Monday, January 12, 2009

Lone survivor of recession - Legal Process Outsourcing (LPO)

Global meltdown and Recession has hit all the industries hard but there is one industry that is booming during this period “Legal Process Outsourcing”. Industry has seen faster growth in the last few months; demand for legal activities has grown from across sectors and verticals. Legal departments do not generate revenue and hence the pressure to cut costs is much higher on them. This has resulted in increased volume of outsourcing of legal work, especially from countries like US and UK which make up 95% of the legal outsourcing market. LPO companies in India are thriving like never before as most of these companies have witnessed increasing business and influx of various new legal processes. Slowdown in the global economy and increasing legal activities among companies like restructuring, downsizing, layoffs, closure of branches, winding up of subsidiaries and termination notices to collaborators and franchisees has led to the growing demand of Indian LPO service providers. Factors such as cost advantage of over 70% for legal work in countries like India is forcing companies to increase the outflow of such legal activities. Performing document review with a senior associate in US costs $200-300 per hour while the same work outsourced to Indian LPO would cost companies barely $25-30 per hour. Another important factor is availability of abundant talent is another which is attracting outsourcing of legal work to India. As per Bar Council of India, Indian universities graduate nearly 80,000 lawyers per year this does not take into account those who study at overseas universities and return to India. Statistics shows till date only 42% find gainful employment as lawyers in India while others having to content themselves with jobs in the country's booming services and IT sectors. Growing legal outsourcing industry will attract law graduates from IT and BPO sector back. All these are good signs for both Outsourcer and Indian LPO service providers.

Indian LPO vendors clearly stand to benefit from the current global turmoil and increasing legal activities. India has over 100 service providers that can be categorized into three groups: Captive centers, Third party - Niche service providers (Stand-alone LPOs) and Third party - Multiservice providers. Companies like GE, Cisco, Oracle. DuPont have their own in-house legal departments in their captive centers in India. Dedicated third party service providers like Evalueserve, Datamatics, WNS, Manthan, Titus, G B Law Solutions, LegalSonic etc offer offshore legal services along with other services. India also has certain niche players such like IP PRO, Patent Metrix, Pangea3, Mindcrest and Quislex.

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