A série de riscos de terceirização: ameaças geopolíticas

The Outsourcing Risk Series: Geopolitical Threats

This is part 2 of our Outsourcing Risks series. In it, we provide solutions to the potential pitfalls that companies face when outsourcing IT in the current scenario.

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In my introduction to this new series of articles, I mentioned new regulations as an example of potential disruptions that could affect your business. “New Regulations” can mean many things – from tax and compliance regulations to specific sanctions against countries, people or companies.

In the complicated, pandemic world we live in, global companies must deal with diverse political scenarios that include unstable or antagonistic governments, power shifts, economic restrictions, stricter regional regulations, terrorist threats, the ever-evolving pandemic and others. unpredictable events.

All of these constitute geopolitical risks that can greatly disrupt and negatively impact the global economy in general, and specifically your supplier/partner relationships. The EU General Data Protection Regulation ( GDPR ), Brexit, the new cold wars that include the USA, China, Russia and some former Soviet republics, economic sanctions between different countries and regions – all these phenomena and many others set up an openly complex scenario for companies that conduct their business on a global scale.

It's not just regulations that can hurt business: the ability to obtain a visa or fly to certain countries has become much more challenging in recent years. All of this adds risk, potentially hampering your ability to do business or ensure close cooperation with your technology partners.

Naturally, these political processes exist independently of the business scenario, but they nevertheless affect it profoundly. As it is not possible to completely eliminate all geopolitical risks, you must focus on mitigating them. Knowing how all these political processes can affect you is the first step towards this mitigation.

Types of geopolitical risks

Firstly, there are two general types of geopolitical risks, depending on the size of their impact:

  • Macro risks. These are important issues that involve radical changes in countries or regions. Examples include major power shifts (such as Brexit), civil or regional wars, long-term trade disputes and other high-level risks.
  • Microscratches. These only affect specific sectors, such as industry-specific taxes, restrictions, sanctions or limits on the export or import of certain products or services, short-term restrictions or difficulty in obtaining visas to or from the country you are considering, etc.

You should also consider the most common geopolitical risks for global (multinational) companies, including:

  • Operating in emerging or unstable markets we may be affected by changing economic conditions, civil unrest, asset expropriation and other challenges.
  • Capital losses or completion time challenges due to changes in local or regional laws and regulations or political instability.
  • Compromised cybersecurity due to a weak legal framework, infrastructure vulnerabilities or lack of local awareness.

Solutions to an increasingly common problem

As a company expands its physical or digital reach around the world, geopolitical risks increase dramatically. Any company that uses suppliers or provides goods and services outside the US must develop a strategic plan to mitigate potential disruptions caused by geopolitical factors.

While this plan will look different depending on the company, your specific risk profile, and your industry, there are certain actions you can take to mitigate geopolitical risks:

  • Distribute critical assets across different countries and regions. As with supplier lock-in, if you focus all of your resources and critical partnerships outside of the US in a single location or with one supplier, you greatly increase your chances of being affected by disruptions. A multi-regional, multi-vendor supplier strategy has become an unspoken but mandatory strategy demanded by CEOs, boards of directors and investors alike. This protects against geopolitical and financial risks, spreads company-specific knowledge securely and redundantly, and ensures that your company can continue to grow even in the face of geopolitical headwinds.
  • Develop a proactive approach to risk management that puts strategic decision-making data at its core. Using AI tools in combination with standard business analytics, you can collect critical information about the locations where you or your suppliers operate, as well as the confidentiality and security of the data you hold, allowing you to anticipate potential issues and act before they affect you.
  • Hear from local experts who know the ins and outs of the specific political situation in your country and region. Your strategy should benefit from the knowledge of these experts, as they will allow you to better understand local nuances and contexts and, hopefully, be able to use your influence to protect your company and supplier relationships.
  • Secure your assets against the most common threats in the locations where you operate. This involves evaluating your assets and the potential risks that could affect them, as well as analyzing the type of insurance you need.
  • Outsource to experienced, trusted vendors in the locations where you operate or contract for services . Local providers can provide access to the insights mentioned above while providing the agility to act in the event of outages.

Any company with a global presence, both from a customer and supplier perspective, must apply all of these measures to mitigate geopolitical risks. These form the core of a solid strategy to address real and potential challenges on the global stage.

Vendor lock-in and geopolitical risks may not be high on your priority list today – but they have the potential to become major risks very quickly. However, not paying attention to them will harm your overall efforts and will certainly take its toll – often sooner than you think! The key to facing these risks is knowing how to decentralize your operations, involve multiple geographies as a “cover” and establish partnerships with experienced and reliable suppliers.

This will give you the agility and resilience you need to dynamically adjust your business to the changing needs of modern markets and realities.

This article is part of the Outsourcing Risk series.

If you liked this article, be sure to check out some more articles about outsourcing.

  • Simplifying Communication for Successful Software Outsourcing Projects
  • Common Outsourcing Services in the Fintech Industry
  • 7 Reasons Why You Should Consider Outsourcing SaaS Development
  • Drafting comprehensive service level agreements for software outsourcing

Source: BairesDev

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