|Case Code||:||ECON031||For delivery in electronic format: Rs. 500;|
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ThemesCompetitive Advantage / Low cost advantage / Outsourcing Case
|Case Length||:||16 Pages|
|Teaching Note||:||Not Available|
|Industry||:||BPO / KPO|
This case is about the legal process outsourcing (LPO) industry in India. LPO had emerged as a good solution to law firms and legal departments of multinational firms for cutting their legal costs. These companies employed qualified, skilled professionals in India to accomplish less sensitive low-end tasks that were outsourced to them. The tasks outsourced to India usually included low-end back office tasks such as drafting, reviewing and reporting documents, online research, drafting and applications of patents, litigation support, corporate due diligence support, and mortgage processing and intellectual property researching. The high-end tasks were carried out by the associates in the US and the UK.
The benefits from LPO were mutual for the foreign law firms and the LPO providers in India. While the foreign law firms could reduce their legal expenditure by 50 to 80 percent, Indian lawyers earned more than what they were offered in the Indian courts or by other law firms. In addition to saving costs, the outsourcing of legal work liberated the lawyers of the outsourcing firm from doing personnel-intensive work and they were able to indulge in more lucrative fee earning activities.
While the law firms benefited from outsourcing, they had to deal with some challenges as well - the issue of information security and confidentiality. The law firms also had to ensure that the firms to which the legal services were outsourced kept the brand name and reputation of the law firm intact. The Indian LPO industry also had to face some competition from LPO industries of Sri Lanka, the Philippines, and South Africa. Despite several challenges and increasing competition, the low-cost advantage in India, in addition to English speaking qualified law graduates resulted in LPO emerging as a successful industry, according to analysts.
» Examine the reasons why foreign law firms outsource their legal work
» Understand the growth of the legal process outsourcing industry in India
» Analyze the potential for growth and challenges for the LPO industry
» Examine how the Indian LPO industry would combat competition from other countries carrying out legal process outsourcing.
Competitive advantage, Low cost advantage, Business process outsourcing, Knowledge process outsourcing, Legal process outsourcing, Economic slowdown, Indian legal services market, e-discovery laws, Ethics, Data security and confidentiality
Legal Process Outsourcing: India's Low Cost Advantage - Next Page>>
Many international companies have outsourced to Bangalore India, where the city’s population has doubles to over 5 million people since 1980. Bangalore is located in South India, in the state of Karnataka, which is East of the Arabian Sea.
Why do companies outsource to Bangalore?
- Labour costs are much lower in India than in the EU or USA.
- India has a large, skilled, English-speaking workforce, many of whom are university graduates.
- The Indian government supports the ICT industry and encourages investors to support new ICT industries.
- Rental costs for office and factory spaces a much lower than in the EU or North America.
- Bangalore has a warm climate that attracts foreign workers from Europe and America.
- As more ICT businesses grow in Bangalore, more workers are trained, knowledge can be exchanged, offshoot industries servicing the main companies can developed so the advantages of agglomeration can be utilised.
What are the benefits and costs of outsourcing to Bangalore?
- Creates jobs in India, which may be more well-paid than the alternative employment.
- With increase in industry comes improvements in infrastructure which can improve the quality of life for everyone in Bangalore.
- The creation of jobs generates the local economy as workers spend their wages, which in turn generates the national economy.
- Often training is provided which provides workers with skills that they can use elsewhere to gain employment too.
- Jobs that are outsourced mean fewer jobs for people in the EU and North America.
- People have been attracted from the rural areas of India to Bangalore, resulting in a high-density population with a lack of adequate housing and infrastructure (however this will likely improve with time given the regeneration that often results from foreign industry).
- The benefits are often restricted to the middle-class citizens of Bangalore, because these are the educated, skilled workers that are offered jobs by international companies.