Technology & Requirements

How to Handle SI Outsourcing with Security Requirements

A guide to managing outsourced software development with security requirements (finance, healthcare, public sector, personal data processing), including mandatory security items.

Freesi·2026-02-17 Updated

Summary in 3 Lines

•Services that handle personal data are legally required to implement technical and administrative safeguards under data protection law.
•Security requirements must be factored into the design from the very beginning of development; adding them later increases costs by 2-3x.
•Basic security (SSL, encryption, authentication) is mandatory for every project and adds approximately 10-20% to the total cost.

Mandatory Measures Under Data Protection Law

In Korea, services that collect and process personal data have legal obligations.

Technical Safeguards (Legal Requirement):

1. Access Control Management: Minimize and log who can access personal data

2. Access Restrictions: Systems to block unauthorized access (firewalls, access control)

3. Encryption: Passwords, national ID numbers, etc. must be encrypted

4. Access Log Management: Access logs to personal data processing systems must be retained for at least 6 months

5. Security Software: Malware prevention measures (server security)

Administrative Safeguards:

Public disclosure of privacy policy

Data processing entrustment agreement (when outsourcing)

Internal management plan establishment

Privacy impact assessment (for large-scale processing)

Penalties for Violations:

Administrative fine: up to 50 million KRW

Penalty surcharge: up to 3% of revenue

Criminal penalties: up to 5 years imprisonment or up to 50 million KRW in fines

Important: When outsourcing development, the agency qualifies as a "data processing trustee," so a data processing entrustment agreement must be executed.

Security Cost and Schedule Impact

Security requirements have a direct impact on development costs.

Security Item	Additional Effort	Additional Cost (%)
Basic security (SSL, XSS, CSRF)	2-3 days	5-10% of total
Personal data encryption + access logs	3-5 days	10-15% of total
2FA + IP restriction + audit logs	5-10 days	15-20% of total
Security vulnerability assessment (pen test)	External engagement	2M-5M KRW
WAF + network segmentation	Infrastructure setup	100K-500K KRW/month
ISMS certification compliance	Several months	30M-100M+ KRW

Ways to Reduce Costs:

1. Include basic security in the initial development (minimal additional cost)

2. Conduct security vulnerability assessments after the first launch

3. Pursue ISMS certification in phases after service stabilization

4. Leverage cloud (AWS) security services to reduce custom build costs

Key takeaway: Adding security later requires modifying the entire existing codebase, which increases costs by 2-3x. Incorporating security requirements into the initial design is the most cost-effective approach.

Essential Security Clauses for Outsourcing Contracts

Here are the clauses that must be included in contracts for projects with security requirements.

Data Processing Entrustment Agreement:

Since the outsourced development agency will handle personal data, a separate entrustment agreement must be executed in compliance with data protection law.

Enhanced NDA (Non-Disclosure Agreement):

In addition to the standard NDA, strengthen obligations regarding the security of data accessed during development.

Security Compliance Requirements:

Security standards for the development environment (VPN access, etc.)

Use of test data (prohibition of using actual personal data)

Obligation to delete data from development environments after project completion

Prohibition of hardcoded passwords/keys in source code

Security Audit Rights:

Specify the right for the client or a third party to conduct security audits.

Execute data processing entrustment agreementEnhance NDA with security clausesAgree on development environment security standardsAgree on test data policy (no real data usage)Specify data deletion obligation after project completionAgree on security vulnerability assessment schedule

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Frequently Asked Questions

Does every project need a security assessment?

Basic security (SSL, encryption, XSS prevention) is mandatory for all projects. Professional security vulnerability assessments (penetration testing) are strongly recommended for projects that process personal data at scale, include payment features, or operate in the finance, healthcare, or public sector.

Who performs the security vulnerability assessment?

It is standard practice to engage a third-party security firm rather than the development agency itself. Self-assessment by the agency lacks objectivity. The cost is typically 2-5 million KRW and takes 1-2 weeks.

Is ISMS certification always required?

It is legally mandatory if your annual revenue exceeds 10 billion KRW, your average daily users exceed 1 million, or you fall under specific sectors such as healthcare, education, or telecommunications. Even if you are not legally required, it can be a commercial advantage when targeting enterprise clients.