calibrating competence for professional excellence€¦ · legal services are the next destination...

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P I L O T P A P E R Calibrating Competence for Professional Excellence 9 CALIBRATING COMPETENCE FOR PROFESSIONAL EXCELLENCE PANKAJ PARNAMI* * Founder Director, KPO Consultants @ 2007. WHAT, WHY & HOW OF LPO INDUSTRY – AN ANALYSIS FOR CS FRATERNITY LPO (Legal Process Outsourcing) Scenario in India Legal services are the next destination for the Indian outsourcing industry. With the legal services industry in the US estimated to be $166 billion, employs approximately one million trained attorneys and 500,000 support personnel such as paralegals and legal assistant, the opportunity for offshoring to India is abound. According to a study by the US based Forrester Research, the current annual value of legal outsourcing, which is worth $80 million can rise up to $4 billion and can fetch around 80,000 jobs in India by 2015. KPO CONSULTANTS estimates that Indian LPOs can become around $20 billion industry in the next decade. LPOs have emerged in this arena by supporting the law firms for several low-level and high-level works. Companies involved in low-level work are generally providing para-legal as well analytical support to U.S. markets. These LPOs hire lawyers and trained professionals for conducting legal and non-legal task such as data management, business surveys, corporate secretarial support, legal drafting and analysis, litigation support, patents drafting and review. Brief Introduction - Legal Process Outsourcing (LPO) LPO is the extension of Knowledge Process Outsourcing (KPO) / Business Process Outsourcing (BPO) where in the legal services are offered to corporate legal departments, law firms and legal publishers based in foreign markets. LPO does not necessarily mean leveraging the skill-sets of lawyers. There are other professionals including patent analysts who are deployed in the sector. 9 BPO v. LPO BPO LPO Saturated sector Emerging industry with few players Rule based processes Judgment based services No expertise required Experts are required (lawyers/ (graduates) company secretaries) Easier to define quality Defining quality is difficult Volume based metrics Quality is preferred than are used quantity Pricing range between Pricing range between $12- $3-$18 per hour basis $80 per hour basis Why do the firms based in UK and US actually outsource legal processes ? Our market research reveals that lawyers think of the off-shore legal process largely as a cost-saving measure and then desire that the quality of the vendor is tremendous. The majority of the law firms / organizations that we interact with about outsourcing are predominantly looking at cost savings, though when we discuss about the issue in more detail with them we habitually uncover the fact that they are trying to solve a problem within their legal process. These problems are more often than not related to the quality of services or productivity of team. It has been our understanding that firms outsource legal processes for the following grounds: To avail huge cost benefits – Most of the firms who seek to leverage labor arbitrage look to

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Page 1: CALIBRATING COMPETENCE FOR PROFESSIONAL EXCELLENCE€¦ · Legal services are the next destination for the Indian outsourcing industry. With the legal services industry in the US

P I L O T P A P E R

Calibrating Competence for Professional Excellence 9

CALIBRATING COMPETENCE FORPROFESSIONAL EXCELLENCE

PANKAJ PARNAMI*

* Founder Director, KPO Consultants @ 2007.

WHAT, WHY & HOW OF LPO INDUSTRY – ANANALYSIS FOR CS FRATERNITY

LPO (Legal Process Outsourcing) Scenario in India

Legal services are the next destination for the Indianoutsourcing industry. With the legal services industry inthe US estimated to be $166 billion, employsapproximately one million trained attorneys and 500,000support personnel such as paralegals and legal assistant,the opportunity for offshoring to India is abound.According to a study by the US based Forrester Research,the current annual value of legal outsourcing, which isworth $80 million can rise up to $4 billion and can fetcharound 80,000 jobs in India by 2015. KPOCONSULTANTS estimates that Indian LPOs can becomearound $20 billion industry in the next decade.

LPOs have emerged in this arena by supporting thelaw firms for several low-level and high-level works.Companies involved in low-level work are generallyproviding para-legal as well analytical support to U.S.markets. These LPOs hire lawyers and trainedprofessionals for conducting legal and non-legal task suchas data management, business surveys, corporatesecretarial support, legal drafting and analysis, litigationsupport, patents drafting and review.

