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Let financial reporting providers offshore at your company’s peril

English: Availability of 4 Mbps-Capable Broadb...

English: Availability of 4 Mbps-Capable Broadband Networks in the United States by County (Photo credit: Wikipedia)

No matter the industry and business you are in, outsourcing and offshoring are two things that any person in the working world needs to be aware of. They can be connected or separate. Either way, the implications for the two has had, and continues to have, far reaching grabs for the global business community.

To understand the meaning of the words is to establish a foundation of knowledge for keeping you on the straight and narrow when it comes to potential confidentiality violations. In the case of some industries, knowing the difference will help keep you in compliance of federal regulations—thus avoiding hefty fines and possible imprisonment for offenders in areas particularly where national security is at stake.

In the world of publicly-owned companies, I was always amazed and frustrated by the extent of offshoring that was undertaken in the process of performing their required reporting with the Securities and Exchange Commission (SEC).

This was probably due to my naivety (in the beginning, at least) as to what drives (at the time and to this day) the whole financial reporting business. While financial reporting and disclosure to stakeholders is required by publicly owned companies, how or where companies perform these functions has never come into question.

Yearly security training which includes the ability to recognize and report potential security violations and breaches is a part of life for employees of global companies that handle sensitive documents. In the case of financial reporting service providers, each year I was in the business provided some consternation during these annual rites of security passage.

Operators had to sign confidentiality agreements which provided for the safe, secure handling of all documents a worker would come into handling; I understood that one easily enough and had no problems with it. The very nature of the work I performed was typically so uninteresting to the uninitiated, when I left at the end of each day, the “switch” regarding the work day and all that I had encountered, was truly turned off. Discretion was further assured by the fact I did not usually get done with work until the wee hours of the morning. All that said, I respected what was required to do the job well and so it was easy to follow all the rules and regulations (note to students of life or any one, specific discipline—if you follow the rules and show up on time you are usually ahead of the game).

In the early days of financial printing, large teams of domestic composition forces (read typesetters and proofreaders) were employed by Bowne, RR Donnelley and Merrill Corporation. But as it so often occurs at businesses driven by the machinations of Wall Street, commoditizing and wrenching every penny of profit possible were the two biggest considerations for operational deployment.

Outsourcing to India: The Offshore Advantage -...

Offshoring of manufacturing jobs happened quickly and thoroughly in the twentieth century. It was cheaper to manufacture parts and assemble things like automobiles overseas. I was naïve in thinking that I would be removed from the effects of offshoring in financial reporting. I thought, “How could they put sensitive documents of publicly-owned companies into the hands of people overseas where not only the security of the documents, but the security of the facility and country in which they were being undertaken, could not be assured 24/7?”

But offshore they did. It was done in a less than publicized fashion, too. They were saving money on composition labor as they were working out the quality kinks. Clients were not being told the work was being offshored. But profit ruled the day and elimination of stateside jobs was not a concern for CEOs of companies who engaged in offshoring tactics—especially when quality proved good enough. They were counting on waiting for “globalization” and offshoring to catch up (in terms of being the generally agreed upon mindset) as being the accepted way of doing business in a global economy.

Medical community parallels

Electronic health records and the Affordable Care Act, which purport to put consumers “back in charge of their health care,” according to the U.S. Department of Health & Human Services, may not give consumers quite as much control over who gets to view their medical data. The fact there is enforcement to ensure the integrity and safekeeping of sensitive information is a step above companies like financial reporting providers who offshore their clients’ sensitive composition work without fear of reprisal.

When physicians’ offices and medical facilities have backlogs of insurance claims, they typically outsource the medical coding of claims to contractors outside their offices.

Global Services: Moving to a Level Playing Field

Global Services: Moving to a Level Playing Field (Photo credit: markhillary)

Outsourcing is very much a necessary method of getting providers compensated for services and procedures performed for their patients. The Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH–under the American Recovery and Reinvestment Act of 2009 (ARRA)), provide for enforcement of confidentiality. Patients’ medical records are considered sensitive documents. A simple push of a button could potentially place a person’s health records and personal data into the hands of an unscrupulous person with less than honorable intentions.

The provisions for enforcement of all of this legislation are not always enough to deter some medical providers from trying to save money on their medical coding. But knowing they may have potentially broken the law by doing so should act as a deterrent for providers considering doing business this way.

A person’s medical and personal information is considered sacred data of sorts. Going forward, the safekeeping of these documents by all who come in contact with them is part of what will drive the success of the Affordable Care Act and electronic recordkeeping.

When it comes to the sensitive documents of publicly-owned companies and the world of financial reporting companies who outsource this work, however, the same provisions for the sanctity of these documents is sadly enough, not a consideration.

Outsourcing will only continue to grow for many industries. We cannot personally control what happens with our health record information. We can be assured that legislation exists for the safe handling of it, though. If I were a publicly-owned company, however, outsourcing and handling of my important documents before they are filed with the SEC is something I want to control. And you can, provided you do it under your own roof.

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