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Liam Brown on November 20th, 2009 at 3:58 am :
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The Lawyer’s Lyceum Capital injects £25m into LPO start-up and LegalWeek’s Lyceum commits £25m to enter LPO market in Laureate venture articles show continuing investment momentum into LPO, as discussed in my post £400m Acquisition an Indicator of a Maturing KPO Market? This particular investor group has been looking for opportunities to invest in “new business models for delivery of legal services” for some time. I can’t find much about the startup company, Laureate, on the web, but Lyceum’s advisory panel knows a thing or two about the opportunity in the legal market: former Clifford Chance managing partner Tony Williams, visionary legal IT consultant Richard Susskind and Paul Hewitt, who helped develop legal services at the RAC and Cooperative Group. I expect to see some of this private equity money go towards acquiring law firms’ captive, non-core business services operations. It’s certainly a use of capital that Integreon has earmarked.
Filed under Business Process Outsourcing (BPO), Captive v. 3rd Party, Economic Trends
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Matthew Banks on October 28th, 2009 at 11:45 am :
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The news of Rio Tinto’s Legal Process Outsourcing (LPO) initiative has been widely reported. For a detailed report, I recommend Richard Susskind’s interview with Leah Cooper, the Rio Tinto General Counsel behind the initiative.
The number of major outsourcing arrangements between leading LPOs and blue chip global law firms, banks and corporations has increased but the topic is rarely discussed publicly. The Rio Tinto arrangement is one of the very few widely publicized.
Cooper’s approach to her challenges (as well as her messages to the industry) will resonate with GCs around the globe, who face similar pressures of increased workload but constrained budgets. LPO enables law departments to meet rising workloads whilst reducing costs. It opens up a “new way of working” where quality can be achieved at reasonable cost by reallocating legal tasks to partner providers.
Indeed, as I listened to this interview I kept coming back to Cooper’s notion of “a new way of working”. Whilst I do largely agree with her comments, I have a slightly different take on how GC should think about legal outsourcing.
The “P” in LPO: Process is Not a Dirty Word
Cooper doesn’t like the “P”. She sees her LPO team as a genuine extension of her in house team, contributing to the overall workload and undertaking tasks that a junior lawyer within the in house team might otherwise undertake. She rightly points out that the “P” downplays or downgrades the importance and nature of the work.
I agree that LPO is not about administrative form filling. Nor is it restricted to organizations with massive volumes of standardized documentation. Process, however, is integral to LPO: it is core to the how LPO lawyers perform tasks, even complex ones. Moreover, process should be core to lawyers everywhere but typically is not. The legal market finally seems to be waking up to the importance of this. Law Firms Look at Process Management in The Legal Intelligencer (20 Oct 2009) discusses project management and process, including law firms that are now adopting Six Sigma, a tool some LPOs, Integreon included, have used for some time.
The benefits of process include consistency, predictability, quality, productivity and defensibility – these benefits apply across many legal tasks of varying complexity, not just tasks which by their nature are substantively straightforward, standardized and routine. For example, one of our current projects involves a multi-national corporation with a suite of 20 “medium complexity contracts” used regularly in its business. The company has different attorneys around the world following different processes using different templates in different locations, accepting different edits with different results. The LPO process brings a method which is common, documented, repeatable and scalable. Beyond labor cost savings, working with an LPO helps the company reduce work volume plus improve consistency and therefore decrease risk.
Smart buyers of LPO services are not simply looking for Day 1 cost savings – they demand long term transformation and improvements. A key value add of LPO is creating these longer term productivity and efficiency improvements by combining process expertise with legal know-how. It’s the same core task but delivered in a more modeled and structured fashion. Richard Susskind discusses this in detail in his recent book, The End of Lawyers?
“Process” captures implementation and transition planning, workflow, performance metrics capture and tracking, communication, and reporting. All of these are not ends in themselves – they are genuine tools for improving performance.
So if you don’t like the word “process” then call it “method” or “systemization”. Whatever we call it though, it’s an essential ingredient to delivering and managing legal services – whether from an LPO, law firm, or law department.
