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Tuesday, September 06, 2005

United States: The Impact of Regulatory Compliance Mandates on Business Process and IT Outsourcing

Regulatory compliance mandates are becoming increasingly pervasive and onerous in western countries (see Figure 1). They have become a driving force in influencing affected organizations investments, areas of attention and activity, and in extreme cases strategic direction (i.e., going private in an attempt to avoid regulatory mandates). Business process regulation has become a new an uglier "BPR".

An affected large company, for example, could easily have total direct and indirect costs for Sarbanes-Oxley (SOX) compliance in excess of $10M annually. AMR Research estimates that affected organizations worldwide will spend $6B+ on SOX related activities in 2005, not counting actual audit fees, and will spend $80B+ over the next five years on compliance as a whole. On top of these costs, it is not uncommon for organizations to experience a doubling in the fees they pay their external auditors. And these numbers do not take into account the opportunity cost of compliance and the distraction it creates from other critical activities.

posted by Brian Moran @ 10:14 AM   0 comments


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