Recession a catalyst for legal outsourcing

March 17th, 2009

Smaller law firms that have been reluctant to use legal support services may change their minds in the light of current economic conditions. That was one of the details that emerged from the recent Leadership Forum held by India’s National Association of Software and Services Companies (NASSCOM). As well as attracting delegates from NASSCOM’s core IT-BPO audience, the event drew in a contingent of interested observers from the legal process outsourcing (LPO) field.

Outsourcing expert Mark Kobayashi-Hillary, who attended the event, told IP Review Online: ‘While a number of larger law firms are beginning to explore legal outsourcing, some of the smaller firms don’t have the same scale to be able to launch LPO deals or joint ventures. There are definitely firms out there exploring the options, and the potential for growth is there. The recession could act as a catalyst to bring new firms into the sector.

‘There’s a paradox,’ continued the author and head of UK trade group the National Outsourcing Association, ‘in that a number of organisations are wary of committing budgets to external services – however, there is a renewed urgency not just to reduce costs, but to create certainty in the long term. In that regard, predicting costs over the next five years has become more important to firms than making short-term savings, and LPO could play a part in that. The legal services are dependent on other industries doing well, so utilising that potential to get back-office work done at a lower cost is something that even the more reticent firms would think about exploring in this kind of economic environment.’

Kobayashi-Hillary added that NASSCOM and the Indian government are working well together in order to stimulate India’s outsourcing trade – particularly in terms of ensuring that there are technological incentives to draw in overseas clients. ‘NASSCOM sits as an independent body,’ he said, ‘and drives the agenda for how India can be made a more attractive location for foreign firms to do business. The Indian government gives a lot of weight to what NASSCOM is trying to do in areas such as data protection and digital signatures – the kind of measures you need for encouraging security.’

The relationship between outsourcing and the economic climate will take centre stage at NASSCOM’s next major event. Scheduled for 26 March, Perspective 2020 will examine how India-based outsourcing is likely to perform over the next ten years. IP observers will be interested to learn that the event will look at how India’s outsourcing trade can ‘lead the way in the innovation-led transformation of global business and technology-led inclusive growth.’ As a part of this, the event will feature material on designs and activity in the R&D outsourcing sector. The IP strand will be particularly useful for LPO delegates: according to a 2007 study by major industry research group ValueNotes, IP accounts for over a third of the work outsourced to Indian LPO companies.

According to NASSCOM, outsourcing is now at a key point in its evolution. ‘Industry leaders recognise that the next decade will be fundamentally different from the last one,’ it says, ‘owing to a radically restructuring global economy; rapidly evolving customer needs, services and business models; and rising stakeholder aspirations.’


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Entry Filed under: Why Outsource?