Blessing in Disguise

At a time when layoffs have become part of the survival strategy for most companies, firms engaged in legal process outsourcing (LPO) in India are on a hiring spree. LPOs in the country are anticipating a surge in demand from US law firms and banks engaged in home loan foreclosures. Sniffing an opportunity, even the non legal business process outsourcing (BPO) firms are jumping onto the LPO bandwagon by making a provision for legal outsourcing. This is because legal firms in the US are unable to process the mountains of foreclosure documents due to shortage of professionals. “Since most US firms are in cost cutting mode and are axing employees, they are unable to process the work quickly,” says Raman Roy, CEO of New Delhi based BPO, Quatrro.

Legal Circle, a subsidiary of Noida-based Fox Mondal Little, an India firm providing legal outsourcing services to multinational companies, plans to add 100 people to its workforce, earmarked for foreclosures. “We are talking to banks about getting prospective work that can be done out of India,” says Soumitro Chatterjee, CEO of the firm.

Mindcrest, a US-headquartered LPO firm says it will add a 450-seater centre in Mumbai by the first quarter of 2009. Similarly, Quatrro has started getting numerous foreclosure-related assignments from US banks and law firms in California, Massachusetts and Georgia. “I plan to ramp up my workforce by 400 to cater to foreclosure-related work,” says Roy. 

Other companies such as Inventures, Pangea3 and Integreon are also bullish on the opportunity. “The services offered by different providers vary from indexing and coding to database maintenance, patent support, contract review and management, litigation support and legal compliance,” says Ganesh Natarajan, president and CEO of Mindcrest.

According to RealtyTrac, which publishes the national database of foreclosures, 279, 561 US properties got default notices, auction sale notices and bank repossessions in October 2008 alone, which is one in every 452 US housing units. The foreclosure numbers have increased 5 per cent compared to October 2007. There are 1.5 million properties across 2,200 counties and 50 states in the US. 

The ballooning numbers prompted Federal Reserve Chairman Ben Bernanke to ask banks to consider reducing existing mortgage payments by writing down negative value. So, Bernanke, in effect, asked banks to reduce home loan rates, instead of asking people to leave their homes. This revaluing exercise added to the outsourcing deluge to India. “Re-evaluating their existing home loans requires a new set of computational process based on the ability of the person to repay a loan to the extent of his financial situation,” says Roy.

For the US, offshoring to India, no doubt is a huge cost-saver. An India legal professional who takes home Rs 25,000 per month earns a tiny fraction of the Rs 11,000 per hour that his counterpart in the US is likely to be paid. Currently, India churns out a million law professionals and 75,000 lawyers every year. Offshoring legal services is already a $4 billion industry according to Nasscom – the mortgage-related bonanza could add to its net worth. 

With drafting of housing related agreements in the US getting more complicated and detailed by the day – it can take anywhere between 24 hours and a month to process the documents depending on the complexity – and the foreclosure numbers rising, legal firms can look forward to more assignments for some time to come. Amidst the gloom and doom, someone does have a reason to cheer.