India legal back-office work picks up on US slowdown

Indian employees seated in their cubicles at a call centre provide service support to international customers, in the southern city of Bangalore in this file photo. Legal process outsourcing is rapidly growing and is expected to become a $4 billion industry globally by 2015 with India occupying a significant chunk of it.

MUMBAI (Reuters) - Legal process outsourcing is rapidly growing and is expected to become a $4 billion industry globally by 2015 with India occupying a significant chunk of it, industry players and analysts said.

U.S.-based Brown & Wilson Group Inc in its 2008 Black Book of Outsourcing has estimated the current value of legal outsourcing at $80 million, with more than three-fourths of it based in India.

"That is a very conservative estimate. I think it will grow faster as the market potential is huge," said Suhas Tuljapurkar, who was formerly a partner at Mumbai law firm DSK Legal and left it to found Legasis Services Pvt Ltd.

Legal process outsourcing is an industry in which in-house legal departments or organisations outsource legal work from areas where it is costly to carry out.

"Law firms are focussing to increase pressure from their clients to decrease costs and retain profits per partner," the Brown & Wilson report said, adding that every Indian homegrown law firm is building its own case for outsourcing.

The main areas of growth are discovery and litigation support, contract and document review services, and legal analytics and due diligence.

SLOWDOWN INCREASES OUTSOURCING

The sub-prime crisis in the United States and subsequent defaults have given rise to a lot of litigations, said Sanjay Kamlani, co-founder and chief executive of Pangea3 LLC, a top outsourcing firm.

"We've seen increased activity in litigations and increased attention to costs," he said.

Business has jumped almost 200 percent in the last quarter, he added.

The economic slowdown in the U.S. and other economies has motivated legal departments and law firms to take a hard look at their own processes and physical functions carried out by their employees in their domestic market, said CPA Global's India country head, Bhaskar Bagchi.

"They are reviewing organisational costs and efficiencies. This is leading a number of clients to explore offshoring options, in relation to outsourcing key parts of the legal process to India," he added.

Service providers are expected to offer cost savings of 30-70 percent, Brown & Wilson's report said.

India's sees an annual output of 80,000 law graduates. The top 3,000-4,000 graduates either go overseas or join top-notch law firms, leaving the rest of the field clear for alternative careers such as outsourcing firms.

CPA plans to invest close to $50 million in India over the next 5-8 years. Integreon Managed Solutions, Inc, which started its legal outsourcing in a small way three years ago, is also ramping up its operations in the country.

"Growth has more than doubled in this segment. There is a huge market opportunity out there considering the difference in the billing rates for lawyers in the U.S. and here," said Integreon's senior vice-president, Lokendra Tomar.

Pangea3 is also expanding its operations and recruiting 100 more lawyers by the end of this year, Kamlani said.