Xapien vs. manual third-party due diligence: Which offers greater ROI?

Building a strong business case for AI determines whether a company successfully implements and leads in its adoption. However, AI must be deeply integrated into a use case to become part of the process. Not just an add-on. The challenge is identifying these high-impact use cases and proving measurable value to stakeholders.

Third-party risk management is a particularly strong use case for AI. As compliance teams navigate complex regulations like the Economic Crime and Corporate Transparency Act (ECCTA) and the Corporate Sustainability Due Diligence Directive (CSDDD), manual due diligence becomes costly.

That’s where third-party due diligence providers​, like Xapien, deliver a clear return on investment.

The hidden costs of manual due diligence

Due diligence is expensive, but it’s also non-negotiable. From suppliers and distributors to joint venture partners and service providers, businesses rely on external entities to operate efficiently and expand into new markets. Having a robust third-party due diligence programme ensures that third-party relationships are compliant with regulatory standards. However, third-party due diligence is more than just ticking a box. It’s about truly understanding the entities your company associates its name and reputation with. The right third-party due diligence providers​ should enable that capability.

Internal costs

Companies often underestimate the internal costs of managing third-party risk, which are spread across multiple departments. They also tend to allocate equal time to each third party, draining critical resources that could be better focused on high-risk areas.

Compliance analysts spend hours scouring databases, verifying identities, and compiling reports. For a team of five compliance professionals earning an average of £50,000 each, even if 40% of their time is spent on due diligence, that’s £100,000 annually tied up in repetitive tasks rather than strategic risk assessment.

In reality, analysts spend much more than 40% of their time searching and discarding negative media, which reduces their capacity to focus on strategic risk analysis and decision-making. The issue isn’t the amount being spent but how it is being spent.

It’s also worth noting that due diligence often involves reviewing sources in multiple languages. Internal teams may lack the necessary linguistic expertise, requiring expensive translation services or hiring multilingual analysts to fill the resource gap. 

External consultancies 

For companies that lack the internal resources to conduct deeper due diligence in-house, outsourcing to a consultancy is often the default solution. However, this comes at a cost. Due diligence firms typically charge anywhere from £2,000 to £20,000 per report. This depends on the depth of analysis and the jurisdictional complexity involved.

At first glance, outsourcing might seem like a convenient alternative to internal research. But at scale, these costs quickly become unsustainable. Many large corporations onboard thousands of new entities annually. That means outsourced due diligence reports can run into the millions. Moreover, outsourced reports are static snapshots in time. By the time they are completed, the report may already be outdated which increases risk exposure.

Time to complete

Time spent on due diligence is the bottleneck to business growth. Third-party due diligence, whether conducted in-house or outsourced, is notoriously slow. Researching an entity and the individuals behind it can take anywhere from several days to multiple weeks. This delays onboarding new suppliers and other third parties. In industries where speed is a competitive advantage, these delays can result in lost revenue and missed opportunities.

Opportunity cost

Every hour spent manually searching AML databases or compiling fragmented information is time lost on higher-value strategic work that drives growth. For instance, taking weeks to onboard a new distribution partner means delayed revenue. For low-risk third parties, it delays contracts, slows supply chains, disrupts production, and ultimately impacts revenue.

Regulatory risk 

Compliance teams operate on the frontline of defence. They’re responsible for ensuring the company meets regulatory requirements while avoiding working with high-risk third parties that could tarnish its reputation. However, when due diligence is conducted manually, the process is inherently vulnerable to human error and inconsistency. 

Manual due diligence often involves sifting through multiple sources of information: news articles, corporate registries, sanctions lists, and adverse media reports. The sheer volume of data makes it easy to overlook critical red flags, especially when operating under tight deadlines. If a company unknowingly engages with a third party involved in financial crime, corruption, or sanctions violations, the consequences can be severe.

Undisclosed beneficial ownership: Third parties with opaque ownership structures can obscure links to sanctioned individuals, politically exposed persons (PEPs), or entities with a history of fraud and corruption. 

Bribery and corruption risks – Many jurisdictions, including the U.S. and U.K., enforce strict anti-bribery laws (such as the FCPA and UK Bribery Act). If a supplier or intermediary has a history of corrupt practices, failing to identify it can expose the company to severe regulatory penalties. The only defence is having adequate procedures in place to prevent it. 

Human rights and ESG violations – Increasing regulatory focus on ethical sourcing and sustainability means companies must ensure their supply chains are free from forced labour, environmental violations, or unethical business practices. 

Xapien: What’s the return on investment? 

Xapien replaces fragmented manual research with AI-powered analysis, delivering fully structured reports in minutes.  The impact on ROI is immediate:

• Cost savings: Xapien provides a clear cost advantage over manual or outsourced due diligence. Companies often see a five-to-one ROI, while simultaneously improving output quality and speed. Our subscription structure provides a far more predictable and manageable budget than relying on expensive external providers for each report.

• Scalability: The scalability of AI-powered due diligence is unparalleled. Unlike manual research, which is constrained by the number of analysts on a team, AI can assess thousands of third parties in a short space, maintaining the same high level of quality and precision across all reports. This scalability ensures that businesses can manage growth without the need to continuously expand their compliance teams.
  
  
• Opportunity cost: The true cost of manual due diligence often lies in the opportunities that slip away as a result of delays. When the due diligence process takes weeks instead of days, contracts are held up and revenue is delayed. By accelerating the process, Xapien empowers businesses to act faster, make decisions with confidence, and seize opportunities as they arise.
  
  
• Efficiency gains: Xapien reduces hours of research to minutes. A compliance officer who once spent 10 hours on a single report can now assess multiple third parties in a fraction of the time. This boosts productivity across the organisation, empowering compliance teams to focus on risk assessment and strategic decision-making.
  
  
• Faster onboarding: Time is money. Running a Xapien report in minutes means compliance teams can clear low-risk third parties, suppliers, and partners much faster. This reduces the delays that lead to missed business opportunities and operational inefficiencies.
  
  
• Risk mitigation: Xapien reduces third-party risk by enhancing the scope and accuracy of risk detection. Xapien scans a wide range of global data sources, including news reports, sanctions lists, and corporate filings, to identify potential risks. While human analysts might miss negative news stories buried in foreign-language media, Xapien uncovers those stories in real-time. 

The cost of inaction

The question is no longer whether to invest in AI, but when. 

It’s a rare opportunity to rethink business processes, improve internal efficiency, and enhance risk coverage in due diligence. With increasing regulatory scrutiny and a growing number of third-party relationships, the cost of traditional due diligence continues to rise. For many, failing to innovate is more expensive than streamlining these processes. 

More types of risk are also being integrated into onboarding programmes. The strategic potential of AI is vast. Businesses that adopt it early will unlock new opportunities, while those that fall behind risk missing out. Try it for yourself by booking a demo with our team.