Newsflash — Why Outsourcing works
The global market in financial services outsourcing is estimated to be USD130Bn with an expected annual increase of 7.5%. Earlier research also suggests that companies which opt for a single vendor to outsource multiple functions have realised savings of up to 32%.
Just before the turn of the century, a new phenomenon was gripping the global business environment. It was “offshoring”, a process of decentralising business activities by strategically moving related business units to jurisdictions that were considered to be most conducive to that business line. This was the advent of the explosive growth of the outsourcing movement which has become an integral part of the modern business profile.
The advances in technology have been both the reason for, as well as the primary facilitator of, the outsourcing boom.
Further fuel came from the speed with which the multilaterals have been churning out new standards requiring implementation at national levels, thereby reinforcing the imperative of outsourcing non-core business functions. Most, if not all the global standards endorse the use of third-party providers to assist with implementation.
It is this deluge of regulations that has accelerated the conversion to outsourced support by smaller and medium size operators. It also influences many start-ups to include outsourcing within their business models.
Why has outsourcing answered so many prayers?
- It supports streamlined efficient business models
- It is more cost effective for most businesses
- It is flexible
- It provides access to highly concentrated skillsets in technical fields and to a wider pool of talent for many businesses.
- It often offers one-stop-shop experiences with an array of outsourced services.
- In the regulatory and compliance space outsourced businesses will generally have strong rapport with regulators and other governmental authorities and can easily navigate the dynamic regulatory landscape.
- Outsourcing provides an effective means of managing business risks.
In today’s world, regulatory obligations are increasing, the scope of businesses caught continues to widen and, not infrequently, the regulators and regulated are both navigating the mechanics of the new rules at the same time. Data protection alone requires even the smallest operators to meet various global standards. The sea change, however, is the breadth and in many ways complexity of the financial crimes and sanctions regulations which extends beyond the traditional financial institutions to cover legal, accounting, tax, real estate, corporate service providers and dealers in precious metals and precious stones. When the pressures of the deadlines to implement the new measures are factored in, the only solution for most is to outsource.
This brave new world with its endless cycle of assessing risks, conducting due diligence, monitoring, tracking, training, and implementing procedures to support the foregoing, can only be effectively managed through outsourcing for many SMEs.
Who we are
Re/think is a boutique outsource and advisory company providing client-focused services in tax advisory, accounting, human resources, regulatory and compliance support and business advisory.
We specialize in assisting clients with cost-effective, high-quality services and solutions.We create value by investing in highly qualified and motivated people and working closely with leading industry partners to provide our clients with a one-stop-shop for all their business support needs which is tailored to suit your individual requirements.
Authors
Gail Johnson-Goring
Partner & Director of Regulatory and Compliance Services
Rowena Bethel
Associate Director of Compliance
