Thursday, August 5, 2010

Outsourcing to India Attracts Western Lawyers

The number of legal outsourcing companies in India has mushroomed to more than 140 at the end of 2009, from 40 in 2005, according to Valuenotes, a consulting firm in Pune, India.

Revenue at India’s legal outsourcing firms is expected to grow to $440 million this year, up 38 percent from 2008, and should surpass $1 billion by 2014, Valuenotes estimates.

“This is not a blip, this is a big historical movement,” said David B. Wilkins, director of Harvard Law School’s program on the legal profession. “There is an increasing pressure by clients to reduce costs and increase efficiency,” he added, and with companies already familiar with outsourcing tasks like information technology work to India, legal services is a natural next step.

So far, the number of Western lawyers moving to outsourcing companies could be called more of a trickle than a flood, but that may change, as more business flows out of traditional law firms and into India.

Compensation for top managers at legal outsourcing firms is competitive with salaries at midsize law firms outside of major metropolitan areas of the United States, executives in the industry say.

Living costs are much lower in India, and often, there is the added allure of stock in the outsourcing company.


Clearly, the Indian authorities are making it very attractive for US lawyers to settle in India but this is a tactic that has worked for them before.

The question is, how soon will the tide turn in the other direction? Is this the first step in bulding a more competitive India law capability that can directly address the US and othe European markets?

US or Europe?

The feeling is that the US is most at risk from this venture because it has a reputation for being a more litigious society, and this has already established a huge market and an enormous opportunity for price competitive outsourcing.

Europe is a more difficult and specialist market with each country having it's own legal system and language preference. A lot of work and study needs to be done to capture a relatively small piece of the larger market.

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