Outsource to Spend More?
August 12, 2010
Author: SPurani | Interesting article at ALB Legal News, which the piece’s title alone caught my attention. “Corporates could halve their legal costs by outsourcing less.” Interesting, right? My first thought was how could this be? The report’s statistics describe the Australian and New Zealand legal market. Based on what Richard Stock, Catalyst Consulting Director, states, these departments are paying too much for the same work they could do in-house. He sums up by stating that they could stand to improve their forecasting requirements to help reduce the costs.
At first reaction:
a.) Who are these outsourced providers – onshore or offshore?
b.) Assuming the firms are well aware of the cost, how could this even continue to happen?
It’s interesting to read such a story since it tends to go against much of everything that outsourcing represents. At first read, it actually appears to go against commonsense. But it’s possible that whether or not these providers are on or offshore, they may be well worth top dollar, or in this case top AUD & NZD dollar. Better forecasting obviously could help, but they may not be truly sourcing their legal outsourcing providers to minimize costs.
There could be a number of reasons for their top value to the firm, and whatever those reasons may be, it’s apparent the 160 organizations studied in the report have a good reason to continue to spend and secure these providers. Right? Why else would this be occurring? I also imagine this market is perhaps comparable to the US, UK, and Canada. That makes me wonder if a similar situation exists in some sector of these markets as well. However, it’s possible this is a unique situation in Australia and New Zealand.
Of course there seems to be some opportunity for cost savings for the firms – there is always some money left on the table. But I think the point is that we can assume these firms are well enough aware and continue to procure their legal support from legal process outsourcing providers despite the higher cost. Unless we cannot make such an assumption?
The ALB story ends with an indication that further details will be shared in a follow up article. I’m looking forward to it. Either they’re aware of the higher cost and happy with their relationships, or there’s a greater value that cannot be measured in costs alone that justifies the spend. We should be interested to find out.