The New York Law Journal (NYLJ), one of the highly reputed and most read publications among American lawyers, said in an article in its latest issue that outsourcing legal work to India is no longer a novelty. Its a reality.
While noting that legal process outsourcing (LPO) to India was growing and resistance level in the country was gradually going down, the journal said a significant cost-advantage was working strongly in favour of the trend and a growing number of firms are angling for a piece of the action.
According to the report, the positive feedback given by the companies having outsourced their work in the past is leading to many other firms opting for the same idea, which includes some of the 10 largest law companies in the Fortune 500 list.
LPO salaries for Indian lawyers are generally well below $10,000 a year. By comparison, a US contract lawyer usually earns around $30 an hour while associate base salaries at major firms in New York start at $1,60,000 a year, said the New York Law Journal in its January edition.
The report noted that Pangea3, one of the largest Indian LPO firms, has garnered investment worth about 12 million dollars within three years of its incorporation. It includes $4.4 million by GlenRock Capital, the fund headed by former top private equity lawyer Lawrence G Graev and $7 million by venture capital firm Sequoia Capital, which also helped Yahoo, PayPal and YouTube.
Last year, international technology research firm Forrester had projected that legal work worth $4 billion legal work may head to India by 2015 and there could be a demand for as many as 79,000 LPO professionals. The article further noted that some LPO service providers from India have also started their own facilities in the US, where they are providing on-shore services to the clients.
Quislex, an LPO firm with a team of 130 lawyers in Hyderabad, last year entered into a joint venture with local contract attorney agency Strategic Legal Solutions, which is providing the US legal industry both offshore and onshore outsourcing options together.
The New York Law Journal article quoted Quislex CEO Ram Vasudevan as saying that the US contract lawyers might be better suited for some jobs. There can be parallel teams working in the US and India. There are no hard-and-fast rules. Vasudevan said.
NYLJ noted that the Indian LPOs also have to spend considerably on infrastructure such as office and computers.
Aside from office space and computers, the leading companies also have US-trained lawyers working in both India and the US to supervise the work of the Indian staff. They also maintain client development teams to market services to the US companies, the journal said.
In order to maintain their cost-effective edge amid growing competition, the LPOs are now turning away from metro cities where real estate costs could be as high as in the US cities and are rather shifting towards small cities like Pune.
The report quoted NewGalexys managing director Robert Glennie as saying that operating in smaller cities was the only way to meet the US and European clients expectation on costs and service. You cant do that in a major Indian city anymore, he said.