The “O” in LPO: “O” Means Outsource, not Offshore
“O” is for Outsourcing, not Offshoring. Outsourcing is about an approach, not a location. The offshore element of the Rio Tinto deal is what grabbed the headlines, but Cooper explains that quite a few projects have actually been performed onshore in the US, and are still achieving cost savings when benchmarked against the cost of the law firm model.
LPO is not exclusive to India, nor those tasks which are suitable for offshoring. The “new way of working” is broader than that. We believe that outsourcing is a global phenomenon and LPO should be no exception. Outsourcing could be onsite at the customer’s office; it could be onshore, multi-shore or offshore.
Offshoring to India is highly successful and can be a great way to reduce cost and create efficiencies, but it’s not the only way. Organizations want the right fit for their requirements, not a one dimensional solution. Different locations offer different attributes and mature LPOs offer law departments and law firms an explanation of the differences and a choice. One size does not fit all; one shore does not fit all.
So What about the “L” You Ask?
The “L” of course is for Legal, which should not be confused with traditional business outsourcing, such as commonly associated with offshore technical support or call centers. Legal outsourcing requires domain expertise. So for example, Integreon’s legal outsourcing services are supported by our staff of full time, licensed lawyers, who can work on-site at client or law firm offices or at any of our secure facilities located onshore, including in such familiar places as midtown Manhattan and London, or in equally secure and lower cost offshore locations.
“Legal Process Outsourcing” therefore implies professional, experienced legal staff delivering quality, cost effective services from the client’s choice of locations.
Filed under Business Process Outsourcing (BPO), Knowledge Outsourcing (KPO), Legal Outsourcing (LPO), Onshore v. offshore, Outsourcing Industry News
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Mark Jewell on September 3rd, 2009 at 11:58 am :
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Earlier this year, FreePint and Integreon partnered to survey business research managers about outsourcing, barriers to its adoption, and the satisfaction level of those currently outsourcing. FreePint recently published the results in a report called VIP Report: Survey on Outsourcing.
Integreon is making available a free copy of the report; click here if you would like to request a copy. To receive the report, you must complete the registration form with the required contact information, including an e-mail address with a business/corporate domain name, and agree to subscribe to the Integreon blog. This offer is valid through Oct. 31, 2009.
Summary and Findings of FreePint Report on Business Research Outsourcing
The survey targeted managers of knowledge and information services but also included managers of document preparation (word processing, etc.), legal support, and pitch support (graphics, presentations, etc.). The majority of respondents were senior-level decision-makers spanning a range of industries, including legal, financial services, management consultancies, and pharmaceuticals. A total of 71 managers responded with nearly 40 percent from corporations with more than 1,000 employees. About one-third were in the US, one-third in the UK, and one-third elsewhere in the EU, Australia, Canada, or other countries.
The findings reveal disparate views about quality and the cost of outsourcing. On the one hand, the 40 percent of organizations that do outsource are satisfied with outsourcing quality and cost effectiveness. On the other hand, the 60 percent not outsourcing cited quality and cost concerns as the most important factors influencing their choice not to outsource.
We can’t explain this seeming contradiction though suspect it says more about outsourcing perception than reality. It may reflect negative perceptions of offshore outsourcing. Some recent surveys (e.g., see our blog post Cost Arbitrage is No Longer Enough (Black Book of Outsourcing Rankings and Findings) suggest that customers look for high cultural compatibility, which typically favors onshore outsourcing. The survey was not designed to tease out differences in onshore and offshore outsourcing. We welcome reader views on other explanations for the seeming inconsistency.
One other result particularly intrigued us: Among those who outsource, the majority of the work continues to be done in-house; respondents who outsource report that over 75 percent of the work remains in-house. This finding supports a key outsourcing benefit, namely, to free high-end professionals for their “highest and best use.” Outsourcing is ideal for handling important but routine tasks that can otherwise overwhelm more valuable strategic work.
Overall, the survey results suggest that organizations considering outsourcing may gain benefit from reviewing the upsides reported by those already engaging in outsourcing. With 2010 budget planning just around the corner, this may be the right time for those organizations to take a fresh look at how outsourcing can facilitate achieving their quality and cost efficiency goals in the new year.
