Compliance risks and costs are on the rise. An in- creasingly complex regulatory environment is tretching many corporate compliance departments to the breaking point and sending the cost of compliance through the roof. Meanwhile, the fines, lawsuits,
and reputational damage that can result from non-com-pliance continue to grow. In extreme cases, they might
even threaten an organization’s existence.
In response to these challenges, a number of leading
organizations are now outsourcing some or all of their
compliance activities to vendors that specialize in
compliance operations.
Is this a good idea, or is it better to keep all compliance
activities in house? Deloitte & Touche executives
Vishal Chawla and Thomas F. Rollauer offer different
opinions on the topic
OUTSOURCING
Outsourcing compliance might reduce
quality or increase costs. Using world-class specialists
who can be relied upon to do a good job seems likely to
cost more than using in-house staff.
Outsourcing can actually improve
compliance quality while lowering costs. Outsourcing
vendors are able to deliver world-class compliance services
at a competitive cost by capitalizing on economies of
scale that result from standardized tools and processes and
resource sharing across multiple clients.
REGULATORS
Regulators might not be comfortable with
outsourced compliance. Compliance has traditionally been
managed as an integral part of business operations. Shifting
responsibility for compliance activities to an outside party
could lead to increased scrutiny from regulators.
Regulators welcome new approaches
that improve compliance. With outsourcing, the
vendor provides specialization and handles day-to-day
compliance operations but the organization ultimately
retains responsibility for its own compliance. Typically,
regulators are very open to non-traditional approaches if it
helps an organization achieve a high level of compliance.
COMPLIANCE TALENT
Compliance talent is scarce so companies
need to stock up. Growing compliance demands and
increased regulatory complexity are creating a severe
shortage of compliance specialists. Finding qualified
compliance talent is fast becoming a strategic imperative.
Compliance talent is scarce so
companies need to share. Organizations around the world
require top-notch compliance talent, but they don’t need it
each second of every day. The core business of outsourcing
service providers is to recruit, train and deploy world-class
talent with a significant scale. In addition they provide
a leveraged talent model aligned with complexity and
specialization as per compliance process requirements.
The outsourcing model gives access to this talent on an as
needed basis. This is a more efficient and effective talent
approach for compliance skills.
DATA SHARING
Sharing sensitive data with third parties
could be a deal breaker. Outsourcing compliance is
likely to require sharing sensitive or private data beyond
organizational and national boundaries. This could be a
problem in some situations.
