Published Editorial

Disaster Recovery and Business Continuity Planning for IT units - A perspective

March 2017

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Hindu Business Line

By

Gyanendra Tripathi
Tax Partner, EY India

When disaster strikes, organizations switch to a recovery mode involving IT Systems, Data and work space. This increases the importance of DR/BCP. After successfully recovering IT Systems & Data; organizations encounter a crisis without people, having a place to work from. In such a case, the IT systems or the recovered data are practically of no use. Hence, companies have come to realize that in addition to IT recovery, workplace recovery should be an integral part of any successful DR/BCP strategy.

This is precisely where the Work Area Recovery (WAR) service is required which provides a fully managed alternate workplace capability for employees to work from; in case their production workplace is disrupted due to any outage. A typical WAR site offered includes full-fledged office with desktop, LAN, meeting /conference rooms, server rooms, swipe card security, CCTV surveillance system – everything employees require to resume operation immediately.

Government of India through Ministry of Commerce (MoC) issued detailed guidelines vide Instruction No.D.12/25/2012-SEZ dated 22 February 2013 (‘guidelines’) for setting up DR/BCP centres for IT/ITES SEZs. While the guidelines are of immense help, some additional points could be considered.

First - The current guidelines restrict the DR/BCP centres to be set-up within the legal entity via branch model. This requirement could pose a challenge for outsourcing such WAR services to experts which may be more cost efficient and effective. This is graver in the case of standalone SEZ units without a branch and hence they would need to invest in an in-house DR/BCP centre adding to the cost of operations. Such model is not viable for Micro, Small and Medium Enterprises (‘MSMEs’).

Second – The guidelines provide that DR/BCP centres can be set-up by a SEZ unit at another bonded location like STP/SEZ/EOU, however, to ensure business flexibility, the Government should also allow operating such centres from DTA unit, may be conditionally, if the fear is the misuse of SEZ scheme. In any case, it is a temporary arrangement till the time systems are back and running.

Third- Closer look at the subsequent guidelines issued in October 2013 in the context of STP units seems to suggest that the guidelines of February 2013 are not replicated for STP units which means a SEZ unit can set-up DR/BCP in STP but a STP unit cannot set-up DR/BCP in SEZ. Government should adapt similar and refined guidelines for STP units as both are ultimately governed by Ministry of Commerce.

Fourth –The guidelines clarify that SEZ units can provide to offer end to end services through a DR/BCP site for third party overseas clients but typically, the overseas clients entrust responsibility to Indian GIC, who in turn want to get DR/BCP support from professional service providers operating from India and front end their overseas clients. The change here would encourage outsourcing model even for Indian captives with a direct contract with a DR/BCP experts.

We all know that the intention of the MoC behind introducing SEZ/STP regulations was to promote exports from India on an international platform. The guidelines are issued to secure the SEZ units critical business processes which can suffer disaster and uncertain events, impacting the exports of India. However, enough -yet controlled flexibility can be the mantra for the Government and we hope the guidelines could be amended to accommodate the above industry expectation.

(Gaurav Trilokchandani, Director, Tax & Regulatory Services contributed to the article)

(Views expressed are personal)