Outsourcing & Off-shoring: The Cost of Regulatory Compliance and Risk Mitigation

By | December 22, 2011

As any auditor will tell you: controls, processes and procedures are the secret to mitigating risk and ensuring regulatory compliance.

Organisations are like a garden shed, they start off clean and tidy, but have a tendency to accumulate clutter as successive projects, reorganisation and management changes add layer upon layer of controls and processes.

Controls, processes and procedures are not free. There are material costs such as documentation, division of duties, developing “idiot-proof” processes, auditing, checks and controls.

In addition to the direct cost, there is an indirect cost, as process-heavy organisations labour under the weight of procedural overhead. Loss in agility can have major implications on an organisations ability to compete in a rapidly changing environment. I have seen scenarios where a 5 minute fix that would provide major cost savings had to run the gauntlet of a 3 month SDLC.

It is no wonder why the business case for off-shoring and/or outsourcing is attractive to so many organisations. Outsourcing/Off-shoring solutions offer a fresh, clean and tidy garden shed.

However, would organisations be better served by cleaning out their own garden shed?