There is no question that the worst recession for 80 years has had a major impact on the legal sector. General counsel are under pressure to deliver more for less. In turn, they are demanding reduced costs and greater value from their legal advisers. Quite rightly they want accountability when it comes to how their budgets are being spent and more imagination when it comes to fee structures.
For law firms this has meant facing up to challenge and change. Whilst some are holding fast, hoping that the boom times will return soon, the smarter ones are adapting for the longer term.
This report shows that the legal landscape has changed permanently and more quickly than anyone imagined when we produced our original 21st century law firm report in 2008. Even before the credit crunch, it was clear that business people were disillusioned with ever increasing fees, wasteful practices and an unwillingness to change. Harsh economic times have pointedly polarised these issues.
During the recession we, as a high quality provider of legal services, set about changing our business to provide greater efficiency, better service and realistic pricing. Innovative use of technology and the possibility of moving work to lower cost centres are all part of our agenda to deliver more for less. We think that others will have to follow in order to survive.
Whilst little good has come out of this recession, the much needed reality check for lawyers is, perhaps, one positive by-product. Is the time ripe for a revolution in the delivery of legal services? This report suggests, that the revolution has now arrived.
Outsourcing to India has always been and always be on the higher side whatever the case may be. There are many reasons fueling this fact and the most prominent of them are: Indiaâ€™s cost, quality advantage, young knowledge workers and its time zone that are making companies not just from the U.S. but from around the world to outsource jobs to India. No company wants to go bankrupt. Every company wants profits. And one of the best ways to earn profits in these recessionary times is surely outsourcing.
Mr. Barack Obama seems to be oblivious about the fact that in the days of globalization, by introducing protectionist policies he would not solve any purpose. By introducing tax reforms he may be able to revive the United States from the recession faster than expected and may be able to generate â€˜fewâ€™ jobs in the field of market research, manufacturing etc. but surely wouldnâ€™t be able to stop the outsourcing industry from flourishing. He should understand that itâ€™s not about the U.S. anymore. The world works as a single unit with everyone connected to everyone in some or the other way.
Law firms and in-house counsel and attorneys wouldnâ€™t be affected by the potential implications of President Obamaâ€™s policy that will seek to curb tax breaks on companies that outsource, but mostly it could affect relations with India, which is one of the world’s biggest sources of Legal process outsourcing (LPO) services. Even if it seems like a bad news, practically itâ€™s not. Right now, by outsourcing jobs to the LPO industry in India, the law firms, legal counsels and attorneys in the U.S are saving up to 50% to 70% on their cost. Even if there are no tax breaks, this figure would end up close to 30% to 50% which is still a huge figure and can overpower the thought of taking away jobs from the LPO industry of India
Mr. Pankaj Parnami, Founder Director, KPO Consultants says â€œThe LPO Industry would not be affected by the tax reforms. The lower costs and quality of service we provide from India will overpower these reforms and the overall effect would be nullified. There is no need to worry for India Inc.â€�
The current economic climate is forcing the U.S. companies to find more ways to manage spending, and outsourcing is a time-tested and appropriate decision. It is a catalyst for review of spending and use of capital. For every company that chooses to keep business functions in-house because of social backlash or political threats, there is another one who finds that the financial and organizational benefits are compelling enough to move non-core functions out of their company and offshore.
â€œThe disparity between wage costs in the US and in leading offshore countries like India for similar jobs, output and quality is far too great to simply dismiss, especially when American CEOs have a fiduciary responsibility to shareholders.â€� says a top executive from a leading LPO firm.