Faisal Rafi, Managing Director, Xchanging Singapore, discusses in this interview how process outsourcing can help companies adhere to ever-evolving and stringent compliance standards
Compliance and governance requirements have been increasingly geared towards international standards. For example, as a rising economic powerhouse, Singapore aspires to be an international hub for industries such as finance and commodities, which means that complying with local rules and regulations will no longer suffice for companies operating in Singapore. Instead, companies will have to meet global regulations and expectations in order to compete in today's international business landscape.
Adherence to corporate governance standards used to require significant time and effort in terms of auditing and management responsibilities. This resulted in lower process efficiency and productivity, as employees were found spending more time navigating tedious procedures and less on actual value-creation.
However, the automation of these processes has made it simple for companies to attain and ensure optimal corporate governance standards today. Having automated processes helps to reduce human error and prevent loss of documentation that is integral to the business. Automated workflows also provide an audit trail, which is a key component of compliance requirements.
Another beneficial strategy is to adopt an integrated approach, implementing enterprise-wide compliance measures. It is essential for different departments to coordinate their efforts and communicate across different functions in order for business processes to fulfil compliance requirements. Maintaining top-of-mind awareness among employees about the latest regulatory requirements and using standardised reporting tools will also help facilitate better compliance.
How much regulation is too much? Do you think too much regulation hampers growth and competitiveness?
There are several drawbacks when regulations involve cumbersome processes and unnecessary red tape. Companies have to bear the costs of implementing the required processes, and the numerous procedures may create inefficiencies. In that sense, too much regulation has the potential to hamper business growth.
However, effective regulations that address lapses in compliance can facilitate growth and competitiveness in the long run. Firstly, compliance ultimately translates into cost savings for companies, for example by reducing litigation costs. If regulations are properly followed, companies reduce staff time spent dealing with paperwork, local authorities and regulatory bodies, freeing up resources to focus on key business priorities.
Secondly, considering the need to meet international business standards in today's globalised economy, failing to comply may deny companies the right to carry out their business in certain countries, thus restricting potential growth.
Lastly, brand reputation can be greatly impacted by a company's governance policies. This is especially pertinent for listed companies that have to meet shareholder expectations. Investors are likely to view organizations with strong governance measures in better light, which may raise market demand and have positive financial implications.