What are the most common BPO risks in regulated industries?

1 Regulatory compliance

One of the main challenges of BPO in regulated industries is to ensure that the outsourcing provider complies with the relevant laws, rules, and standards that apply to the industry and the region. Regulatory compliance is not only a matter of legal obligation, but also a source of competitive advantage and reputation. Therefore, BPO clients need to conduct thorough due diligence on their providers, establish clear contractual terms and service level agreements, monitor and audit their performance, and implement corrective actions when needed.

2 Data security and privacy

Another major risk of BPO in regulated industries is the potential breach or misuse of sensitive data that is transferred or processed by the outsourcing provider. Data security and privacy are critical for any business, but especially for those that handle personal, financial, or health information of their customers or employees. BPO clients need to ensure that their providers have robust data protection policies and practices, use secure encryption and transmission methods, comply with data privacy regulations such as GDPR or HIPAA, and notify them of any incidents or violations.

3 Quality and consistency

A third common risk of BPO in regulated industries is the possible decline or inconsistency of the quality and reliability of the outsourced processes. Quality and consistency are essential for customer satisfaction, loyalty, and retention, as well as for operational efficiency and effectiveness. BPO clients need to define and communicate their quality standards and expectations to their providers, measure and evaluate their outcomes and outputs, provide feedback and training, and enforce penalties or incentives for quality performance.

4 Communication and coordination

A fourth common risk of BPO in regulated industries is the potential breakdown or delay of communication and coordination between the client and the provider, or among different providers. Communication and coordination are vital for smooth and seamless operations, timely delivery, and problem resolution. BPO clients need to establish and maintain regular and clear communication channels and protocols with their providers, use common platforms and tools, align their goals and strategies, and foster a collaborative and transparent relationship.

5 Business continuity and disaster recovery

A fifth common risk of BPO in regulated industries is the possible disruption or interruption of the outsourced processes due to unforeseen events or circumstances, such as natural disasters, cyberattacks, pandemics, or political instability. Business continuity and disaster recovery are crucial for minimizing the impact and restoring the normal operations as soon as possible. BPO clients need to assess and mitigate the risks and vulnerabilities of their providers, develop and test contingency plans and backup systems, and ensure that their providers have adequate resources and capabilities to cope with emergencies.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?