Updated: January 30, 2023

NDA in Software Development

NDA in Software Development: Protect Your Business’ Confidential Information

Disclaimer: This post is intended for informational purposes only and may not be considered legal advice. For legal advice that is specific to your situation or project, we recommend talking to your attorney.

Contracting with third-party vendors to support any business processes — from marketing to finance to leadership consulting — requires sharing some amount of confidential information with outsiders. The nature and quantity of that information varies depending on the vendor’s role, but it’s especially significant for companies working with custom software developers to create new systems that will help run and grow the business.

The software vendors will need access to information about business processes, the intellectual property underpinning existing systems, product roadmaps, and perhaps even customer and financial data, for starters. As this is sensitive information, it stands to reason that companies will want to find a way to protect it, ensuring the software developers (or any vendors who will need access to company “secrets”) cannot share it with any other parties without explicit permission.

For that, we recommend a nondisclosure agreement.

What Is a Nondisclosure Agreement?

A nondisclosure agreement (NDA) is a legally binding document that is executed to protect the confidentiality. When one party is asked to share confidential information with another, the sharing party can ask the recipient to sign an NDA indicating their commitment to protecting that information — and establishing consequences should the recipient breach confidentiality.

Types of Nondisclosure Agreement

There are three types of NDAs you and/or the parties you’re working with may need or want to sign.

Unilateral NDA

Under a unilateral NDA, only one party is agreeing to protect confidential information (likely because they’re the only party that will be handling any confidential information).

Bilateral NDA

A bilateral agreement commits both parties to protecting each other’s sensitive materials. This isn’t quite as common as a unilateral NDA, but it often creates a stronger foundation of trust because it indicates that both parties have skin in the game.

Multilateral NDA

Multilateral NDAs involve more than two parties that are sharing—and therefore bound to protect—confidential information with one another.

When Do I Need to Ask for an NDA?

It’s a common practice to sign NDAs in software development, as a developer needs a lot of insight into the business in order to design and execute a project. At Syberry, our clients often ask us to sign NDAs before any detailed conversations about a project take place, beyond just general ideas. And we’re happy to oblige. There’s nothing more important to us than our clients’ trust.

In return, we often ask clients to sign NDAs, themselves, so that we can share some of our own confidential information with them, including information about previous experience and similar projects (to the extent allowed by our agreements with other customers). When this is the case, we want to be sure our new clients aren’t going to distribute or use that information for any purposes unrelated to our project, just like they want to be sure we won’t distribute or use theirs inappropriately.

When both parties are requesting the other to sign an NDA, the two parties can sign a “Mutual NDA” instead — one document outlining both parties’ obligations to protect sensitive material.

What Should an NDA Include?

Every NDA will look a little different depending on the nature of the parties and of the information being shared. However, there are several components that must be clearly defined:

The Parties Involved

The Information to Keep Secure

What information is being protected? Only documents? Only information shared in writing? Or information shared verbally, as well? Furthermore, what isn’t confidential? Information that is already public knowledge, for example, doesn’t need to be protected under an NDA, so it should be explicitly carved out of the agreement.

Who owns the information being shared? If either party’s IP is owned by multiple parties, all parties (and their business addresses) must be listed, along with the names of anyone with the authority to execute the NDA on behalf of their principals.

The Duration of the Agreement

An NDA must outline a finite duration during which it is valid and enforceable. The industry standard is up to two years, but this term can be longer or shorter.

The Parties’ Obligations in the Agreement

Who has the right to handle confidential information from either party? Is it only the leadership that’s eligible to access confidential material, or can other employees see it, too? For example, can the project managers and developers assigned to a client’s project have full access to the materials? This section may contain specific names or refer more generally to a group of people involved in the project.

Consequences of Breaching the Contract

Should either party inappropriately share or otherwise mishandle confidential information, what recourse will the damaged party have? This could include financial damages and legal costs, for starters. The general terms of these consequences, however, should be outlined in the document so both parties are crystal clear on what’s at stake.

Red Flags: Things Better Avoided in the NDA

Again, we’re not here to give legal advice. If you’re ever in doubt about a term or clause in an NDA, we recommend reaching out to your attorney for help getting it just right. But here are a few things to keep an eye out for when reviewing an NDA someone has asked you to sign — or when writing one yourself for someone else to sign.

Unclear Definitions or Overly Broad Language

An NDA must be specific in identifying the protected information. If it’s too broad, that may make it difficult to enforce the contract, and it may even make it difficult for the signing party to operate their business if too many non-confidential materials fall under its umbrella. Usually, it is considered good practice to include only to the IP related to a specific project.

Infinite Duration

While it’s ok for the NDA to survive the engagement by a period of time, if it lasts in perpetuity, it’s overreaching.

Legal Violations:

An NDA may not contain terms or rules that violate existing legislation or regulations — or that would force either party to violate those rules.

Is an NDA Ever Not Necessary?

An NDA isn’t always necessary, especially when two parties are just beginning conversations and discussing a project in general terms. It’s not until you get into the weeds about the details and begin discussing scope of work or software requirements, that it’s likely sensitive information will be shared.


Who should you sign an NDA with?

In general, it’s a good practice to sign an NDA with any party for whom you’ll be handling sensitive information — and to ask any party that will be handling your confidential materials to sign one, as well. A good relationship between a client and a software vendor is built on trust, and either party should be happy to acknowledge its dedication to protecting the other party’s sensitive information. An NDA is a powerful way to do just that.

What happens when NDA is breached?