Brief Introduction - Legal Process Outsourcing(LPO)

LPO is the extension of Knowledge ProcessOutsourcing (KPO) / Business Process Outsourcing(BPO) where in the legal services are offered to corporatelegal departments, law firms and legal publishers basedin foreign markets. LPO does not necessarily meanleveraging the skill-sets of lawyers. There are otherprofessionals including patent analysts who are deployedin the sector.

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BPO v. LPO

BPO LPO

Saturated sector Emerging industry with fewplayers

Rule based processes Judgment based services

No expertise required Experts are required (lawyers/(graduates) company secretaries)

Easier to define quality Defining quality is difficult

Volume based metrics Quality is preferred thanare used quantity

Pricing range between Pricing range between $12-$3-$18 per hour basis $80 per hour basis

Why do the firms based in UK and US actuallyoutsource legal processes ?

Our market research reveals that lawyers think ofthe off-shore legal process largely as a cost-savingmeasure and then desire that the quality of the vendoris tremendous.

The majority of the law firms / organizations thatwe interact with about outsourcing are predominantlylooking at cost savings, though when we discuss aboutthe issue in more detail with them we habitually uncoverthe fact that they are trying to solve a problem withintheir legal process. These problems are more often thannot related to the quality of services or productivity ofteam.

It has been our understanding that firms outsourcelegal processes for the following grounds:

— To avail huge cost benefits – Most of the firmswho seek to leverage labor arbitrage look to

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achieve total legal process savings between50% and 70%. This is much higher thantraditional outsourcing arrangements where thecost savings often are in the range of 15% to25%.

— 24X7 working for their clients.

— This improvement comes in three forms:

— Improved quality central to the serviceitself.

— Enhanced commercial impact.

— Superior strategic impact.

— To concentrate on their core competency (legalconsulting).

Demand Curve

A key demand driver for the LPO (ITeS) industrywould be the changing international business dynamicswhich would put performance pressures over the biglaw firms based in United States. This pressure maycomprise of various factors like mainly cost and riskreduction, more value for capital employed, enlargingmarkets, exploiting core competency, etc.

It would be imperative to learn from where thebusiness actually emanates. There are primarily thefollowing entities which outsource their legal jobs toIndian LPOs.

— International Law Firms

— Several MNCs (In-house Legal Departments)

— Legal Publishing Companies

— Solo Attorneys

— Paralegal lawyers / legal assistants

— Legal Research Firms

— Universities

Amongst all the demanding entities, law firms arethe pioneers and dominate by outsourcing larger pieceof the cake. Over 80% of the global legal services arerepresented by the law firms; they represent around60% of the outsourcing to Indian LPOs. At the secondrank, are the corporate legal departments which haverapidly started realizing the significance of outsourcingto Indian lawyers. In accordance with research study,the legal departments could be convinced relativelyeasily about the cost and benefits to be availed from

India. Most of the legal hubs of companies were alreadyseeking services of some kind from the Indian lawyersand there were good signals of satisfaction in terms ofquality, costs benefits, security of information andknowledge base.

Some Law firms and Legal Departments areoffshoring their work to their subsidiary companies basedin India instead of including any third party. These firmsand Departments have their own offices set up incollaboration with Indian employees.

Divergent Streams of LPO Vendors – The SupplySide

Broadly there are four key categories of Indian LPOvendors. They are – captive businesses of largemultinational law firms, units of publishing houses inthe legal stream, captive set-ups of corporate abroadand offshore third party vendors. The fourth category ofvendors encompasses many more. The first will be BPO/KPO companies that will rise up the legal knowledgechain to become a key player in the LPO industry. BPOCompanies are providing legal transcription or legal datamanagement services to law firms abroad would like toprovide high-end knowledge based legal services. Thesecond one would be the professionals running theirlaw firms in India imparting services to companies, legaldepartments and law firms abroad. The third categoryis formed by experts creating niche meant for only theinternational markets like legal support or patentsportfolio management services. The last category is thecaptive units of large multinational corporate houses andlaw firms.

