Outsourcing

Despite Mumbai Tragedy, Outsourcing Continues

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The terrorist attacks in Mumbai reminded everyone that we live in a dangerous world. But as India takes the steps necessary to improve its homeland security, we shouldn’t expect the tragedy to stem the tide of outsourcing American legal functions to Indian companies.

The National Law Journal reports that firms are increasingly proud of their outsourcing initiatives:

As outsourcing becomes more commonplace and corporate counsel and law firms are under increasing pressure to reduce costs for clients, law firms such as Baker & McKenzie; Greenberg Traurig; Milbank, Tweed, Hadley & McCloy; and Shapiro Sher Guinot & Sandler are actually touting at conferences the benefits of outsourcing.

Baker & McKenzie was the last best hope for Heller Ehrman, Greenberg Traurig is conducting stealth layoffs, and Millbank just announced Half-Skadden bonuses. But their outsourcing operations are thriving.

And the wave of firms outsourcing legal services to India is only going to get bigger:

Forrester Research projects that legal outsourcing to India will reach $4 billion by 2015. Some experts, however, find that number too low and others too high. Regardless, other numbers don’t lie — there are an estimated 800,000 lawyers in India and nowhere near that many jobs. Attorneys there charge, on average, $35 an hour, or no more than half of what an upper paralegal or lower-level associate bills, and up to three times less than an upper-level associate’s time.

After the jump, will global terrorism have a chilling effect?

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The thing with global terrorism is that it can strike anywhere, at any time. Businesses aren’t running away from the Indian market because of the recent attacks. The NLJ explains:

And the recent terrorist attacks in Mumbai, where many of the “LPOs” — legal process outsourcers — are based, are adding one more concern to the list.

“Terrorism can happen anywhere,” said Jeffrey Bailey, associate general counsel for Fresh Del Monte Produce Inc. in Coral Gables, Fla., which is considering outsourcing legal work to India. “But it is a concern. It would be one of those additional factors to take into consideration — not only whether our information is secure but whether there could be disruption to our service.”

Apparently no LPOs were affected by the attacks, although there were a number of close calls.

If anything, quality control is a greater concern than terrorism. But because there is so much money to be saved by having some work done in India, firms are finding new ways to add oversight to the Indian legal market:

Washington-based Howrey has similar concerns. That’s why the firm said last year it would open its own office in India to do trademark searches and registrations throughout the world. The firm hopes to open that office, staffed with Indian non-lawyers, in the first quarter of 2009.

With $600 million a year in litigation, Howrey had been approached by “a ton” of LPOs, but decided it had to open its own office to maintain quality control. …

But outsourcing fears could be somewhat alleviated, as at least two companies are planning certification and training programs for LPOs to provide some quality assurance to U.S. firms and companies.

Every student thinking about going to law school needs to take a step back. Look at the global economy, look at the cost of attending law school. Use a calculator if you need to. It’s still a good deal for some people, but don’t get into this racket expecting milk and honey.

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India Work Grows, With Glitches [National Law Journal]

Earlier: Baker & McKenzie’s Mumbai Scare

Prior ATL coverage of Outsourcing.

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