New Year fiesta is a period of high hopes. Traditionally during these days divination is very popular and (if true believers don’t cheat) more reliable. That’s why I decided to send this post at the very beginning of 2011.What trends will change the face of background screening and due diligence in Russia during 2011? Can we expect that in the nearest future dealing with Russian companies will be less dangerous with the help of background screening, due diligence or risk-management professionals?
Let’s play that I’m the Delphi oracle (who also was said to be “not quite good in Greek grammar”) and listen to my answers.
Development of Background screening as a service. The strongest disease of background screening in Russia is that it is still treated by mid-sized enterprises as a kind of semi-governmental, partially-legal (i.e. corrupted) activity which is aimed on gathering data about partners and employees in militia’s databases. The funniest thing is that in most cases (except for identity and criminal records checks) these databases are useless for the client. I expect that in 2011 most innovators of the market will at last understand that if background screening won’t be considered as a service which brings value to the customer they will be forced to leave the market. What’s in background screening report will bring value to Russian customers? – The answer will dramatically change the face of Russian background screening market in the year 2011.
Changes in informational structure of Russian databases and availability of information. Until 2009 there were no open for public official databases in Russia. Ones I had a chance to ask reliable informant “Why we keep all the data classified? Isn’t it reasonable to move towards the US or European practice in management personal and corporate information?” The answer was simple “we simply can’t define what should be kept classified and what should be opened for public. That’s why we protect everything we know”. Some news in current legislation of Russian Federation, development of Electronic government and infromatization of State agencies brings hope that in 2011 we will see new opened for public databases. By the end of 2011 these databases will cover 20-35% of standard background screening report of regular Russian risk-management company. There still some questions (including reliability of these open for public databases) and it shouldn’t be expected that in general background screening prices will be reduced but I assume that newcomers of the market will use these new sources to start damping of the market. With no doubt these databases will simplify remote background screening of Russian companies by foreign professionals.
Aging of illegal databases and decrease of small-sized background screening companies. As you have probably seen in my previous blog posts, there are several illegal databases available at the black market and torrents of Russian Federation. Until 2008-2009 these databases (also known as Cronos databases) were widely used by small and mid-sized market players in background screening processes. It is obvious that without regular update these databases are aging every day. If it was acceptable for regular customer to buy 2007 expired information during 2008-2010, in 2011 it won’t work. At the same time I can’t decline that these illegal databases will be extremely helpful in enhanced due diligence projects mostly related with origin of capital. Being offline source these databases can’t be edited by politician or businessmen’s wish. Anyway, Russian companies relying on illegal offline databases will be forced to search for a new source. Will they find free of charge databases? I doubt.
Rising of legal background screening. I know that most of my readers are skeptical and hardly believe that in a short period Russian business will become more transparent and legal but in my opinion this exact market has a strong potential of legal growth in nearest future. I think that during 2011 we will see the rise of innovating companies who will use only legal procedures in background screening projects. Doing my part in 2011 I’ll try to show simplest methods of legal gathering of information on my blog.
I wish you all the best and good luck in 2011!