Pilot offices of

publishers

Offshore third party

vendors

Units of large

multinational law firms

In-house legal

departments

Supply Source of LPO from

India

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Categories Name of LPO Vendors

Captives of Corporate — DupontLegal Departments — GE

— Oracle— Cisco— Sun Microsystems

Legal Publishing Sector — Thomson— Westlaw— Lexis

Captives of Global — LexecuteLaw Firms — Atlas Legal Research

— Baker & McKenzie— Allen & Overy— Lexsphere

Offshore Third PartyVendors

BPO/ITES PlayersProviding LPO Services — Quattro

— Datamatics— Office Tiger— Intrust Global

Arms of Indian Law — J Sagar AssociatesFirms Providing LPO — Kochhar & CompanyServices — Nishith Desai

Associates— Patent Metrix

Third Party Units — Legasis(Single-Focus LPO — QuislexExcluding Patents — LexadigmServices) — Mindcrest

Third Party Units — Brain-league(Single-Focus Patents — IntellevateServices) — Ripple IP

— Ippro

KPO Players Providing — EvalueserveLPO Services — Manthan

— Integreon— WNS

It is the effect of the optimism about LPO industrythat not only established BPO companies but also severallegal firms have thought out of box to incline to thislucrative opportunity.

What LPO Companies Demand

The companies predominantly require people forlegal support services and patents outsourcing related

jobs. Hence, lawyers (and engineers) having inclinationtowards learning and implementing the effect of foreignlaws are in high demand. They desperately look for thefollowing requisites in any of the candidates in the queueto LPO sector:

— Experienced professionals (Patents or Legal)

— Trained professionals

— Exposure with foreign laws

— Foreign qualifications in legal stream

The table below depicts the range of key servicesoffered by the LPO companies:

Litigation Support Patent Services Paralegalsupport

– Extensive – Prior-Art – Image andContract Search DocumentReview – Freedom-To- coding

– Due Operate – IndexingDiligence Research and

– Conveyancing – Patentability Tagging– Memorandum Search – Legal

and brief writing – Product transcrip-– Legal research Clearance tion– Drafting Investigation – Archiving– Enable – Patent and – Deposition

e-discovery Technology and– Legal Research Landscaping Testimony

– Patent Data summari-Mining zationServices – Document/

– Patent Watch EvidenceServices Review

– CorporateSecretarialServices

Why Indian Lawyers / Company Secretaries

There are currently over a million lawyers in Indiaand an average of 75,000 more passing out every yearfrom Indian law schools. India with its crop of intellectuallawyers has the relevant skill-set to handle even highvalue legal tasks like legal research, drafting contractsand making determination regarding responsiveness ofthe document and privilege. It goes without saying thatthe LPO trend offers great benefits. India’s legal servicesare affordable, efficient, and above all, skilled.Outsourcing legal work to India costs up to 80% lessthan the cost of using the services of American lawfirms. Top of all, India, like the US, is a common-lawjurisdiction rooted in the British legal tradition, appellate

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and Supreme Court proceedings in India takes placeexclusively in English.

Entry by BPO Players

As per the research done by KPO CONSULTANTS,the LPO sector is moving towards mergers, acquisitionsand consolidations owing to the entry of biggies of BPOspace including Infosys, HCL, WNS, Wipro, Exl etc. Theinteresting observation is that the companies due to theirfinancial muscles are open to embrace both the routes–organic and inorganic growth to get a foothold in thespace.

The reasons are quite obvious due to which theywant to execute the legal outsourcing jobs too. Themargins in the BPO industry are only 12-15%, whileLPO offers them as high as 40% margins with lessernumber of people working. Then, these BPO companieshave already been entertaining the foreign clientsincluding financial institutions, banks, insurancecompanies, corporate departments, etc which may bebig user of legal services too. Once they feel convincedwith the offerings of these vendors from India, the pilotwould start soon. The vendors have got soundknowledge of the foreign markets, they have adequateinfrastructure with them, local presence in foreignmarkets are of great use, finance is not a problem forthem; the only thing required is to understand the nitty-gritty of the LPO business. Once they are sure aboutdoing the LPO business, may be from small scale, theywould rise fast.

