IT Compliance: A Guide To Understanding The Basics

Updated 21 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

For businesses that promote digital services, have an online presence or use electronic systems to collect and store data, meeting information technology (IT) compliance standards is important for protecting private information and maintaining customer trust. These standards vary by industry and company, so learning about some common compliance standards can help you determine what regulations apply to the business for which you work.

In this article, we explain what IT compliance is and why it is important, and we provide three compliance standards for businesses to consider.

What Is IT Compliance?

IT compliance refers to businesses meeting all legal requirements, standards and regulations for the software they use. Achieving these standards means following all industry regulations, government policies, security frameworks and customer terms of agreements to ensure the security and appropriate usage of software in business. In addition to protecting the security of businesses and customers, compliance standards promote the availability and reliability of services. It also ensures businesses use the software as intended.

The standards for this compliance vary by industry. For example, the health care and finance industries meet certain industry-specific compliance laws to protect themselves and their customers. In health care, organisations follow legal guidelines that protect the privacy and confidentiality of patients when using digital health care services or storing medical records electronically. Businesses that conduct e-commerce require meeting certain regulations to safely store, process, and transmit the customers' payment information. Additionally, other compliance expectations can vary by the size of the business and the customers it serves.

Why Do Companies Ensure Compliance With IT Regulations?

A company ensures its IT practices comply with federal law to protect the integrity of the business and help ensure it is not subject to fines or any other penalties. Being IT compliant can also help a company improve its cyber security, which can allow it to protect data from various threats and ensure privacy for clients and employees alike.

Compliance regulations and standard practices for IT encourage companies to follow specific protocols, which can help them gain the trust of clients and partners. This is because following these principles allows companies to operate as other industry professionals expect, which can increase a company's credibility and integrity.

Why Is Compliance With IT Regulations Important?

Compliance with IT regulations and standard practices is important because it offers many benefits to both consumers and industry professionals. Technology helps advance businesses in nearly every industry, so it is important to maintain compliance. The following are some of the benefits that IT compliance can offer:

Promotes privacy

Information technology compliance is important as it protects the privacy and security of an employer's customers, clients, employees and the business itself and improves the customer's trust in the business. When a company follows regulations and takes special precautions regarding storing and sharing data and electronic transfers, it shows its partners and clients that it values privacy. This can help set an expectation of data privacy and compliance, encouraging other companies to do the same.

Promoting privacy regarding data is important, as it can help protect professionals, businesses and clients from identity theft and hackers. Clients are also more likely to trust a business that values data security, as it shows that the company has respect for clients' personal information.

Enhances reputation

When a business meets a high standard of compliance with digital security and privacy standards, it can improve its reputation and help customers feel more secure using its services. Clients and customers are also more likely to recommend the business to others. This can help companies realise other significant benefits, such as increased sales and a wider consumer base.

Ensures legal compliance

Meeting compliance standards also ensures a business follows legal requirements, minimising the risk of facing legal penalties and accumulating fines. Maintaining legal compliance is a requirement for all businesses, so this is a significant benefit. Understanding more about compliance and specific IT regulations can help you gain the knowledge you may use to ensure the company you work for continues to operate legally. This also allows you to improve the business ethics of your employer.

To enjoy the impact of this benefit, it is important that you and your colleagues maintain current information about IT laws, as the government may pass additional regulations or alter existing ones. Staying informed about data security trends in the industry can also provide you with ideas you can implement for the company to improve how you and your colleagues manage data and other electronic activities.

Allows for international opportunities

Staying compliant with IT standards can also allow your employer to conduct business in geographic areas with specific compliance regulations. This can help a company expand its reach and work with international clients. International business can increase the revenue of the company and may also affect the reputation of the business. This is because clients and consumers may respect a company with a wider reach and associate it with success, as it can serve global clients.

3 Common IT Standards

To better understand some of the regulations a business may consider when ensuring compliance, it may be helpful to learn the following common IT standards that impact businesses:

1. Health Insurance Portability and Accountability Act (HIPAA)

In health care, HIPAA maintains the security of patient health records. It applies to all businesses and organisations that handle, access or transfer medical records, including medical facilities and third-party businesses such as insurance providers. While this is an American policy that doesn't have jurisdiction in other territories, it's common for tech companies to observe it to enable them to work with international clients from the United States. Some specific compliance policies under HIPAA include the following:

Maintaining privacy regulations that restrict sharing medical information without direct patient consent
Ensuring that businesses fully secure electronic files by implementing administrative, physical and technical structures that prevent unauthorised individuals from accessing patient information
Installing a notification system that immediately alerts businesses and patients in case of a security breach or threat

2. The IT Act

The IT Act is a comprehensive governmental regulation that affects how companies can legally conduct e-commerce activities, digital signatures and other electronic transactions. This act also addresses cybercrimes, falsified electronic records and identity theft. The IT Act applies specifically to the private sector, which is an important distinction to make for a business.

A notable feature of this regulation is that it allows the Indian federal government to intercept and monitor any correspondence and information that travels through a digital platform or computer resource. Companies observe this regulation and cooperate with government efforts to stay compliant with the law.

3. General Data Protection Regulation (GDPR)

The European Union (EU) enforces a set of IT regulations called the GDPR. This regulation protects the digital information of European citizens, and any business that collects and handles data related to citizens of the EU has a duty to follow these regulations. Even a business outside the EU has the duty to meet the GDPR compliance standards if it wishes to conduct business and work with the private financial information of citizens in the EU.

An example of GDPR regulation is asking permission from individual users to collect data. Users can either agree or decline when they open a web page. If the user declines, the business deletes any collected data. This regulation ensures that users know when businesses are collecting their data and gives them the option to decline if they prefer to keep their information private.

Please note that none of the companies, institutions or organisations mentioned in this article are associated with Indeed.