For the report table of contents, click here.
To request a full copy of the report from Integreon, click here.
Filed under Business Process Outsourcing (BPO), Knowledge Outsourcing (KPO), Legal Outsourcing (LPO), Onshore v. offshore, Outsourcing Industry News
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Chris Niccolls on September 1st, 2009 at 11:26 am :
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Arpit Kaushik recently authored an insighful article, Making sense of Offshore Outsourcing 2.0 (published in CIO UK, 28 August 2009; and originally in CIO US, 13 January 2009), identifying five principles for outsourcers who want to move to “Outsourcing 2.0″, which represents next generation outsourcing.
Making a correlation with Web 2.0, Kaushik’s five principles for Outsourcing 2.0 include:
- Offshore implemented as a platform rather than as the delivery channel,
- Globally syndicated delivery networks,
- Rich user experience: Success as the measure,
- Rich user experience: Relationships, not complex contracts, and
- Engagement as a conversation: Co-creation, not blame-game.
These principles paint a clear roadmap for Business Process Outsourcing (BPO) companies that want to move to the next stage of outsourcing evolution. Clear as Kaushik’s roadmap is, however, it’s a map for outsourcers, not for business managers.
Kaushik is absolutely correct that for outsourcing to be truly effective it needs to be pervasive and syndicated across the firm as a single, integrated approach rather than a series of disconnected initiatives. To achieve this outcome, the planning and analysis needs to be done at the C-Suite level. The problem is, the C-Suite does not focus on outsourcing; rather, it focuses on core business issues.
This distinction may seem subtle but it’s important. C-Suite executives generally receive staff recommendations tied to specific projects or functions. Whatever they need to move their business forward - building a new building, adopting a new technology, expanding the workforce, or even outsourcing - executives assume that staff have worked out the details reliably. But with the thinning of middle management, not just in this recession but over the last decades, the assumed attention to detail may only hold true with the help of a business partner who can augment these due diligence efforts and then translate them into strategic C-Suite business terms.
Rarely does the C-Suite see their organization as being confronted with an outsourcing problem. Instead they may see unrelated problems to solve or opportunities to pursue, for example, the rise in secretarial costs that needs to be controlled, an unprofitable product that has too many loaded costs, real estate constraints limiting the growth of their workforce, or the need to fix a recurring budget overrun. They do want a solution that works and is complete.
Kaushik ’s last three principles perfectly articulate these needs within the new wave of outsourcing. To be realized, BPOs must first establish a level of trust that quickly goes beyond metrics and penalties and rises to a holistic level that focuses on how the business should work. What this means is moving the conversation away from short term horizons (e.g., did we meet this month’s metrics), to more important business issues (e.g., are we fully supporting the client’s 2010 revenue goals). To achieve this, both outsourcers and customers must work at a higher level than in the past. They need to go beyond a traditional vendor type relationship, often characterized by “hand off” delivery processes, and instead mold a deeper business partnership using integrated, tandem processes.
To achieve such tight integration as well as the full benefit of outsourcing, customers and providers together should begin by considering how an existing or prospective outsourcer performs in three key areas beyond Kaushik ’s five principles:
- Focus on just a few markets: There are subtle and not-so-subtle differences in how similar services are supported in different industries. A BPO needs expertise in specific industries, otherwise solutions will be crafted that take too long to get “just right” and may miss critical opportunities. So customers need to make sure their provider has the right industry experience and expertise.
- Provide the services your markets need: No single BPO can perform every task for every client that every market asks for. Some big BPO’s focus on a single service such as Word Processing, or Accounting… which is perfectly fine. But providers who want to offer the synergies that the C-Suite demands need domain expertise across multiple service lines. So customers must make sure they assess the full range of provider capabilities.
- Support offshore, onshore and onsite strategies: Kaushik is right to say that outsourcing is “not about ‘which’ shore you use”. But if a provider is going to fully provide for the outsourcing needs of a big client, it must have multi-shore capabilities. Clients don’t necessarily come into an engagement knowing that they need support from a variety of geographies. Yet, once the program is underway, details may emerge that the C-Suite did not anticipate, for example, national privacy laws, internal security regulations and the cultural history of a firm all come into play when designing specific programs. A BPO that lacks all of the right locations lacks all of the right tools to fully service the client. So customers must consider the range of geographies and locations, including onsite, over which their provider operates.
