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Introduction The current business environment is constantly evolving. The global economic scenario is providing opportunities as well as challenges. The factors affecting business environment are consumer needs, globalization, and government policies, etc. In such a business environment, organization basically has four action steps. The organization can be reactive, anticipative, adaptive, or/and proactive. For this, organization […]
Investing in Sin Industries: Are They Worth the Hassle ?
Some professions in the world are not considered to be as acceptable as others. This notion of acceptability is widely influenced by the cultural norms in the society where one is conducting business. However, in the modern world, being associated with sin does not seem to be much of a deterrent to investors. Cities like […]
National Competitiveness – Meaning and Its Myths
National competitiveness is becoming an important subject of debate as governments all across the world are competing with one another to gain foreign capital and resources. However, the problem is that there is no theory that correctly defines what national competitiveness is and how countries can become more competitive in the global market. It is […]
What is Six Sigma Plus ?
Most of us would have heard of the revolutionary quality management methodology and framework, Six Sigma. For quality professionals and people in manufacturing and operations, Six Sigma is a buzzword for effective quality management and rigorous application of defect prevention and reducing wastage in the organizational processes. However, in recent years, there has been movement […]
Contract Logistics Pricing Methods
Warehousing and Contract Logistics forms an important part of Supply Chain Networks. Contract Logistics projects are of two kinds. The first being a flow through the warehouse that can be a Finished Goods warehouse for the purpose of consolidation and merging or documentation purposes or in the case of supplier shipments, inventories being consolidated to […]
The regulatory scandals involving HSBC and Standard Chartered (2013) have brought into focus the issue of how the outsourcing of business processes including oversight and compliance has meant that standards have been relaxed.
Since both the scandals involved Indian back office operations looking the other way when they should have raised red flags, there are some lessons for the BPO sector in India from these experiences.
For instance, outsourcing of back office operations including oversight and compliance does not mean that the Indian companies need to blindly follow the Client’s instructions and instead, they have to do their own due diligence with regards to processing of the transactions as well as detect and report fraud as and when it happens.
Both the Senate Report on HSBC and the NY Financial Regulator on Standard Chartered have pointed to the way in which the outsourcing of oversight and compliance to India has increased the risk for fraud in these banks.
The point here is that the Indian BPO Sector like any other business believes that the consumer is the king and in this case, the client is god. However, this should not extend to oversight and compliance since regulatory issues are involved here and hence, the BPO sector has to draw the line between pleasing the client and obeying rules and regulations.
Since in both cases, it was found that a majority of fraudulent transactions were passed over by the compliance teams based in India, the focus is now on how the Indian BPO Sector tackles fraud and detects irregularities. Indeed, this is a test case for the BPO sector and how it reacts and responds to this would determine how mature it is.
In a way, the Indian BPO sector needed this wakeup call since there were many grey areas that the sector was skirting till now.
For instance, there were incidents where the client data which was confidential was compromised and the way in which financial scams were being carried out by some rogue employees.
With this scandal, it is time for the Indian BPO companies to realize that they are not only the partners of the Western companies but also are custodians of financial and operational processes which means that they have a right to blow the whistle on dubious business practices even at the risk of losing business.
Given the option of losing business against being stripped of the license, the obvious choice should be to raise the red flag on suspicious transactions instead of being hauled up by regulators.
Finally, these are issues any maturing business sector has to grapple with and take corrective steps before the whole sector is in jeopardy because of passing over the cracks.
The point here is that the BPO sector in India has to be responsible to its clients as well as regulators and hence, must take steps to prevent the recurrence of such frauds and practices.
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