Wednesday, August 23, 2006

33,000 more lawyers needed to tap LPO potential in USA

Indian law firms can earn up to $ 4.7 billion in revenues by 2011 by tapping the massive $ 25 billion US legal offshoring business, a new study conducted by Crisil has said.

The Indian Legal Process Outsourcing (LPO) industry can target two big segments of US legal sector - the mid-sized private law firms and US corporations, Crisil Research and Information Services Ltd said in its report recently.

The combined revenues from these private law firms and the corporations could go up to around $ 4.7 billion by 2011-12, it said, while citing a NASSCOM estimate that put the legal offshoring content of the Indian BPO industry at just $60-80 million at present.

The Crisil Research suggested that Indian firms must tap US mid-sized or large law firms in the first phase and then corporates in the second stage.

There could be a substantial increase in Indian LPOs targeting US corporations as the industry matures, the report said.

However, law firms in India would need to add 33,000 lawyers to achieve this revenue, it said, adding that as per NASSCOM estimates, the industry has only 50-60 firms that employ just 700 lawyers.

“Availability of a large number of law graduates in India and the significant cost differential in manpower and infrastructure between the US (client destination) and India (offshore destination) will facilitate the Indian IT industry in capturing a share of this large addressable market in the US,” the report said.

Some of the LPOs already operating in India include international law firms like Lexadigm, Intellevate and NewGalexy and in-house legal departments of companies like GE, Cisco, Oracle, Dupont and Citibank, the report said.

Indian LPOs can compete even directly with private law firms in the US to garner a share in the corporate legal services spend as they have the cost advantage.

However, Crisil said that the Indian LPOs would require huge investments to scale up their operations in the US.

To compete with the US firms, Indian LPOs would also have to provide the entire value-chain of services ranging from support level to senior associate level activities.

Crisil pointed toward some negative factors, which may act as barriers to growth despite the huge potential. These bottlenecks include concerns over data security and service quality and shortage of trained manpower in legal writing. The report said that US firms already invest a fair amount in training their professionals and after which they might prefer not to offshore these legal services. — PTI