Data residency: what matters, what doesn't
Data residency is a hot topic but not everything about it is equally important. Here's what to actually focus on.
TL;DR
Data residency matters most for personal data and regulated information. For general business data, location is less critical than access controls. Focus on the data categories that carry real regulatory risk.
Key Takeaways
- Not all data needs the same residency protection — prioritize personal data and regulated information.
- Storage location is necessary but not sufficient — also check who has access and under what legal framework.
- Backups and disaster recovery often break residency promises — ask specifically about backup locations.
- Sub-processors can create residency gaps even when the primary vendor is clean.
- Practical approach: classify your data, then match residency requirements to risk level.
The data residency spectrum
Data residency has become a checkbox item in enterprise procurement. But treating all data the same way leads to either over-engineering (spending too much to protect low-risk data) or under-engineering (missing the data that actually matters).
What matters most
Personal data (GDPR Article 4)
Any information relating to an identified or identifiable person. This is the data GDPR is designed to protect, and where residency decisions carry the most regulatory weight.Examples: Customer names, email addresses, phone numbers, IP addresses, behavioral data tied to individuals.
Regulated industry data
Financial records, health data, legal documents, and government information often have specific residency requirements beyond GDPR.Examples: Payment card data (PCI DSS), patient health records (varies by country), classified government information.
Trade secrets and competitive intelligence
Not regulated in the same way, but the consequences of unauthorized access can be severe.What matters less
General business data
Internal project plans, marketing drafts, team schedules, and similar operational data. While you want it secure, the residency location is less critical than access controls.Public information
Product documentation, marketing materials, and publicly available content. Residency adds cost without meaningful risk reduction.The hidden residency gaps
Even when your primary vendor stores data in the EU, watch for these common gaps:
- Backups — Where are disaster recovery copies stored? Many vendors use US-based backup services.
- Search and indexing — Some tools process data in a central location for search functionality, regardless of where the primary data lives.
- Support access — When you file a support ticket, can engineers outside the EU access your data to troubleshoot?
- Sub-processors — Your vendor may use third parties for email delivery, analytics, or error tracking that process data outside the EU.
A practical classification approach
| Data Category | Residency Priority | Action |
|---|---|---|
| Customer PII | High | EU-hosted, EU-owned vendor preferred |
| Employee HR data | High | EU-hosted, strong DPA |
| Financial records | High | EU-hosted, check sector regulations |
| Product analytics | Medium | EU-hosted preferred, anonymize where possible |
| Internal docs | Low | Focus on access controls, not location |
| Marketing content | Low | No residency concern |
The goal is proportional protection: high scrutiny for high-risk data, pragmatic decisions for everything else.