This article by Manisha Singh originally appeared in Indiatimes Infotech, one of India’s top three most read business news portals covering the IT/ITeS industry. Integreon is a leading KPO business headquartered in Los Angeles and which has a global network of delivery centers, including India operations based in Mumbai and New Delhi. The article provides a profile on Integreon and takes a look at key market trends from the perspective of Integreon’s Matthew Banks, senior vice president, Legal KPO services.
Mumbai-based knowledge process outsourcing (KPO) firm Integreon provides a range of outsourced knowledge, legal and administrative support services, both onshore and offshore, to global investment banks and private equity and law firms. Earlier this year, Integreon acquired the e-discovery services unit of US-based ONSITE3, which specializes in electronic evidence solutions for law firms and corporations. Integreon, which clocked revenues of $35 million in FY 08 (Jan – Dec’ 08), has set a target of $85 million for the FY `09. With 150 clients in the legal process outsourcing (LPO) space, the company claims to be the only player in the integrated KPO space to offer research KPO as well as legal KPO. In an interview Matthew Banks, senior vice president, Legal KPO services, Integreon, talks about the company’s LPO business.
Q. To start with, give us a brief on Integreon, projects, clients, revenue, rivals…
Integreon is a premium knowledge services provider with nine delivery centers across Asia Pacific, Europe and the US. In India, we have two delivery centres in Mumbai and one in Delhi. We serve some of the world’s leading corporations, law firms, banks and financial services companies. In February this year, we won a contract worth $75 mn with Osborne Clarke, one of the top 20 law firms in UK. This is the largest deal of its size and nature in this space. Also, in one of the deals with a leading investment bank, the bank has outsourced 100% of its research functions to Integreon, with 40 people from the bank being added to the payrolls of Integreon. Our LPO solutions (in descending order of revenue) include Discovery (electronic discovery and document review), Contract Management, Loan Restructuring, Due Diligence and Legal Research.
Q. What are the major challenges faced by LPOs in India today?
LPOs in the country today face two major challenges. First is globalization of legal services. Most LPOs only have a single geography delivery center. However, the trend in the market is for multiple location options to match the service and client requirements including BCP, hedging wage inflation, and time zones. The second challenge is raising capital for growth. Building teams, infrastructure and processes capable of serving the most demanding professionals is costly and many LPOs are not be able to access the capital required to compete at the highest level.
Q. According to a recent survey by ValueNotes, there is a low perceived benefit of outsourcing legal services amongst law firms and this is likely to stunt the growth of the LPO industry. Your comments.
Let us put this in context. Traditionally, law firms would naturally perceive low benefit to their own business as it erodes their hourly fee income. However, many today face reality when their clients demand lower costs for some activities and so some are proactively creating alternate cost-effective solutions for their clients. Two, the nascent LPO industry has been fed directly by corporations and banks/financial services. However, this year we are seeing a significant shift with law firms now accelerating their offshoring interest and activity.
Q. What are the models working in the LPO industry? What is more popular, hourly billing or a full-client contract payment?
Hourly billing is the least popular model. Unitized pricing (price per unit) is prevalent for most transactional LPO services (including document review) and fixed monthly billing is prevalent for ongoing enterprise services (including contract management).
Q. How has the recession affected the LPO biz? What about the pressures on billing rates (the kind being seen by software cos)?
Initially, the recession caused a slowdown in new LPO projects as customers focused on crisis management and put outsourcing initiatives on hold. However, the landscape has now changed and LPO is benefiting significantly as cost pressures bite and businesses evaluate new strategies (including outsourcing) to deal with the new economic reality. We are seeing a significant increase in activity from the law firms and, at a product level, in litigation document review and contract management. Integreon recently launched a contract management solution specific to loan restructuring which is targeted at the financial sector. Billing rates have dropped a little but mostly due to increased competition in the LPO market, not the economic recession.
Q. With the world economy contracting, the LPO biz too is sure to contract, how do you see the industry’s growth from here?
On the contrary, the LPO industry is likely to benefit from the changed economic reality. As I said before, post-recession law firms and corporations are under tremendous pricing pressure. This is forcing them to revisit their strategies and outsource a higher volume of work. Outsourcing activity is often conversely proportionate to the health of the global economy. The same goes for activity in litigation, regulation/compliance and debt workout. Hence, the low cost arbitrage and scalability of end-to-end solutions by players like us having global delivery platforms would drive an increase in the LPO business.
Q. Which are the emerging areas in LPO biz?
Discovery (litigation) continues to be the biggest area in LPO. We are seeing a growth in contract management opportunities globally and also in regulatory/compliance work and debt workout.
Q. Does being niche pay in LPO business? Also is profit margin higher (on the niche side)?
No. Integreon provides a range of KPO services including LPO. Our decade-long KPO experience has been a great help in evolving our LPO business including predicting outsourcing trends, integration of technology and developing sophisticated processes to increase efficiencies.
Q. Does Integreon also offers legal advisory services? If yes, how much does it brings to the total revenue pie?
No, we do not provide legal advisory services. LPO is legal support, not legal advice.
Q. Considering that the size of the LPO industry is still very small, is it not a hindrance in getting the right talent?
Till three years ago, the awareness about LPO among candidates was low, but today there is a greater awareness and interest in LPO as a career opportunity for lawyers. We are able to grow our teams with quality lawyers. Also, we have a very robust training facility which imparts training to both new and existing employees on both technical and professional development subjects.
Q. Integreon recently acquired a US-based firm, how do you see Onsite3 helping you?
The acquisition bolsters our Discovery capabilities and makes Integreon a Tier-1 provider in the space. It adds new delivery locations, principally in Washington and Atlanta, and enlarges our customer base and revenue stream. Expanding our Discovery business has been a strategic priority for Integreon for the last two years. We see litigation support as a major growth area globally and one that can feed the growth of our offshore document review business.
Source: Indiatimes Infotech