Forbes recently published an article that explains how COVID-19 has disrupted the operations of several offshore financial data collection services. This is a significant development—and a very serious problem—because without accurate and timely data collection, American investors will be unable to make informed investment decisions amid an already volatile market. Since most prominent financial institutions have business process outsourcing (BPO) operations in foreign countries that are currently experiencing lock-down or stay-at-home orders, the virus is preventing many employees from being able to carry out their typical data processing job functions.
The potential shortage of foreign workers in this field has affected—or very well could affect—thousands of Wall Street professionals, and other investors, who heavily rely on this financial data in order to make informed investment and financial decisions. While a country’s decision to implement a lockdown may be necessary for the health and safety of its people, the decision has come at an unfortunate time from an economic standpoint. The Forbes article goes on to explain that many companies who have a 12/31 or 1/31 fiscal year-end date recently filed their 10-Ks and will have to file their 2020 first quarter earnings and their 10-Qs over the next few weeks. The reporting and collection of accurate financial data is arguably more important now than at any other time during the calendar year.
Since stay-at-home and lockdown orders have become a normal part of life for most of the world, there is no clear solution for data collection operations. While relocating to “on-shore” operations may serve as a short-term solution (assuming such services would be deemed “essential”), the cost-saving component of offshore financial services might not be an advantage that financial institutions are willing to cede. Moreover, a significant push for domestic business processing services may overwhelm the existing workforce in the United States, causing delays.
How this will play out is difficult to predict. Deadlines to file tax returns have already been extended, and perhaps regulatory filing deadlines will be as well, but this may not be feasible when investors rely upon up-to-date quarterly and annual financial information. Lenders and accredited investors as well typically rely upon up-to-date quarterly and annual financial information when performing their underwriting and due diligence processes, and information delays may very well result in delays obtaining much-needed financing.