That depends on the terms outlined in the NDA itself. Breaching a confidentiality agreement could expose you to financial penalties or legal actions. The contract should specify the bounds of those consequences; if not, push to include those before signing.

What is the time frame of the NDA?

Again, that will be specified in the NDA itself. The time frame is likely to last beyond the end of the engagement, but it should not be perpetual.

Publication date: May 11, 2020
  • IT trends
  • outsourcing

Learn more about how Syberry can help your business achieve its every goal

What our customers say about us

Syberry’s team was highly responsive and communicative, managing our project smoothly, responding immediately to any issues that arose, and delivering great software at a reasonable price.

Richard Harkness


Elk Grove, CA

How we help ADEPT Driver Company

We developed a web-based driving simulator for teens and another for adults. The products run on Chromebooks, and the team added features that enable them to measure a driver's ability to avoid a crash.

Technologies used

I don't think you could find a better company to manage and build your project. I get so many compliments on my application, and it has a lot of unique and complex development.

Todd Surber


Charleston, South Carolina

How we help PIXRIT Company

A photographer approached us to build a web-based software platform that combines the fastest social media manager with state-of-the-art galleries and provides the ultimate tool for photographers to upload, store, back up, and share their photos and manage their SMM activities.

Technologies used

The high-quality, user-friendly software Syberry created for us has helped grow our clientele, and we were very pleased with their partnership. Syberry was straightforward and consistent in their communication, met every deadline, and ensured a hassle-free development process.

Vince Hughes

Owner, Steel Estimating Solutions

Knoxville, TN

How we help Steel Estimating Solutions Company

Our client was inspired to create a product that helps steel erection companies perform faster, more efficient estimations and bids. We developed original proprietary software from the initial concept.

Technologies used

Syberry delivered world-class service for a cost-efficient price. They communicated well with our team throughout the process, breaking down steps and utilizing a streamlined management system to keep everyone in the loop at all times. The resulting new platform far outperforms its predecessor and has received rave reviews.

Bill Fahy

Owner, FDI Creative Services

Houston, TX

How we help FDI Creative Services Company

Following strict regulations and requirements, we used AWS to develop a custom e-commerce web app that includes shipping integration. Since the site’s launch, the team has continued to make updates.

Technologies used

The application was delivered on time and within budget. Syberry explained their process thoroughly and accommodated to scope changes effortlessly. Their stellar project management, highly responsive communication, and proactive attitude set them apart.

Ricardo Casas

CEO, Fahrenheit Marketing

Austin, TX

How we help Fahrenheit Marketing Company

We developed a large, complex .NET application with various third-party integrations. The team built the software from scratch based on existing wireframes.

Technologies used

The end solution exceeded the client’s expectations. Syberry delivered high-quality products on time and at outstanding value. They provided frequent updates and repeatedly sought feedback at each stage. Customers can expect a highly experienced team that easily translates concepts into solutions.

Rudy Milkovic

Executive Director, Velikom

Austin, TX

How we help Velikom Company

Our team built video streaming software as a web and desktop app for a third-party client. We completed end-to-end development—from scoping to feedback cycles to QA—using PHP and Wowza Streaming Engine.

Technologies used

Syberry has significantly improved our existing platform, and they continue demonstrate their dedication to our business goals and needs by making thoughtful suggestions for enhancements. The Syberry team is communicative and reliable, mitigating all our concerns about outsourcing software development.

Cory Kowal

VP of Products, THG Energy Solutions

Tulsa, OK

How we help THG Energy Solutions Company

Taking over for another vendor, we served as the ongoing software engineering partner for an energy company’s cloud-based platform. The company provided scoping, development, testing, and deployment services.

Technologies used

Syberry has been an invaluable partner in development. Their impressive team was more than able to fulfill our project needs, and their expertise and dedication led to smooth collaboration every step of the way. The result was a successfully launched product that has received lots of positive feedback.

Chris Cox

CTO, MyMelo

Louisville, Kentucky

How we help MyMelo Company

We provided staff augmentation resources for a development project. The team contributed engineers to follow an established roadmap to perform updates and add features.

Technologies used

The database Syberry developed has empowered 40 organizations to help in the fight against COVID-19. A communicative partner, the Syberry team worked quickly and efficiently to launch the website, and they continue to invest their time and efforts into the project.

David Snyder

Product Director, Covid Resource Network

West Orange, New Jersey

How we help Covid Resource Network Company

The company developed a website that serves as a database where organizations can find and donate to other organizations. Currently, the team is working on enhancing the website and fixing bugs.

Technologies used

Syberry was a patient partner, making this engagement feel like a true collaboration. The system they created for us will save our team significant time and frustration.

Joyce Cubio

VP of Operations, Ernie's Mobile Home Transport

Yuba, California

How we help Ernie's Mobile Home Transport Company

The team built an information hub for a mobile home transport and permit service. After discussing the existing system and processes, we delivered a new structure for forms and data.

Technologies used

The Syberry team is skilled at juggling multiple projects. Though they are in high demand, we were confident that they had the resources and the expertise needed to focus on our partnership. Their constant dedication led to a truly successful engagement, and the final product exceeded all our expectations.

John Fox

Executive VP, Fox Business Automation Solutions

Lakeland, Florida

How we help Fox Business Automation Solutions Company

Brought on as a third party, we supplied ongoing development services. The team work on multiple projects and deliver according to predetermined design specifications.

Technologies used

Contact us to learn more about how Syberry can help your business achieve its every goal!

0 / 2500

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Submit loading...

Was this page helpful?