Managing Outsourcing Risks without Limiting Innovation

August 3, 2016 12:55 pm | Updated 5 years ago.

Over the last few quarters, we have seen a metamorphosis taking place in Offshore Outsourcing globally, specifically with new policies being announced to ensure that the economy, industry, and employment take full benefit of what digitization has to offer without undue regulatory restriction.

 Recent developments in Offshore Outsourcing globally:

All the recent policy announcements from Financial Conduct Authority (FCA) in the UK, Monetary Authority of Singapore (MAS) and EU Digital Single Market Strategy, aim to have a regulatory framework that adapts to enable further innovation. Even the reforms announced by the EU to the data protection rules aims to give the citizens back the control on their personal data and more importantly simplify the regulatory environment for the business. The data protection reform and the Digital Single Market aims to enable the European citizens and businesses to take full benefit of the digital economy.

While governments around the world are coming out with policies to enable the citizens and businesses to take advantage of the digital economy, we analyze here the restrictions that the governments are trying to remove and how these will benefit both the customers and the offshore outsourcing service providers.

Key focus areas:-

  1.  Access to customer’ data:
    This is the most significant area that is being addressed by the regulators. Both for outsourcing in a cloud environment as well as outsourcing to 3rd party vendors, the regulators have put more responsibility on the vendors to be able to identify and segregate customer data (in a multi-tenancy cloud environment) and have proper access control to protect customer information. While the businesses will still be responsible and accountable for customer data, but this will be more of providing an oversight, with the primary responsibility shifting to the vendors.
  2. No need to inform the authorities before making outsourcing commitments:

    This again is a very significant policy enablement for outsourcing, both in a cloud environment as well as to 3rd party vendors. One the vendors are able to convince the businesses of their abilities to deliver and protect the customer data, the businesses are at full liberty to outsource without any regulatory restrictions.

  3. Modifying copyright laws to reflect new technologies and make them simpler to implement:

    EU and several other countries are not only making the Copyright laws simple but also aligned to the new technologies so that the vendors can innovate without being bogged down by too many restrictions.

Benefits to customers and offshore outsourcing vendors from these regulatory changes taking place globally:

  1. Increased recognition and acceptability of solutions hosted in the cloud: With increased acceptance of cloud hosted solutions by governments around the world, the customers will see much more solutions available on the cloud that they can use and benefit from.
  2. Innovation: The above recognition and acceptance by the governments of the cloud environment will also encourage the vendors to come out with more and more innovative solutions on the cloud and will also lead to innovations in the cloud environment itself.
  3. Enhanced security solutions: With the governments relying on the vendors to provide adequate security and privacy relating to customer data, the industry will see significant improvements in segregation and isolation of data, data encryption and other techniques to enhance security and privacy of customer data, especially in shared environments.
  4. Improved 3rd party Offshore outsourcing environments: With governments putting fewer restrictions on 3rd party Offshore outsourcing and encouraging the customers to do more due diligence, there will be significant improvements to offshore outsourcing environments with 3rd party vendors paying more attention to strategic needs of the customers – both business and technology. This will also encourage customers to use offshore outsourcing aggregator platforms like D2E that offer solutions from a number of carefully chosen specialty vendors on one platform along with program management, both onsite and offshore, to ensure that the strategic objectives of the customers are fully met.