Filed under Business Process Outsourcing (BPO), Knowledge Outsourcing (KPO), Legal Outsourcing (LPO), Onshore v. offshore, Outsourcing Tips
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Liam Brown on May 12th, 2009 at 3:09 am :
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Outsourcing is back in the news. Come to think of it, when has it not been in the news? Two US national mainstream media had important articles last week.
Outsourcing: Thriving at Home and Abroad (Business Week, 4 May 2009) reports that outsourcing is thriving in the current economy. “Companies looking to cut expenses in the face of soft demand are keener than ever to hand off parts of their operations to lower-cost providers.” That is old news; what’s new is the locations those companies are selecting. Political considerations, internal and external customer perception, availability of talent, currency exchange rates, disaster planning, shrinking cost differentials between domestic and offshore locations, relative inflation rates, now drive companies to consider smaller domestic US cities such as Indianapolis and Boise. The drivers have consistently been, as the article touches on, increasingly sophisticated customers taking “a more nuanced approach” to their operations and sourcing strategy. Core processes are kept captive and non-core processes are outsourced (the so called “hybrid captive/outsourced approach”); some non-core processes are outsourced to multiple providers to mitigate risk (the so called “multi-sourcing approach”); and some processes are sourced offshore while others are sourced onshore (the so called “right-shoring approach”).
Obama’s Plan on Corporate Taxes Unnerves the Indian Outsourcing Industry (New York Times, 6 May 2009) reports on how the Obama Administration’s proposal to tax offshore profits is causing consternation in India. The article suggests the impact of the proposals may not be that great, though they are not yet fully understood. As we read the tax proposal, to the extent it has an impact, it would impact the profits of companies operating offshore captives so it might actually drive demand for third party providers of offshore services such as Integreon. What really caught my attention, though, was the speed at which this tax proposal appeared and at which it has the potential to change the sourcing location landscape - much faster than company operations planners can respond.
The lesson we draw from both articles supports the strategy we have long followed; namely, be flexible about location and have a choice of countries and continents. Companies should select location based on factors such as culture, time zones, cost, business continuity, exchange rates, relative inflation rates, skill availability, turnover, and taxes. Because these factors change over time, sometimes quite rapidly, companies must retain flexibility. For example, the Indian Rupee has had dramatic swings in value versus the US Dollar. And, as the Business Week article points out, the economic downturn has suddenly shrunk the cost arbitrage advantage of India over the US (though it is still large).
For these reasons, we now operate delivery centers in India, the Philippines, US, and UK, with more locations likely in the future. We are not dogmatic about the “best” location.
For onshore locations, we have long been enthusiastic about the types of cities Business Week describes. In 2007, we acquired an existing outsourcing business in Fargo, ND. The location in Fargo was a big factor in our acquisition decision - we recognized that we could hire, and more importantly, retain long-term highly skilled workers there at costs significantly lower than in major US cities.
We have also just opened a delivery center in Bristol, UK. While Bristol is a major city, costs there are up to 30% lower than in London, so it reflects the same thinking - find the right onshore locations that offer a good mix of skill, cost, and cultural compatability.
To drive home the point that location decisions depend on many factors, consider electronic discovery services. For our EDD business, we employ specialized employees, operate server farms, and need to take quick delivery of digital media. For these reasons, we operate delivery centers in “high cost” domestic cities such as New York City and Washington DC.
Global supply chain economics are complex and change rapidly. We encourage those considering outsourcing to think carefully about the right destination(s) for their work and to select a service partner that offers a range of choices, with the location flexibility to accommodate your needs as the evolve. We believe that optimized value chains will operate the right processes, in the right places, with the right people, using the right technology. Each value chain will differ - one size definitely does not fit all.