Big companies in the BPO space are scouting forsmall (100 seaters) LPO companies for their expansionpath. They may acquire, collaborate or simply enter intojoint venture business for legal outsourcing work. Thesecompanies have already started talks with the privateequity investors to buy some stake with one or twoleading LPO companies in the industry.

Pre-requisites to set up the Venture (by CompanySecretary)

The LPO industry requires the entrepreneurs topossess the following qualities:

— Technical/Professional Skills

— Strong Communication Skills

— Strong Writing Skills

— Analytical Mind

— Learning Aptitude

— Basic Computer Knowledge

— Adaptability: Foreign Working Culture

— Ability to Work in a Team

— Positive Attitude

— Understanding Importance of Time and Quality

— Back-up by consulting partner

Business Models

The most obvious advantage of outsourcing legalservices by any overseas clients is to seek enormouscosts savings. Each of the LPOs markets itself is a solutionprovider with lower costs with equal quality to U.S. orUK based clients. Prior to outsourcing, the clients preparean apple-to-apple comparison by making the cost-benefit analysis of the business models available in thesector. With special service offerings, however, thevendor company must consider a different set of businessmodels driven by the specific needs and requirements.There are different models prevalent in the industrywhich gives different benefits to suit the needs of thebuyers, such as:

— Captive Centers

— Third Party LPO

— Multi-Sourcing

— Joint Venture

Project Execution Model

Client contracts

Company’s representative (CR in US)

Dept head confirms the project details

CR handles each project, forwards to Indian office

Offshoring Team works as per the needs

Communicates with clients

Final Products delivery in time

Client Feedback

Client reviews

Clarification with clients, if required

Communicating with Clients

Better

CR discusses & understands the clients requirement

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Calibrating Competence for Professional Excellence 13

Marketing Differentiation

Differentiation is the lifeblood that runs through theveins of all successful organizations. Without that, nomatter how good the service is, the organization willfail. It’s differentiation that allows you to define thedistinctive features and benefits of the service; itsdifferentiation message that communicates thosefeatures and benefits to the appropriate audience; andit’s differentiation that ensures delivering the servicesto the clients.

As the LPO sector enlarges, the mounting pressureof competition forces the LPO players to create adifferentiation in their offerings. You might have to re-invent the wheel having learnt the market’s requirementscarefully. The differentiation would help you makingunique positioning leading to allurement of lots of clients.You can draw your plans to lead and excel in the servicesin comparison of your competitors. It gives thecompetitive edge to help you grab larger pie of themarkets.

In all areas of business it helps if everyone, bothinside and outside the company, understands yourdifferentiation. In it’s most basic form this may tacklethe key question: “Why should I buy from you ratherthan the competition?” The ideal answer would be acombination of the following phrases:

— For (target client)

— Who (need or opportunity)

— The (service is a product category)

— That (key benefit)

— Unlike (competition)

— Our Service (primary differentiation)

— Marketing Tools

Some Impediments in Offshoring Legal Services

The following are the main impediments associatedwith the offshoring of legal services:

— Conservative and reluctant attitude of US andUK Law Firms

— Concern of loss of confidentiality of attorney-client Communication

— Lack of data privacy laws

— Low levels of awareness of ethical and securityrequirements

— Availability of relatively inexpensive temporaryresources

— Quality is hard to define

— Regulatory compliances in foreign markets

— Managing expectations is another problem

— Cultural differences

— Communication issues

CONCLUSION

The Company Secretary community is at par withthe legal fraternity in India. Company secretaries arenot less than the legal officers to the companies, theywork with. They are equally versed with the lawsprevalent in the Indian context. There are professionalsworking with MNC corporates too. Practicing companysecretaries are also entertaining foreign clientele. Thenotable fact is that they have got the desirable legalacumen, research mind-set, English as a robust tool andgood negotiation skills. At the top of it, entrepreneurialabilities lie amongst practicing company secretaries aswell. Therefore, it makes business sense to gear up!!

