Licensure
Licensure represents a form of regulation. By regulating a service, the government seeks to define minimum quality standards and require, by granting or denying licenses, compliance with those standards.
Circumvention
Increasingly, outsourcing service providers are entering markets that require licensure. Means of circumventing the licensure requirement include:
- piggybacking on a licensed provider’s license service as a “paraprofessional” under the supervision and control of the licensed professional;
- obtaining licensure in one jurisdiction and extending it by obtaining reciprocal licensure in other jurisdictions (which, in the United States, is done under the “Full Faith and Credit” Clause of the federal Constitution); or
- designing the scope of service in a manner where an essential regulated activity is omitted from the outsourced business processes.
Compliance
These circumventions have attracted the attention of regulators and self-regulatory organizations. In 2005, the American Institute of Certified Public Accountants adopted an ethical rule, for example, that requires disclosure by a CPA to his or her client of the fact that a paraprofessional is performing the services and, indeed, that such service might be performed offshore.