Filed under Business Process Outsourcing (BPO), Captive v. 3rd Party, Economic Trends, India Business and Economy, Onshore v. offshore, Outsourcing Industry News
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Ron Dappen on April 9th, 2009 at 7:23 pm :
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In our constant effort to learn more about the market, we’ve just launched a survey co-sponsored by FreePint. In particular, we want to know more about how outsourcing is viewed by those who use or buy any of the following services:
- Research
- Document preparation (word processing, etc.)
- Legal support
- Pitch support (graphics, presentations, etc.)
If you fit the description above, please consider taking this survey. We will share the survey results with all participants.
To receive a copy of the report, just provide your email address at the end of the survey. The survey is completely anonymous. Your email address will not be associated with your responses in any way; it will only be used to send you the survey results.
To link directly to the survey, click here.
Filed under Business Process Outsourcing (BPO), Captive v. 3rd Party, Economic Trends, India Business and Economy, Knowledge Outsourcing (KPO), Legal Outsourcing (LPO)
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Lokendra Tomar on November 25th, 2008 at 11:19 am :
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How should knowledge process outsourcers (KPOs), their clients, and their employees respond to current crisis in financial markets?
Client Perspective
Choose your vendor carefully - If there was ever any doubt, the current turmoil shows that that service quality and price should not be the only factors customers consider . Long term vendor financial stability is critical as well. Vendors with only a few hundred employers who depend on a handful of clients may find it difficult to survive even a single client loss. Depending on how much business they lose and their financial backing, a key client loss can put at risk continuity of service to remaining clients. Buyers should seek vendors with scale, good financial backing, and a broad customer base.
Outsourcing as a survival tool - Outsourcing is not just about cost savings - it can be a company’s lifeline too. Unless you remain competitive, you may not survive as a business. You may be able to save more jobs (and create new ones) by outsourcing if done smartly and with the right vendor. Choosing the right vendor will help you improve business economics, achieve flexibility, innovation, and help create growth (jobs). The downturn could last quite some time so it is important to consider both your cost basis and operating efficiency, even as your deal with what may be emergency circumstances.
Vendor Perspective
Reduce client concentration - While it’s always good to get more business from existing clients, look to balance the client mix. Otherwise, if your biggest client accounts for 40% of revenues and suddenly disappears (which seems to happen very often these days), you may not be able to survive the impact. Diversify into more verticals and geographies. Winning new business in this economy may be hard, but point your sales team in the right direction now.
Enhance capital - Clients will start asking more probing questions about the financial stability of your business and access to capital. Cover your financial bases. Work towards moving to profitability and get an investor who can be there to support you on your long term business plan/strategy
Leverage opportunities to consolidate /buy cheap assets - A major economic downturn is a time to be simultaneously conservative and bold. Be conservative in managing operating costs but be bold in buying good assets (companies, people), especially when many outstanding properties are available at the lowest price in years. Tight operations coupled with strategic acquisitions will pay handsome dividends when the economy eventually turns around.
Employee Perspective (for India-based personnel)
A downturn is not the end of the world. It’s not first time it’s going to happen. The economy will recover and KPOs will grow again at a rapid clip. This is perhaps first time that global events have had a direct impact in India, specifically immediate job losses. Previously, these types of incidents were limited in scope and barely would even be covered in the press. Now, however, the impact has been pronounced, both in captives and third party vendors. KPOs are not the only ones affected by the global turmoil; many other sectors have shared in the turmoil (e.g., consider what has happened with domestic Indian airlines). The pervasive impact of the Western downturn on the Indian job market shows that the Indian economy is now more tightly integrated into a US/global environment. So it is natural that Indian jobs in many industries will rise or fall based on events in US/global markets.
But, there is hope among this bad news. Outsourcing is expected to pick up even more strongly in the months to come and that should drive new job creation.
Filed under Business Process Outsourcing (BPO), Economic Trends, India Business and Economy, Knowledge Outsourcing (KPO), Legal Outsourcing (LPO), Outsourcing Industry News
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Liam Brown on August 7th, 2008 at 10:51 pm :
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We read with interest that Quatrro, a busines process outsourcing (BPO), knowledge process outsourcing (KPO) and legal process outsourcing (LPO) company, plans to acquire three US BPOs. (Economic Times, 7 August 2008.) We wish them well, but as we previously wrote in BPO Players Moving Up the KPO Value Chain, we think that building a combined BPO/KPO/LPO is a difficult strategy to execute.
