Your enterprise buyer asks for "your SOC report" and you spend the next two weeks trying to figure out which one they mean. This lesson prevents that.
Five reports. Each answers a different question for a different reader.
The comparison table
| Report | Standards body | What it covers | Who reads it | When your customer asks for it |
|---|---|---|---|---|
| SOC 1 | AICPA (AT-C 320) | Controls at a service organization relevant to user entities financial reporting | Your customer's external financial auditor | If you process transactions that materially affect their financial statements. Payroll processing, payments, revenue recognition. |
| SOC 2 | AICPA (AT-C 205 + TSC) | Information security controls, at minimum Security TSC; optionally Availability, Processing Integrity, Confidentiality, Privacy | Your customer's vendor risk management, security, procurement, legal teams | Any SaaS that touches customer data. The default demand for enterprise SaaS. |
| SOC 3 | AICPA | Short-form version of SOC 2 for public distribution (no NDA) | Anyone (your marketing team publishes on the website) | Rarely asked for directly. Used as a public trust signal, not as VRM evidence. |
| ISO 27001 | ISO / IEC (Geneva) | Information Security Management System (ISMS) meeting the ISO/IEC 27001:2022 standard | Your customer's security team, especially in Europe, UK, APAC, Middle East | Alternative to SOC 2. Some customers demand one, some the other, some both. |
| FedRAMP | US Federal government (GSA) | Cloud service authorisation to serve US federal agencies | US federal agency contracting officers | Only if you sell to US federal government or federal-adjacent primes. |
SOC 1 versus SOC 2, the confusion
Founders confuse SOC 1 and SOC 2 more often than any other pair. Both are AICPA. Both are examination engagements under SSAE 18. Different reporting section, different criteria, different reader.
SOC 1 lives under AT-C 320 [L2-C1]. It covers controls at a service organisation that could affect a user entity's Internal Control Over Financial Reporting (ICFR). Example: you run payroll processing for a US Fortune 500. If your controls fail, their financial statements could be materially misstated. Their external auditors need to know your controls work. That is SOC 1.
SOC 2 lives under AT-C 205 read with the Trust Services Criteria [L2-C2]. It covers information security controls. Example: you run a CRM SaaS that stores customer contact data. If your controls fail, customer data leaks. Their security and VRM teams need to know your controls work. That is SOC 2.
If you are an Indian SaaS selling any typical B2B product (CRM, marketing automation, HR, IT, help desk, analytics, database, developer tools, security), your customer wants SOC 2, not SOC 1. If you are a payments or payroll processor, they may want both.
SOC 2 versus ISO 27001, the choice
SOC 2 is AICPA-based and reads more naturally to US enterprise buyers. ISO 27001 is ISO/IEC-based and reads more naturally to European, UK, APAC and Middle East enterprise buyers. Some large customers demand both.
The pragmatic Indian SaaS approach: start with SOC 2 Type II if your dominant revenue is US enterprise, or ISO 27001 if it is European enterprise. Add the other one 12 months later. Vanta, Drata, Sprinto and Secureframe all offer combined SOC 2 + ISO 27001 programmes that share most of the control set. The marginal cost of adding the second framework is typically 40 to 60 percent of the first, not double.
Zoho publishes both a SOC 2 Type II and ISO 27001 certification on its security page. Freshworks does the same. That is the current bar for a mature Indian SaaS: both frameworks, both current.
SOC 3, the misunderstood report
SOC 3 is a short-form public-distribution version of SOC 2. Same underlying examination, but the report is stripped down to a summary that can be posted publicly without an NDA. Very few Indian SaaS pursue SOC 3 as a separate engagement because it typically adds 15 to 25 percent to the audit fee for a report that most customers do not specifically ask for. Freshworks, Zoho and most Indian unicorns skip SOC 3 and publish a "SOC 2 Type II report available under NDA" statement on their Trust Portal instead.
FedRAMP, the special case
FedRAMP applies only if you sell to the US federal government or to federal-adjacent primes. Very few Indian SaaS pursue it in the first two years post SOC 2. Cost of a FedRAMP Moderate authorisation runs 500,000 to 2,000,000 US dollars and takes 12 to 24 months. If you have US federal ambition, add FedRAMP after SOC 2 and ISO 27001 are stable. If you do not, FedRAMP is not on your roadmap.
What to tell your customer when they ask
Ask a clarifying question. "When you asked for our SOC report, do you mean SOC 1 (financial controls) or SOC 2 (information security controls)? Most SaaS customers want SOC 2 Type II." Nine out of ten will say SOC 2 Type II. The tenth wanted SOC 1 and you have just saved yourself weeks of confusion.
Next lesson: Type I versus Type II. Design at a point in time versus operating effectiveness over a period. Which to start with, when to move, why the choice matters for the sales cycle.