Compliance spending trends evolving

By Jerome Doraisamy|23 March 2021
Compliance spending trends evolving

The widespread economic disruption caused by COVID-19 appears to be prompting compliance departments to decrease its personnel spending but up its spending on technology and external services.

A study of 117 organisations, conducted by global research and advisory company Gartner in the second half of last year, indicates that compliance department spending was “projected to plateau” in 2020, following years of significant growth.

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In the three years leading up to the age of coronavirus, total compliance spend per 1,000 employees grew by 42 per cent, the company noted, but the median compliance department decreased its headcount from 12 to 10 full-time employees.

“Like many business functions, compliance spending has been impacted by the coronavirus pandemic. However, the pandemic has significantly increased the workload faced by legal and compliance teams as they grapple with new risk issues and a more remote work environment,” said Gartner Legal and Compliance managing vice-president Brian Lee.

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“One reason for the decrease appears to be a shift in spending away from headcount to technology and outside spending. Many compliance functions were allocating more spend in 2020 to external experts, training and communication vendors and compliance technology expenses than in 2019.”

Compliance departments only planned, Gartner noted, to increase personnel spending by 1.6 per cent in the past year, while increasing spending on external experts and services by 30 per cent, technology expenses by 15 per cent and training and communication vendors by 13 per cent.

“Compliance’s mandate has expanded and organizational risks have been heightened by the pandemic. These spending trends indicate that compliance leaders intend to look for more scalable ways to handle the burgeoning workload rather than simply increasing headcount,” said Mr Lee.

Gartner suggested that compliance leaders “evaluate current technology offerings that enable communication and collaboration and improve efficiency in an increasingly hybrid and remote work environment”.

“It’s also critical to work more closely with other functions, including legal and privacy, to better manage new and existing risks within a remote workforce and establish clear guardrails around risk,” added Mr Lee.

Compliance spending trends evolving
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