I recently completed a piece of work for a client where they had a specific requirement to process outsourced legal work onshore, in this case the UK. This raised a number of interesting questions for me which I thought would be worth discussing here.
One of the key characteristics of the LPO market was that it was born offshore. Whereas the IT outsourcing market started off onshore and gradually migrated offshore, the LPO providers were pretty much all founded in India. This made sense at the time – there was enough process maturity around to make it work, and the key driver was labour arbitrage. However, this also led to a great deal of nervousness from GCs who were unsure about having their sensitive data processed in a foreign country. It is probably this factor alone that has held back the LPO market from reaching its tipping point any sooner than it has.
A number of the US-based LPO providers were the first to build delivery centres on home soil as well as India, but it’s taken a while longer for the UK to catch up. However, we are now seeing a few providers setting up centres in the UK – Axiom in Belfast, New Galexy in Glasgow and Integreon in Bristol and London. Each of these were encouraged by their respective clients to set up shop here, but the surprising thing is that it has taken so long for anyone to make the move. One large corporate, Carillion, set up their own UK captive centre in Newcastle, because they wanted their resources close by.
ITO and BPO suppliers all make a virtue about being able to provide ‘right-shore’ services – usually a mixture of offshore, nearshore and onsite resources, all matched to the relative risks, priorities and costs of the processes carried out in each of them. With LPO, there is an even greater need because of the potential requirement to keep some data onshore. Even having an EU delivery centre (as I understand at least one supplier is planning on creating) would help develop the market considerably.
My plea, therefore, is to all of the major LPO providers to seriously consider setting up UK and/or EU service delivery centres. The benefits, apart from the jurisdictional ones, would be numerous, especially if the supplier is able to exploit a dual offshore / onshore model:
- It would be able to exploit the different time-zones to ‘follow-the-sun’ and maximise responsiveness and throughput
- It would provide local resources close to the client who can work together to proactively identify tasks and activities which are suitable for unbundling and LPO and thereby accelerating the wider adoption of LPO
- It would provide a low-risk staging post for ‘proof of concepts’ for outsourcing new activity areas which can then be followed by offshore migration under supplier control to maximise the labour arbitrage
- It could provide a source of ‘lawyers on demand’ to provide interim resources and increase understanding between client and supplier.
More and more clients will be demanding onshore presence as a matter of course, and more choice is needed to make it a viable solution. Most GCs I know of would gladly sacrifice some labour savings in return for the risk mitigation and other benefits offered by an onshore/offshore model. And those that have avoided even thinking about LPO in the past may well be tempted to dip a toe in the water. Which would be a good thing for the market as a whole.