REFERENCES

1. Kpoconsultants.com

2. Baum, Lawrence. American Courts: Process andPolicy. 5th ed. Boston, MA: Houghton Mifflin,2004.

3. Fallon, Richard H., Hart, Henry Melvin, andWechsler, Herbert. Hart and Wechsler’s theFederal Courts and the Federal System, 5th ed.New York, NY: Foundation Press, 2005.

4. Facts About the American Judicial Systemhttp://www.abanet.org/media/factbooks/judifact.pdf

5. Legal Encyclopedia http://www.nolo.com/lawcenter/ency/index.cfm

6. The Supreme Court of the United Stateshttp://www.supremecourtus.gov

7. http://www.fjc.gov

8. http://www.washingtonpost.com

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9. http://www.courts.state.co.us

10. http://www.co.clark.nv.us

11. http://www.courtinfo.ca.gov

12. http://www.usinfo.state.gov

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Corporate Compliance Management — A Practical Perspective & IT Enablement 1

CORPORATE COMPLIANCE MANAGEMENT — A PRACTICALPERSPECTIVE & IT ENABLEMENT

V PASHUPATI KUMAR* & SHUJATH BIN ALI**

* Chief Financial Officer, Deliotte Consulting India Private Limited.** Manager (Corporate Affairs, Legal & Tax), Deliotte Consulting India Private Limited.

INTRODUCTION

'Importance of Corporate Compliance Managementin Today’s Environment.

Most of the businesses today understand theimportance of ethics, compliance and corporateresponsibility. But there is a wide gap betweenrecognizing the importance of something and weavingit into the cultural fabric of an organization.

Nevertheless, corporates in general perceive legalcompliance, substantive and procedural, as mundaneactivity involving costs without any tangible benefits.What they fail to realise is that the cost of noncompliance; may effect cancellation of businesslicenses/ huge fines or even jail terms, which couldcripple a company.

“On an average, around 120 laws (central, stateand municipal) apply to an Indian manufacturingcompany,” and the dictum, ignorantia legis non exusat,(ignorance of the law is no excuse) is the sword thatdangles dangerously over businesses.

Non-compliance is largely due to lack of awarenessof two issues viz (a) the need to comply and (b) impactof non-compliance.

Increasing complex regulations, audits and newregulations are creating a paradigm shift in the wayenterprises perceive compliance. Strict corporategovernance rules have made independent directors ofa company personally responsible for acts of thecompany’s management. Corporate boards, therefore,are seeking assurance on compliances. With corporationsexpanding their businesses in multiple countries,compliance management is assuming internationaldimensions as well. Corporate laws, intellectual property

1

laws, labour laws, tax laws, securities laws and all otherlaws affecting a corporation require a systems and astructured approach for unflinching compliance.

The emphasis of the compliance management ison enabling companies acquire the skill-sets and systemsto ensure continued adherence of law.

Therefore there has emerged a clear need for thecompliance framework to build an efficient, consistentand auditable environment; which may lead anorganization to gain competitive advantage, meetcustomer and regulatory demand.

Need of a creative proper systems, processes, toolsand dynamic systems approach that takes in its stridecompliance, change leadership as well as behavioraldimensions. With such an approach corporate compliancemanagement becomes an integral part of RiskManagement and value adding exercise.

The key objective of writing this paper is to sharereal life experiences of the authors in their currentorganization and draw some generally replicableapproach. We also feel that setting an organizationculture on compliance with extensive communicationon the subject is vitally important, and hence lot ofreferences will be drawn to how compliancemanagement can be effectively managed in anorganization. The effective use of IT system, tools, andautomation in general can be immensely helpful instaying on top of compliance management, and authorswish to share some very successful experiences in thisregard.

Communication to set Compliance tone

Let us straight away jump to something as abstractas importance of communication in the art of compliance

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management. To give you a perspective oncommunication, we will list out some examples

— In new employees orientation, on the very firstday, in the first session, after introduction aboutthe Company, new employees are given adetailed introduction to how ‘Independence’,‘Ethics in Action’, etc… are viewed by theCompany, how employees will undergo bothonline and class room training. This sets a strongbasis for compliance management.

