Indian IT firms lag in regulatory compliance

By IANS

Bangalore : A recent technology survey has found regulatory compliance by Indian IT firms is far behind their counterparts in the Asia-Pacific region despite a majority of them acknowledging the business benefits of such a initiative.


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The survey, conducted by MarketShare for Serena Software Inc., a leading global IT firm engaged in application lifecycle management (ALM), has observed that though 68 percent of Indian firms favoured regulatory compliance, only 18 percent of them had implemented the programmes so far.

"The compliance level in India is lower than in APAC by 42 percent and lags behind Japan (56 percent) and Singapore (52 percent). The future uptake is, however, promising, with 46 percent of Indian firms planning to implement the programmes by 2008," the company said here in a summary report on the findings.

Of the total 350 medium and large IT enterprises interviewed for the survey across the region, 50 were from India.

While 88 percent of Indian chief information officers (CIOs) accept the role of IT in ensuring regulatory compliance, their company heads do not share the same view.

"About 40 percent of Indian CIOs feel they would be held accountable for compliance activities, as against 67 percent in the region. The reason for lower compliance is due to lack of budgetary support for such initiatives. Of the total respondents, 20 percent admitted spending 15 percent of their total IT budget on such activities.

"Indian firms have been slow in taking up regulatory compliance programmes, but realise the importance of international compliance requirements that give them a competitive advantage in the market," Serena country manager Keshav Prakash said.

Take-up of compliance programmes in India is driven by corporate demands and global trade requirements. If Indian firms want to do business with a multinational or trade with an overseas firm, they have to meet certain standards.

In contrast, the level of compliance implementations in the APAC region has increased over the last 12 months. For instance, the number of firms implementing the compliance programmes doubled to 42 percent this year from 21 percent in 2006.

The survey also found the reason for launching compliance initiatives in APAC is to meet local regulations and do business with foreign firms.

"While the take-up of compliance initiatives in Asia has increased, the main drivers have also changed, with local regulations being a major factor. Japan is creating J-SOX, which will go into effect next year. Other Asian countries are following suit and developing their own industry regulations, Serena vice-president (APAC) K.C. Yee noted.

Singapore has emerged leader in IT budget spend on compliance, with 34 percent of its firms earmarking 15 percent of their budget on the initiative. Korea, however, lags behind other countries, with eight percent of its firms spending 15 percent of the IT budget on compliance. More Korean IT firms, however, agreed to provide enough budgetary support for compliance-related activities.

Among the verticals, the banking and finance industry has the highest rate of regulatory compliance in APAC at 58 percent, followed by telecommunications (38 percent) and IT (37 percent) industries. The travel and tourism sector has the best outlook with regard to future take-up of compliance activities, with 56 percent of its firms agreeing to implement the programmes by 2008.

"IT applications are used in all aspects of the business. To ensure regulatory compliance, companies need to run and evaluate their application development lifecycle to reduce costs. The application development lifecycle is complex because it is heterogeneous, global, and collaborative, and due to this complexity many non-standard, labour intensive processes exist," the report pointed out.

Serena's flagship product ALM helps manage complexity in application development by automating the entire lifecycle and providing complete visibility into the portfolio of projects. This helps companies meet regulatory compliance requirements and also enables IT to deliver the most business value with their available time, budget, and skills.

"IT is involved in all aspects of the business and therefore plays a major role in ensuring regulatory compliance. As IT develops applications to meet new business requirements, companies can use Serena's ALM solutions to automate the arduous and costly task of compliance, providing flexible and streamlined capabilities for tracking, controlling, and managing activities," Yee added.

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