LPO Prospects in India

If you are wondering whether the current economic slowdown has spared any industry, you will be pleasantly surprised to hear the answer – Yes. Legal Process Outsourcing (LPO) industry seems to be the one which is actually benefiting from the economic crisis! As the corporates and law firms themselves are struggling to trim their cost structure, LPO business is set to benefit from it. One obvious, rather a more meaningful choice for the corporates and law firms abroad is to consider outsourcing some parts of their legal and administrative work to a low cost destination like India where people have no dearth of talent too. However, it is good to understand whether we are fully equipped to reap the benefits from the present opportunity.

LPO as an industry in India is in a nascent stage. The industry is highly fragmented with over 100 firms operating in different verticals. According to a report by ValueNotes, the revenues from legal services offshoring are forecast to grow from $146 million in 2006 to $640 million by the end of 2010. Forrester Research projects that $4 billion in legal work is likely to come to India by 2015. Currently, the size of the industry is small (especially, considering the number of players operating) but the growth prospects are good. It is obvious that many entrepreneurs jumped in to catch a pie of this lucrative industry. But the fact is that only a handful of companies in India are doing well and most of others are still small and suffering. The lack of preparedness while staring the business has led to quality issues as well.

No doubt the industry holds tremendous prospects, but it is critical to understand the industry dynamics which are specific to LPO. Cost benefits are definitely a top consideration for the firms who would like to outsource legal work to India. The cost of getting work done from India could be as low as 20% of what it is in the US. Availability of manpower is not a big constraint in India as thousands of students graduate from Indian law schools and engineering colleges (engineers are needed to execute work related to IP/Patent research). However, training them to carry out the foreign legal work is important and this needs investment. Association with a foreign law firm would be extremely helpful in building the LPO business. This helps in knowledge transfer as well as assurance as far as client base is considered. Signing in a legal client is not a simple task unless there is some backing by a foreign legal firm or you have sales persons who are well connected in the industry.

There is interest from the investor community in the industry. Firms such as Clutch Group, Pangea3, United Lex, Mindcrest and TechLit have been funded by angel investors and VCs.

We believe that LPO is certainly a good space to jump in, but one needs to focus on certain key aspects to be successful:

  • Cost benefit is an obvious consideration while outsourcing – every player in the industry offers it. But being quality conscious is extremely important to be successful and to grow the business. The challenge for the Indian LPOs is to convince the firms outsourcing the legal work, about quality of output.
  • Investment in training and devising right training techniques is important.
  • Industry connection/network is critical – either through foreign law firms’ association or through a well connected sales force
  • Confidentiality – this is an important aspect any legal client would expect from LPO firms while executing the assignments. Therefore, implementing measures to take care of this and winning client’s confidence is of great importance.

We also believe that as the industry becomes more competitive, small and inefficient players may be forced out of business and we could also witness some consolidation happening in the industry.

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