From cyber security risks to payment services rules to health and safety protocols, every sector shoulders an increasingly heavy regulatory burden. Ensuring your business is compliant is critical to fend off both reputational and financial harm. The enforcement of the European Union’s General Data Protection Regulation (GDPR) from May next year - which unifies data protection rules across the EU – is a case in point. The new rules will impact all commercial entities handling the personal data of EU citizens, including foreign businesses. Any business that falls into that bracket needs to prepare, if they have not already. At up to 4 percent of global turnover, the penalties for non-compliance are high.
The benefit of having compliance resources in place is not just to avoid fines; it can also increase new customer win rates, as well as client loyalty and longevity. However, the discussion of regulatory compliance typically focuses on the internal processes within a business, such as the need to appoint a chief compliance officer or a chief information officer. Outsourced functions, including business process outsourcing (BPO), software development, and knowledge process outsourcing (KPO), are often overlooked. Developing a robust compliance regime is where outsourcing providers can differentiate themselves from the crowd.
Keeping up with the speed of regulatory change can be difficult. Staff expertise and processes can become quickly out-dated. With heavy-hitting regulations like GDPR and the EU’s Second Payments Services Directive (PSD2) on the horizon, skilled resource is at a premium.
Finding the talent from within
The fastest, most effective and repeatable approach to fill any skills gaps is to increase the training and upskilling of existing talent. Many firms achieve this goal through in-house graduate schemes. By starting the upskilling process as early as possible, they can nurture the best talent within their business. As these schemes recruit annually, employees can be trained to acquire the latest skills and expertise needed.
Another benefit of upskilling in-house talent is that expertise becomes a valuable business asset. With the introduction of new technologies such as AI, the Internet of Things and machine learning, the compliance landscape will continue to evolve and become more specialised. Having that resource on tap is an advantage.
For consultancy-based outsourcing providers, new skillsets are highly valuable and offer potential for increased revenues from existing service offerings. New expertise also allows the business to expand into unchartered areas where clients require new forms of assistance and are perhaps less price sensitive. Supported by a technology backbone, the potential to accelerate margins is even greater.
The impact of good talent
Having processes in place, whether that is a strong training regime or corporate development programme, will help ensure the future stability of your business and, in turn, lead to a higher valuation for your company. For outsourcing providers working in highly regulated industries, these processes are critical. Having a track record of successfully upskilling people is a far more scalable and cost-effective approach than a series of expensive hires. Investors in service providers will put a higher value on an agile company that can evolve whatever the regulatory environment.
In light of upcoming shifts in the regulatory space, such as GDPR, PSD2 and the Senior Managers Regime in the UK, which strengthens personal accountability and is soon to be extended across the financial services sector, businesses have an opportunity to think strategically about their approach to outsourcing compliance and the talent they require. Doing so is not simply risk mitigation; it is also a means to consolidate your market position and value.
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