— In the very first week of joining, employeesreceive an email with complete guidance toindependence responsibilities, referencematerial, an online course to be taken, andfinally an independence representation to befiled online. This representation needs to becompleted within 2 weeks of joining theorganization. Senior employees need to alsocomplete the ‘Trading & Tracking’ informationon their stocks and investments to ensure thatthey maintain the required independence fortheir professional roles in the organization.

— There is a weekly update email onIndependence telling employees on newerexternal organizations vis-à-vis employeeswould be expected to maintain independence

— Employees undergo 2 hours of online interactivecourse on ethics in action, with plenty ofexamples of real life business situations. Theyneed to constantly answers questionsthroughout the online program and successfullycomplete a test at the end of the course. Thisis followed by a class room training called ‘Ethicsin Action- Part 2’, wherein more case studiesare discussed in a team setting.

Constant communication on compliance vision,criticality to business image, and effectivecommunication built into day to day processes whichimpact compliance is required to enable right attentionbeing accorded to compliance by the entire business.There are many more areas/way to communicate better,and we will highlight these as we go along. You willobserve that communication is at the core of compliancemanagement.

Identifying training and other resources needs

It is important to identify the key processes andprocess owners in an organization who either havecompliance roles or who impact key corporate

compliances. Once, the processes and people areidentified, key risks due to which either these processesor people may not be able to stop or identify a non-compliance should be evaluated in detail, and correctiveaction/compensating controls should be identified.

— One requirement that is almost definite is that,people managing key processes impactingcompliance, should be provided all knowledgeand training that they need to ensurecompliance. They may need to undergo specialtraining on specific industry compliancerequirements. E.g. Insurance industry hasplethora of compliance needs based ondirectives of regulator IRDA. So, almost anynew individual joining insurance industry willneed awareness of compliance requirementsfor his role.

— It is always fair to tell people what is expectedof them, provide them training and tools toplay their role, and, then also hold themaccountable for their role.

— Second requirement that should be evaluatedis IT systems supporting the business. Are theIT systems being used by the business up todate, and have the triggers been establishedto capture any non-compliance in transactionsof the business. E.g. in an Accounting system,when a new vendor is established, the vendorshould be mapped to appropriate tax deductionmatrix, and automatically whenever a newpayment is being proposed to that vendor, theaccounting system would be able to captureappropriate rate of tax deduction at source.

Consultations between business/tax/legal/finance

To promote a good compliance management, it isimportant that functions like tax/legal/finance haveconstant dialogue amongst themselves of the complianceobligations, discussing grey areas, if any, and seekconstant best guidance for promoting compliance. Thesefunctions should stay in constant touch with businessand identify any new business situations, which maywarrant evaluation of newer compliances, andarrangements to be put in place to manage compliances.

Some examples of ways the functions cancollaborate:

— Have regular monthly/fortnightly meetingsbetween finance/tax/legal functions to discussnewer projects/business situations that they areaddressing; these meetings can give a sense

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Corporate Compliance Management — A Practical Perspective & IT Enablement 3

to all of possible compliance issues that mayarise.

— Hold annual strategy meetings to identifylearnings from past year’s compliance/legal andbusiness issues, and identify ways to managethem better in the coming year.

— Have common database of information relevantfor compliances like contracts, regulatoryinformation, etc…

Grey Areas and constant dialogue

We believe that even law constantly evolves alongwith business and economic situations, hence, therewill be many business situations where the law will nothave complete answers, and, hence, there could begrey areas. What is important is that possible grey areasare identified, discussed with internal and externalCounsels, and possible reasonable views that Regulatorswill take on those grey areas is understood, and then aconscious business decision on how best the grey areasare addressed is made. It may involve appropriatedocumentation, coupled with appropriatecommunication needs. At times, business may decideto even communicate in advance to the Regulators andeither seek advance rulings, or at least keep theminformed.

