As your startup grows and begins handling more personal data, whether from customers, employees or users, the need for a solid privacy strategy grows with it. And that leads to one of the most common questions:
Do we need a Data Protection Officer (DPO)? And if so, should we hire one internally or outsource the role?
The answer depends on several factors: your legal obligations, the type of data you process, your risk level and, of course, your resources.
Are you legally required to have a DPO?
The GDPR requires appointing a DPO in three clear cases:
- When processing is carried out by a public authority or body
- When large-scale, systematic monitoring of individuals is performed
- When special categories of data are processed (health, biometric data, etc.)
Even so, many startups voluntarily appoint a DPO to be better prepared for audits, offer guarantees to clients and meet certification requirements such as ISO 27001 or NIS2.
What does a DPO do?
The DPO oversees the privacy strategy and ensures the organisation complies with the GDPR. Their responsibilities include:
- Advising on Data Protection Impact Assessments (DPIAs)
- Acting as the point of contact with the supervisory authority
- Reviewing privacy policies and internal procedures
- Monitoring processing activities
- Supporting audits or security incidents
It is not just an operational role: it is strategic, and it must have genuine autonomy and independence.
When does hiring an internal DPO make sense?
Having an in-house DPO may be the right choice if:
- Your startup handles complex or high-risk data
- You operate in a heavily regulated sector (fintech, healthcare, legal, etc.)
- Your processing volume justifies a full-time role
An internal DPO can embed themselves in day-to-day operations and work closely with product, legal or security teams.
But be aware: finding someone with legal expertise, technical understanding and the independence required by the GDPR is difficult, and expensive.
“The GDPR requires independence. And that’s hard to guarantee if the DPO reports to the team they are supposed to supervise.”
Why outsourcing the role may be the better option
For many startups, an external DPO is the most logical and efficient choice.
You gain specialised expertise from day one without taking on the cost of a full-time hire. It also ensures the independence required by the GDPR and gives you an external perspective gained from working across companies and sectors.
It’s also much faster: instead of recruiting, interviewing and training someone, you can get immediate coverage with a partner who already understands the legal and technical landscape.
What about costs?
Hiring an internal DPO in Spain typically costs between €45,000 and €75,000 per year, excluding training, tools and additional legal support.
An external DPO usually operates under a fixed monthly fee adapted to your actual risk profile. More affordable. More flexible. And scalable.
When does it make sense to switch from external to internal?
Some startups eventually hire an internal DPO when:
- They are undergoing significant international expansion
- They manage complex operations (such as mergers or acquisitions)
- They are under continuous pressure from investors or major clients
Even then, many maintain a hybrid model, keeping an external advisor for audits, reviews or strategic support.
Conclusion
There is no single right answer. But if your startup processes personal data and does not yet have a professionalised privacy approach, outsourcing the DPO role is an effective and safe way to start.
At PrivaLex, we serve as external DPOs for startups and fast-growing companies across Spain and the EU. If you need a clear strategy, quick responses and an approach tailored to your stage, we’re here to help.