We have extensive experience working with demanding professionals such as lawyers and investment bankers. On the one hand, they are apprehensive about dealing with BPO generalists, who are not focused domain-specialists in their markets and therefore may lack the relevant people, process, judgment and technology systems. We are seeing some reversals of earlier decisions to outsource KPO work to BPO generalists where those BPO suppliers have struggled to deliver the appropriate level of professional service, failed to deliver ongoing continuous improvement, promised transformation but did not deliver, or did not create the training and career path that would keep professionals from leaving.
On the other hand, lawyers and investment bankers want to make sure their business partners are financially stable and a suitable scale to serve their business continuity plans (BCP) and breadth of service needs. In our view, the LPOs and KPOs that will thrive long term are those that specialize in these professional support sectors with scale. BPO services such as mortgage servicing and voice support are different enough businesses that they ultimately don’t fit well with KPO and LPO work.
Filed under Business Process Outsourcing (BPO), Knowledge Outsourcing (KPO), Legal Outsourcing (LPO)
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Lokendra Tomar on July 16th, 2008 at 8:00 pm :
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The annual Black Book of Outsourcing survey results were recently released. Beyond the rankings, authors Douglas Brown and Scott Wilson report on several important findings in their “state of the industry” report. (For the record, Integreon scored very well in the rankings; see our Black Book press release.)
We think the most striking finding is what the authors calls reverse outsourcing:
“Outsourcing is taking on a new twist. Rather than U.S. jobs going to India, the latest evolution of outsourcing is moving in reverse, with India’s leading service providers opening offices on Main Street, USA. The reverse outsourcing development is too new for Indian companies to point to actual cost savings yet, but moving front office processes closer to the client is fast attracting buyer interest. Major suppliers are responding to the demand for enhanced, locally delivery customer service.”
Several Indian outsourcing firms have established and grown US presences, not only for front office marketing and sales, but also for delivery of services as well. TCS, Wipro, Satyam and HCL are notable examples. Outsourcers have multiple reasons to adopt “dual shore” strategies. One is purely administrative, linked to visa challenges.
The bigger and more important reason is the realization that the best customer service requires a combination of an offshore and onshore team or, in some instances, pure onshore teams. In Integreon’s view, supported by the Black Book findings, firms with only offshore operations will find it increasingly difficult to provide world-class solutions.
The authors also comment on what buyers value. For client segments in the early stages of adopting outsourcing, for example legal process outsourcing (LPO) such as legal document review, “client relationship and cultural fit and trust and end-to-end service” is key. This may be because the providers may not have differentiated themselves on service delivery in early stages and cultural/relationships issues become proxy for potential performance.
For more mature segments – document process outsourcing (DPO) or knowledge process outsourcing (KPO) such as research and analytics – “innovation and deployment and comprehensive end to end service” are the key to successful relationships. This finding adds to the already overwhelming evidence that as outsourcing clients gain sophistication and develop increasingly high expectations, providers must deliver more than simple cost-arbitrage. Innovation, cultural fit, and domain expertise are among the critical success factors for the future.
Filed under Business Process Outsourcing (BPO), Knowledge Outsourcing (KPO), Legal Outsourcing (LPO), Onshore v. offshore, Outsourcing Tips
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Ron Friedmann on July 3rd, 2008 at 8:00 pm :
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In our prior post, we noted that BPO and KPO scaling faster than IT Outsourcing. Lokendra Tomar, SVP Knowledge Services, pointed out that business process outsourcing players were on the way to crossing the $1 billion US dollar revenue mark faster than IT outsourcers got there.
Now, BPOs queue up to book seat in billion dollar club in the Economic Times (4 July 2008) makes a similar observation:
“Analysts feel that IT services success story is now unfolding in the BPO industry… Large Indian IT services players, which roughly took about two decades to cross the $1-billion mark, operated in a different era when they mostly grew organically. Their inorganic growth path came much later unlike the case of the BPO companies, which may have crunched the time to grow big.”
Filed under Business Process Outsourcing (BPO)
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