is defined by the definition of what is considered confidential.
  • The bans on seeking private treatment
  • The duration of the contract
  • The aspects that need to be included in clauses 
  • Bifurcate between relevant and irrelevant information

You may also read: Strategic Examples of IT Outsourcing Boosting Sales

3. Purpose of NDA

Non-disclosure arrangements don’t have to be prolonged or impossible to grasp. In reality, the best ones are usually just a few pages long. The purpose of NDA is very thoughtful. It is just meant to provide a clear picture to all businesses why they should use NDA for their business. So the purpose of NDA is to eliminate all future disputes and bring both the parties of multiple parties involved or multiple parties. 

The extent of involvement of the partner company in the partnership can be decided by signing the NDA. Hence the software development services are exposed to the risks of classified information or data breach as the partnership will expose the software developers to access information.

As a result, all aspects of it must be included in non-disclosure clauses. Often, both organizations will get a feel of the degree to which they will be able to assist each other and the collaboration’s limits.

For the time being, any paper and piece of information transacted or stated in advance in the agreement would be secured under the Agreement.

4. Types of Confidentiality Agreement in IT Outsourcing

NDA is an integral part of the business to collaborate seamlessly without any interruptions. For companies to do business, it is important to establish trust among both the parties and NDA is responsible to take this on board. NDAs are not just one type. There are numerous ways you can associate with any business using different types of NDA. Basically, there are three types of NDA most of the businesses closely associate to.

Unilateral Agreement – One side discloses sensitive details to a second party under this unilateral deal. The second (receiving) group promises to keep the information private to prevent it from being shared with others. A one-way NDA is another name for this.

Bilateral Agreement – All sides exchange classified information under a bilateral arrangement, with each side promising to keep the information exchanged confidentially. In joint ventures, mergers, and acquisitions, this is also known as a two-way or shared NDA.

Multilateral Arrangement- It is one in which three or more sides agree not to share sensitive information with anybody other than the parties to the agreement. When working for three or more members, this form of NDA is advantageous, but it necessitates mutual consent during the agreement’s negotiation.

5. Is NDA a Savior for all Your Complex Software and App Development Challenges?

Undoubtedly, yes signing a non-disclosure agreement (NDA) is very important for businesses. You can easily handle your business data, confidential information, and all other private data which are vital for businesses. You must ensure that a strong binding arrangement is drawn out with your service provider while outsourcing business processes. Your trade secrets and other classified information will be safeguarded by this NDA. Hence, we can simply conclude this by saying signing an NDA is a smart choice that companies make with outsourcing companies by guaranteeing the confidentiality of all personal business information and concurrently boosting business.

Itesh Sharma

Itesh Sharma is core member of Sales Department at TatvaSoft. He has got more than 6 years of experience in handling the task related to Customer Management and Project Management. Apart from his profession he also has keen interest in sharing the insight on different methodologies of software development.


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    1. Jaun Faraz

      Businesses know that outsourcing their IT operations can be very beneficial but they are afraid of losing control of their project and loss of valuable information. But by reading this article business can overcome this issue. This article completely explains how by signing NDA businesses can take advantage of outsourcing. By signing an NDA your trade secrets and other classified information will be safeguarded.