Categories
Latest News

Gartner: Compliance spend plateaus despite uptick in workload and increased risk factors

“The median compliance department decreased its headcount between 2017-2020 from 12 to 10 full-time employees (FTEs).  One reason for the decrease appears to be a shift in spending away from headcount to technology and outside spending.”

A study by Gartner has revealed that corporate compliance spend plateaued in 2020 after several years of growth. The study concludes that compliance spend has been impacted by COVID-19 despite the increased workload and new risk factors ushered in by the pandemic.

Based on data from 117 organisations in the second half of 2020, in the period from 2017-2019 total compliance spend per 1,000 employees grew more than 42%, from $114k to $162k. However, due to the widespread economic disruption of COVID-19 that figure remained the same in 2020. 

“Like many business functions, compliance spending has been impacted by the coronavirus pandemic,” said Brian Lee, managing vice president in the Gartner Legal and Compliance practice. “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.”

Gartner points out that the pandemic has heightened a slew of organizational risks that compliance leaders have needed to monitor more closely (see Figure 1).

Figure 1. Risks Monitored More Closely as a Result of COVID-19

Chart

Description automatically generated

A deeper look into compliance department spending found that the median compliance department decreased its headcount between 2017-2020 from 12 to 10 full-time employees (FTEs).  

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

While compliance departments only planned to increase their personnel spending 1.6% in 2019-2020, the median compliance department planned to increase their spending on external experts and services by 30%. Similarly, compliance technology expenses were projected to increase 15% and compliance training and communication vendors spending to increase 13%.

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

Caroline.hill@legalitlexicon.com