The HIPAA, if you are not aware of what the acronym stands for, could well be a father hippo. In Business Process Outsourcing (BPO) circles, however, they know that it expands to the Health Insurance Portability and Accountability Act. This is a US law. But it has considerable impact on how Indian companies handle healthcare outsourcing.

There are many more of its tribe. Sarbox, for instance: the Sarbanes Oxley Act that was pushed through in the wake of numerous corporate scandals in the US. If you search the redtape, you will find thousands more, the Gramm-Leach-Bliley Act, the EU Data Protection Act....

“Indian BPO companies have boned up on all these Acts, because they won’t win contracts otherwise,” says a corporate analyst. “The sad part is that they are clueless about similar provisions at home. The track record of Indian companies on compliance is very poor.”

Take the issue of insider trading. The Securities & Exchange Board of India (SEBI) rules are quite clear. First, every company needs to have a compliance officer who reports directly to the CEO.

“I get a call from the Bombay Stock Exchange practically every morning asking for an explanation of how a particular new item has found its way to the newspapers,” says the compliance officer at a large Indian company. “Half my day goes in responding to these queries.”

That is likely to be an exception. The truth is that in most places, compliance officers are junior-level flunkeys who have been appointed because it has been statutorily ordained. Very often, this function is handled by the communications department.

But compliance is a mindset that must be instilled in each and every employee. It doesn’t happen automatically. Honda workers used to carry a rag cloth around to polish any dusty Honda they saw on the roads because they were so loyal to the company and so proud of its products. But that took years for founder Soichiro Honda to inculcate. Along the way he became famous for throwing spanners at his employees if he ever found them guilty of sloppy workmanship.

“While it is the responsibility of the top management and the HR department to instil a spirit of compliance, every employee should be receptive too,” says Mumbai-based HR consultant D. Singh. “And compliance is not narrow focus; it includes a whole lot of things.”

SEVEN HABITS OF COMPLIANCE • Document the policy and control environment • Assign appropriate oversight of compliance management • Require personnel screening and access control • Ensure compliance through training and communication • Implement regular control monitoring and auditing • Consistently enforce the control environment • Prevent and respond to incidents and gaps in controls Source: Forrester research: Seven Habits Of Highly Effective Compliance Programs, by Michael Rasmussen

At the very basic level compliance would mean punctuality and a work ethic; this is compliance with the company’s work norms. Then there are compliance with social norms, like acceptance of minorities and those with disabilities. Most Indian companies pay lip service to these aspects. In fact, political parties and trade unions have a sons-of-the-soil approach, which ensures that the local community bags the lion’s share of the jobs.

The employee may well ask himself in this scenario whether voluntary compliance will be of help to him. “If you try to obey every rule in the book, you will end up tied hand and foot” is a common enough complaint.

At all levels ? from shopfloor worker to foreman or management trainee to marketing head ? it eases your way up the ladder. “Mavericks rise up to a point; it is the company man who becomes CEO,” says Singh.

He also points out that, with globalisation gathering pace, it is important to live within the rules in the co-mingling of corporate cultures. He concludes: “All other things being equal ? and they very often balance out ? this will be a competitive advantage.”