Internal vs. external data protection officer:Which is right for your business?

The internal vs external DPO dilemma

If your business processes personal data, compliance isn’t just a box to check—it’s a cornerstone of any modern business strategy. And that means appointing a Data Protection Officer (DPO) isn’t only about meeting legal requirements under the General Data Protection regulations (GDPR). It’s a decision that shapes your entire approach to security, risk management and long-term resilience.

Get it right, and you safeguard your business against costly missteps. Get it wrong, and you expose yourself to compliance failures, reputational damage and regulatory scrutiny. 

But do you appoint an internal DPO or work with an external security and compliance expert? In this guide, we break down the key differences, benefits, and challenges of each approach to help you make the best choice for your business. 

Why your business might need a DPO

The financial risks associated with non-compliance continue to grow. According to the CMS Law 2024 GDPR Enforcement Tracker, total fines have now exceeded €4.06 billion, with 2,086 enforcement actions—an increase of 510 in just one year. 

So, if your business processes personal data, failing to meet regulatory requirements isn’t just a legal issue—it’s a financial and operational risk. Under Article 37 of the GDPR, organizations that engage in large-scale monitoring of individuals or handle significant volumes of sensitive data are legally required to appoint a Data Protection Officer (DPO).

Even when it’s not mandatory, having a DPO can provide:

• Regulatory assurance – ensuring compliance with GDPR and other data protection laws
• Risk mitigation – reducing exposure to fines, legal action, and reputational damage
• Operational efficiency – streamlining data protection processes and incident response

Internal vs. external DPO: A side-by-side comparison

So, we know having a DPO is a smart move. But what will work best for your business—appointing someone in-house or working with an external security and compliance expert? The table below breaks down the key differences across cost, expertise, availability, and more to help you weigh your options. 

The cost considerations of appointing a DPO 

The cost of hiring an internal Data Protection Officer (DPO) varies significantly based on location and industry. In the UK, the average salary for a DPO is approximately £51,000 a year, with base salaries starting at around £45,000—though this can fluctuate based on experience and industry.

In contrast, external DPO services often start at a fixed monthly fee. This pricing structure can provide a more predictable cost model compared to the variable and long-term commitments associated with hiring an internal DPO. 

When should you choose an internal DPO?

An internal DPO may be the right choice if:

• Your company already has a compliance team with deep data protection expertise

• You require full-time, hands-on oversight over compliance operations

• You operate in a highly regulated sector (e.g., healthcare, finance) and need a dedicated compliance function in-house

However, an internal DPO requires continuous training and can present conflict-of-interest risks if they hold other roles within the company.

When does using an external DPO make sense?

Your business might benefit from an external DPO if:

• You lack internal expertise and need immediate access to specialized knowledge
• You want a cost-effective, scalable solution without long-term salary commitments
• Your company is growing rapidly, and you need a neutral, independent advisor to ensure compliance
• You prefer liability protection—external DPOs often have professional indemnity insurance to cover compliance risks