While China has become a powerhouse of outsourced manufacturing, India still retains a commanding lead in the outsourcing of services and business processes like LPO. This will remain true for a number of structural reasons. For starters, the English language is the dominant language of services outsourcing and clearly, India has a much larger number of English speakers. But other factors will also continue to hinder the growth of BPO and LPO in India including concerns about data security (in China, the central government still exercises a lot of control over all forms of communication and data storage.) For more on the subject, click here.
There is some evidence that law firms have been adopting legal outsourcing at a slower pace than their own corporate clients. There are a variety of reasons for this; most obviously, lawyers are not eager to send billable work to another provider, even if the client will save money. As one partner articulated to me in a recent meeting, sending even commodity work to an offshore vendor is a win, win, lose proposition for a law firm (where the corporate client saves on legal fees, the vendor generates the fees the law firm used to generate and the law firm loses revenues but retains the risk associated with the engagement).
While the Great Recession continues to send more U.S. lawyers packing, the job market in India offers some opportunities. As the LPO industry expands in India, the need for U.S. trained lawyers (who are able to manage and train Indian lawyers in some of the nuances of American practice and American lingo) is growing.
An article in the London Evening Standard suggests that many Magic Circle firms have already sent legal work to India and South Africa (e.g. Allen & Overy, Clifford Chance, Eversheds, Lovells and Simmons & Simmons.) The article reports that 1000 more legal jobs may be sent to India by the end of the year.
While the article does not provide a lot of concrete evidence that this is actually occurring (it mainly quotes various individuals in the legal and LPO industries), I am left with the impression that the U.K. is taking more quickly to outsourcing legal work to India. I cannot recall seeing an article which lists as many American law firms adopting the practice.
If it is really the case that U.K. firms are taking more quickly to offshoring legal work, perhaps this is because of the strong colonial history between England and India. There is a large population of Indian immigrants in the U.K., particularly in London, and I suspect that your average English solicitor or barrister has more contact with professional Indians than you average American lawyer.
An interesting analysis of recent ValueNotes research appears on Integreon’s blog.
Back in May, ValueNotes issued a report which concluded that LPO penetration had been relatively weak at law firms (only 3% of the surveyed firms had worked with an LPO.) ValueNotes is one of the few companies that has conducted research on the LPO industry. While Integreon suggests that this can be explained by factors other than a wholesale rejection of the concept (LPO is a nascent industry and lawyers are very slow to change), the post suggests that under-reporting may be at play. In short, individual lawyers may not be aware of what is happening at their firms. Read the rest of this entry »
Mark Ross of LawScribe, an LPO that provides services in several areas including e-discovery, IP, corporate transactions and legal research, is offering a free Webinar on ethical issues in outsourcing legal work. I’ve heard Mark’s past presentations and they are very worthwhile. Below is a description. Read the rest of this entry »
Yesterday I noted that it is very difficult to evaluate the actual size of the LPO industry. Nonetheless, there are continued signs that the industry is growing.
Today, for example, the Times Online reports that Rio Tinto, one of the largest mining companies in the world, is setting up a team of lawyers in India to complement their in-house team.