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Economic crisis bodes well for legal process outsourcing
DNA Money
September 2008
Unlike her acquaintances working in the banking, insurance and financial services sectors, 30-year-old Renuka Shah is quite secure about her current job as a law professional at a legal process outsourcing (LPO) firm in Mumbai.
She says that her friends are worried and anxious about what their jobs hold for them - in terms of future career growth, increments, etc - due to the turmoil in the global banking and financial services domain. "But these times of uncertainty have actually proven beneficial for the LPO sector, as it will lead to greater outsourcing of legal services to India," Shah says.
This optimism, at a time when the overall sentiment in the job market in grim, is echoed by not just Shah but several others working in the LPO sector. Take the example of 23-year-old K Ninad (name changed). The law professional, who graduated this year from Mumbai's Government Law College, joined an LPO based in South Mumbai in July for a starting salary of Rs 24,000 a month. He feels that the crisis in the financial sector will lead to outsourcing of more legal services such as due diligence in case of mergers and acquisitions, contract reviews, document reviews in case of litigation, etc. "This will give us global exposure to execute a wider array of cases," Ninad says.
Other areas that have seen a large quantum of work are services such as corporate governance, corporate compliance, and contract drafting. Industry experts say that the economic turmoil created by the investment-banking crisis will see demand for the LPO business shoot up in double digits, at least 12 per cent, in the coming days.
This spells good news for the LPO market in the country, which is poised to cross $6 billion by 2010, as per National Association of Software and Services Companies (Nasscom) estimates.
Rohan Dalal, managing director of LPO firm Mindcrest India, says, "A financial crisis involving large corporations will no doubt mean an increase in legal services in the areas of litigation, bankruptcy proceedings and corporate legal work." He adds that at a time like this, legal budgets will be stretched and LPO companies in India will be looked at as a cost-effective option for these services. This is because labour costs in India are way below those abroad. Entry-level salaries here, which average Rs 25,000 per month, are just 20-30 per cent of what is given in the US. “Thus outsourcing results in huge cost advantage for clients abroad," says Sanjay Kamlani, co-CEO of LPO firm Pangea3.
Kamlani adds that his firm has seen an increase of over 100 per cent in volumes in the last few months. "There is significant shift in the marketplace with an increased focus on outsourcing legal work that may not have been outsourced even six months ago."
Naturally, LPO players are upping their manpower and business strength to meet the demand. Pangea3 is planning to hike its workforce from 300 to 500 by December this year. Mindcrest, on the other hand, will increase its lawyer base from 450 to 700 over the next year. "We have four centres (in Mumbai and New Delhi), and are looking at expanding to places such as Bangalore and Pune by 2009," says Kamlani. Mindcrest's Dalal says that the company will set up a third centre soon, Mumbai and Pune being the first two.
According to business intelligence provider ValueNotes Research, the number of LPO jobs in India could double from 16,000 now to 32,000 by 2010.