Compliance as an Opportunity

Compliance culture and pro-actively making surethat compliance aspects have been considered inbusiness decisions, can often promote good and cleanbusiness image. It can also help in providingopportunities for better business structuring. Being awareof laws that could impact a deal and negotiatingappropriately would avoid any surprises to both parties.Interestingly, even law at times sets a benchmark ofprotection to both parties.

Business contracts which are compliant with law,promote good business and ethics. They also ensurethat contracts will sustain test of law, avoid litigationand will endure the business results expected out ofthose contracts.

Management of Non-Compliances

How an organization manages when non-compliance comes to its notice can also bring to lightthe real culture of an organization towards compliance.In large businesses, even while there are mechanismsto track and manage compliances, situations could arisewherein there have been lapses, and non-compliances

come to light later, either through an external scrutinyor an internal review.

The response mechanism of an organization to non-compliance will be closely watched by employees andadvisors to draw conclusions on compliance culture.

Some examples of promoting good culture in suchsituations can be:

— Seek complete guidance from externalCounsels/ other experts on full consequencesof non-compliance, corrective actions thatcould be taken to rectify/minimize the damagedone due to non-compliance

— Find out if there are procedures available forself-disclosure and seeking compounding ofoffences, if any, incurred due to non-compliances

— Pro-actively volunteer to make appropriatedisclosures/communication to all concerned,including appropriate government authorities/regulators, and communicate actions beingproposed to rectify the non-compliance

— Identify learning’s for future, and not end upreprimanding or punishing employees who didthe non-compliance, as long as it was not bydesign and intention

Automation of Compliance Management- a casestudy

We are a closely held private company operating inthe areas of IT/ITES and various Central/StateLegislations are applicable to the Company. TheManagement of the company has decided to implementand strengthen the Compliance management frameworkusing the systems and processes with the help of ITTools like Documentum’s eRoom, Microsoft Outlook,Internet Explorer. We will share how we implementedan automation tool and what are the essential featuresof same.

Implementation process

Compliance Identification : This process involvedthe identification of various compliances under variouslegislations applicable to the Company. In this processvarious legislations applicable to the Company and thecompliances that are required under each legislation orrules and regulations are identified and various moduleswere prepared based upon the functions responsiblefor compliance.

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Function wise Modules

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Compliance Ownership: The next important aspectof a Compliance Management is compliance ownership/responsibility fixing. The ownership of the variouscompliances are described and assigned to particularindividual and the email id of individual is mapped withthe system.

For example, compliance with the payment ofProvident Funds employer’s contribution and filing of

various returns should be clearly described as theresponsibility of the Finance Department or the Humanresources Department and the individuals who are theprimary and secondary owners of the compliance. Cleardescription of primary and secondary ownership is alsovery important. While the primary owner is mainlyresponsible for the compliance the secondary owner(usually the supervisor of the primary owner) has tosupervise the compliance.

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Compliance Awareness : The next important stepwas creating awareness of the various applicableCompliances amongst the responsible individuals.

Intimation of various applicable compliances to theindividuals through Microsoft outlook reminders and alsothrough specific emails.

.

Sample of compliances reminders to responsibleindividuals through Microsoft outlook and also through

specific emails is given below.

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Compliance Reporting : Compliances or non-compliances should be reported along with supportingdocuments and any variances have also to be reported.

Reporting of non-compliances ensures that appropriatecorrective action is taken by the function head and thelegal team.

Compliance has to be reported along with uploading the proof of compliance to the System.

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CONCLUSION

The emphasis of the Compliance management ison enabling companies acquire the skill-sets and systemsto ensure continued adherence of law.

Compliance is one of the steps in corporategovernance initiatives since governance is a strategywhile legal compliance is an operational plan of action.

Core to good corporate governance is compliancewith the laws of the land. This assists companies in theirendeavour towards being a good corporate citizen.

Today compliance is not an option; it has becomecost of doing business and the best possible way ofmanaging risks.

Compliance management solution addresses thiswith the help of integrated framework supported by anautomated IT solution and strong managementcommitment.

Compliance management when automatedprovides the sustainable framework and a predictableand proactive way of managing compliances.