What is SOC 2 Type 2, and Why Does It Matter for Indian SaaS Companies?
SOC 2 is a compliance standard that evaluates how well your systems protect customer data. Type 2 is the more rigorous version – it doesn’t just look at whether controls are in place (like Type 1), but whether they actually work consistently over time.
For SaaS startups in India, especially those targeting the US or handling sensitive customer data, SOC 2 Type 2 has become the go-to security benchmark. Without it, many enterprise deals simply won’t move forward.
Why Everyone’s Talking About SOC 2 (And Why You Can’t Ignore It)
If you’re a SaaS founder in India and your customers are in the US, you’ve probably heard this before:
“We love your product. Can you share your latest SOC 2 report?”
And just like that, your deal stalls. SOC 2 Type 2 has become the trust badge for SaaS startups – especially those eyeing enterprise contracts, procurement lists, or even marketplace listings on Salesforce or AWS. Without it, your sales team’s hands are tied. With it, you move faster, close bigger, and look mature to investors, too.
Why SOC 2 Type 2 is a Big Deal in 2025
- Global buyers -especially in the US -expect SOC 2 reports before onboarding vendors.
- It’s often a prerequisite for procurement, VC due diligence, and compliance checklists.
- SOC 2 helps startups bake in trust, maturity, and accountability right from the early growth stage.
Step-by-Step: SOC 2 Type 2 Checklist for Indian SaaS Startups
Here’s your no-fluff, founder-first breakdown of how to get audit-ready.
Define the Scope and Criteria
Start by deciding:
- Which Trust Services Criteria (TSC) apply -Security is required, others like Availability and Confidentiality are optional.
- What systems and teams are in-scope — typically your core platform, cloud infrastructure, and engineering workflows.
Establish Baseline Security Controls
You’ll need clear, working controls across:
- Access management (MFA, least privilege, onboarding/offboarding)
- Change management (dev-to-prod traceability, approvals)
- Logging and monitoring (e.g., CloudTrail, Datadog)
- Vendor risk (contracts, reviews, DPAs)
- Incident response (who acts, how fast, what gets logged)
These aren’t one-time documents – auditors will review how well they run in real life.
Write Policies That Reflect What You Actually Do
Avoid the temptation to download generic policy templates.
Instead, create real policies that match your processes:
- Information Security Policy
- Risk Management Policy
- Secure Software Development Lifecycle (SSDLC)
- Incident Management Procedure
- Access Control Policy
Document ownership and versioning – auditors check this.
Automate Evidence Collection
Manual spreadsheets don’t scale. Most Indian SaaS teams use a GRC tool (like Paracomply) to:
- Assign control owners
- Automate tests and tasks
- Set up reminders for renewals, reviews, and risk assessments
- Generate audit-ready evidence on demand
Run an Internal Risk Assessment
Before the official observation period begins, conduct an internal audit:
- Flag missing evidence
- Fix misconfigured tools
- Align teams around what “compliant” means
Think of this as rehearsal — it saves a lot of pain later.
Complete the Observation Period (3–12 Months)
Type 2 requires real-world control operation over time. You’ll track and document controls actively for at least 3 months (many aim for 6).
During this phase:
- Don’t change core processes without documentation
- Keep controls and alerts running
- Conduct reviews and log activity continuously
Work with a Licensed CPA Auditor
SOC 2 audits can only be performed by licensed CPA firms. It’s not something you can self-certify — and choosing the right auditor matters.
- You’ll want someone who:
- Understands the unique challenges of Indian SaaS teams
- Can work with your GRC platform (like Paracomply)
- Is responsive across time zones
Here’s what the auditor typically does:
- Reviews your documented evidence
- Interviews key stakeholders from engineering, HR, and leadership
- Confirms that your controls ran consistently during the observation period
- Issues your official SOC 2 Type 2 report
The good news? You don’t need to navigate this alone.
At Parafox Technologies, we don’t just hand you a checklist – We coordinate with the CPA firm on your behalf, help you prep for every stage, and stay involved until your final SOC 2 report is delivered and signed.
That’s full-spectrum handholding – from implementation to audit to certification.
SOC 2 Type 2 Cost for Indian Startups in 2025
Costs vary depending on your company’s size, scope, and whether you’re managing the process in-house or through a partner.
| Business Type | Cost Estimate (INR) | Timeline |
|---|---|---|
| 10 – 30 employees | ₹4 – 6 lakhs | 4 – 6 months |
| 30 – 100 employees | ₹7 – 10 lakhs | 5 – 7 months |
| 100+ employees | ₹12+ lakhs | 6 – 9 months |
Tips to Accelerate Your SOC 2 Type 2 Journey
- Appoint a dedicated internal lead — ideally someone with security or infra knowledge.
- Start with a shorter observation window (e.g., 3 months) if you’re in a hurry.
- Use automation wherever possible — evidence, policy tracking, renewal alerts.
- Work with a compliance partner like Parafox Technologies who offers end to end support.
Want to Make SOC 2 Simple?
At Parafox Technologies, we guide Indian SaaS startups through every step of SOC 2 Type 2 Compliance – from control design and tool setup to auditor selection and final reporting.
Our platform, Paracomply, helps automate 70% of the heavy lifting – and we’re offering 50% off GRC platform access for all new SOC 2 projects.
