Survey: Nearly Half of Companies Outsource Compliance

Nearly half (45 percent) of the supply chain professionals recently surveyed by global logistics firm BDP International and its Centrx consulting unit indicated they are supporting their internal regulatory compliance departments with external resources. Not surprisingly, the need for supplemental compliance services was especially pronounced for companies with under $1 billion in annual revenues and for those doing business in emerging markets.

Growing concerns over environmental and safety issues have created a complicated tangle of trade and security programs that now impact importers, exporters and essentially, all stages of product manufacture and distribution. Compliance with new regulations such as the EU REACH and U.S. Importer's Security Filing 10+2 programs can be both complex and costly, and findings from the survey suggest that companies typically deal with product-related regulations such as registration, labeling and marked, themselves, while outsourcing compliance for product movement.

Here are a few more survey results I found particularly intriguing:

60 percent of the respondents trading in Asia-Pacific cited a growing need for compliance services over the next 12 to 18 months, compared with 53 percent in North America and 50 percent in Europe. 80 percent of respondents said they staff and administer the compliance function internally for North America.

With regard to use of external compliance services, respondents split fairly evenly between those who retain the function fully in-house (43 percent) and those who outsource at least a portion of it (45 percent). Only 12 percent indicated they outsource the entire function.

More than half (51 percent) of respondents from companies with annual revenues up to $1 billion indicated they outsource at least a portion of the compliance function, with a third (32 percent) retaining the function in-house, and just 17 percent outsourcing it entirely. By contrast, 38 percent of respondents from billion- dollar-plus companies reported outsourcing part of the compliance function; 58 percent retain it fully in-house; and just 4 percent outsource it entirely.

45 percent of the survey participants with in-house compliance departments reported staff additions over the past two years. Only 5 percent reported reductions. Over half said they employ two to eight full-time staff in the compliance function.

Nearly all of the respondents saw a continued increase in the need for compliance services, particularly in the Asia-Pacific region (60 percent). Nearly a third (30 percent) indicated an increased need for these services in the Middle East and South America as well. Just 7 percent of respondents saw the need for more compliance services for European imports, compared with 27 percent for North America.

Interestingly, over half of the respondents from billion-dollar-plus companies see a growing need for compliance services in North America, and 75 percent of those in metals and minerals see greater demand in Asia-Pacific.

There's no doubt that in today's multifaceted global marketplace, compliance is more critical and more challenging than ever before. As these survey results indicate, companies are recognizing that they need to proactively manage compliance in order to stay ahead of the regulatory curve. (See this earlier post for a related discussion regarding the the trend towards an integrated approach to governance, risk and compliance.)

TAGS: Finance
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