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.

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.


Comments

3 Responses to “Outsource to Spend More?”

  1. Good one on August 13th, 2010 10:07 am

    I have been reading some your blogs about LPO and it is interesting and informative. Can you write about current and future growth of LPO and how to setup offshore LPO offices?

  2. Abhinav on August 26th, 2010 1:22 am

    Once the news about the excellent quality of work done by the Indian attorneys is spread even further not only would more work be outsourced into India, but US attorneys would outsource themselves too. Indian firms doing high-end legal work have been continuing to impress all.
    For example, law.com reports on how Indian lawyers at SDD Global Solutions (http://www.sddglobal.com/ – a high-end legal outsourcing company) impressed the legal department of UK’s Channel Four Television Corporation, which even issued a press release on the subject: 

    http://legalblogwatch.typepad.com/legal_blog_watch/2010/04/outsourced-indian-lawyers-help-sacha-baron-cohen-win-ali-g-lawsuit.html

    Moreover, Russell Smith adds:
    — outsourcing actually creates more legal jobs in the West, rather than cutting them. —
    http://cityroom.blogs.nytimes.com/2010/08/06/keeping-legal-work-from-moving-to-india/#comment-727079

  3. Outsourcing to India on November 13th, 2010 12:49 am

    Outsourcing to India can give your organization a competitive edge in the Cost-effective services as well as The time zone advantages between India and countries in the U.S and U.K has proved to be another important factor why companies outsourcing to India.

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