| LPO market gains momentum |
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| the cto forum 01/02/2007 |
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Low cost and a burgeoning talent pool are helping usher in a spate of Legal Process Outsourcing deals to India
The legal process outsourcing (LPO) market is poised to cross six billion dollars by 2010 and touch 15 to 20 billion dollars by 2015 according to a recent NASSCOM report.
Touted by some in the Indian industry as the third wave of outsourcing, the LPO market has become more active with large firms in this space opting for joint ventures (JVs) and acquisitions to increase market presence.
Last week Integreon acquired North Dakota-based CBF Group, a business process outsourcing company exclusively focused on enterprise services to law firms.
"Though the legal process market is more conservative and slow as compared to the BPO and KPO industries in India, it has surely picked up momentum in the last six months,” says Prashant Chawla, COO, Integreon.
Early this year, Hinduja TMT (HTMT) in association with Fox Mandal signed a deal with the UK-based Centric to form India's largest legal process outsourcing firms. The firm will be 40 percent owned by Centric and 60 percent by the JV between HTMT Technologies and Fox Mandal, with HTMT holding the majority stake.
“Law firms are following the lead of their corporate clients and are increasingly looking at innovative forms of outsourcing as a means to drive operating efficiencies and cost savings,” said Michael Bryant, CEO, CBF.
He further adds that many U.S. law firms are more comfortable using an outsourcing firm based in their home country, but want the cost efficiencies that can sometimes only be achieved by utilizing offshore facilities.
According to industry statistics, associate lawyers in the US carry a price tag of 225 dollars per hour in their first year of practice and 450 dollars an hour in their eighth year. With the rate of pay at between 10 to 15 percent of that of US Lawyers and a turnaround time of 24 hours for outsourced work, India seems to be the favored choice for LPO.
Though outsourcing of litigation coding and patent filing has been there in the country for the last few years, patent filing required more of technical skills rather than legal skills, which was readily available in the country.
Every year there are three million applications for patents filed in the US alone. The cost to file for patent right in the US ranges between 4000 dollars for a simple invention to 14000 dollars for a complex invention. If outsourced to India the costs reduce by half.
However, the trends in the space are changing. “There is a definite trend in the space of document reviewing which requires legal skills and for this LPOs have started hiring lawyers who can provide serious review of documents,” says Chawla.
As per reports, the annual churn out of law graduates in India is estimated at approximately 80,000. Also, the Indian legal structure is similar to countries like the US and UK. This makes it easier to train Indian law graduates to suit their needs who draw a salary that is 20 to 30 percent less than their US counterparts.
Apart from the low-cost, the other driving factor is the proven expertise of Indian talent in the outsourcing business.
However, the industry opines that the players in the LPO space have to tread cautiously. A report from Evalueserve indicated that if a professional in a normal call center goofs up on a call, the customer loss on an average amounts to 5,000 dollars. On the other hand, the loss for an error on an ongoing lawsuit could amount to anything between two million to two billion dollars. |
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