Rajendra Vaidya

To cut costs and tackle recession, US companies look at Legal Process Outsourcing units in India; Sector expects a growth of 60 to 70 per cent in 2009

BLOODBATH on the Wall Street, particularly with the collapse of Lehman Brothers and the takeovers of Merrill Lynch and AIG, has made most business sectors, including IT and IT-enabled services, cringe with fear spreading a pall of gloom. These very factors are making the Legal Process Outsourcing (LPO) bloom in India as the spate of litigations in the United States are opening new business opportunities.

In fact, NASSCOM expects a growth of 60 to 70 per cent in 2009 in the LPO business. "This is one sector which is going to have a tremendous growth during the times of recession. LPOs will witness a phenomenal growth because US companies will look towards this sector to cut cost," NASSCOM president Ganesh Natarajan told MiD DAY.

"This is one sector which will witness an upturn, while other sectors are witnessing a downturn," he added.
Rajendra Vaidya, Chairman and Managing Director of EXL-Source, a city-based LPO said, "I know it is politically incorrect, but it is a fact that recession is proving to be a blessing in disguise for the nascent LPO industry which is expecting a good deal of business from the US in the form of litigation support activities, e-discovery, contract management and lot of other opportunities in the legal fraternity."

According to Vaidya, who is also the director of Delivery of Loxodrome Solutions (India), US is scrambling for new markets like India which will cut cost by more than 50 per cent.

US companies are facing severe cash crunch and the availability of credit is also going down. With litigation cases mounting because of the collapse and termination of contracts, US companies are eyeing India very seriously where availability of talent is high and the cost is low, making good business sense.

"Recession has triggered a lot of property disputes and insurance companies have a hard time getting clear titles of the property. Litigation surrounding the companies is bound to increase. Besides, recession will force the companies to terminate many contracts which in turn will trigger many more litigations and thereby offering more scope for Indian LPOs," Vaidya added.

The IT industry took 13 years to come to maturity, BPOs took half a decade and now LPOs are emerging in a big way. Most of LPOs are located in Pune, Noida, Delhi, Hyderabad, Bangalore and Chennai.

What is an LPO?

LEGAL outsourcing refers to the practice of a law firm obtaining legal support services from an outside law firm or legal support services company. The outsourced entity based in another country is also called Offshoring.

Legal outsourcing has gained tremendous ground in the past few years in the United State. Legal outsourcing companies, primarily from India, have had success in providing services such as document review, legal research and writing, drafting of pleadings and briefs and providing patent services.

In-house law departments of major multinational corporations outsource some of their work in order to cut costs.