KPO’s Global LPO Conference
Global LPO put on by KPO was different from what I had expected and a little light on expected attendance. It did have a feed to a Web audience, and KPO videotaped all of the session, which will play out for some time for CLE credits for sure. So how this will play out for the long term on exposure, we will see. The discussion with the people that attended, maybe 30 at any one time, brought some interesting things to light.
Although much talk was given to promoting the higher level of legal services available with offshore LPO right now, digging a little deeper, it became apparent that the majority of services actually performed are tasks like patent searching and administrative paralegal work that legal counsel would not likely do. The amount of upscale work done will change to some degree for sure; India base companies, which represented the majority of offshore IP LPO, will move upmarket…they will have to for Indian LPO companies to stay viable for the long term. As time goes by, and a number of presentations showed this, the fast rising wages in India and flat wages in the US are lowering the wage arbitrage differential from a noted 6:1 difference in 2003 to perhaps 3:1 difference now. The services will need to offer other benefits or the work will likely move back onshore to domestic markets.
The discussion about cost fit well with a theme of my own talk that trying to emulate domestic services with services in India is likely to fail; the real challenge is to make the services from India fill the need of the customer appreciating that without regard to which services will be superior, there will be differences. None of the speakers from India based LPO businesses disagreed with that, and in fact seemed more to embrace the idea and what it should mean for where to focus their work.
Black Hills founder, Leon Steinberg, one of the pioneers of India based IP outsourcing with Intellevate, now part of CPA Global, showed how that upon doing the calculations of where to open new outsourcing business in 2010 versus 2003, he had chosen South Dakota instead of India. Given the total cost of operations and the change in cost trends, it made more economic sense for him to open up shop in this lower cost region of the US. I believe it was Leon, but may have been someone else in the audience, and in any case, a humorous point came up that in a 2003 outsource operation in India, serious contemplation had been given to having Indian employees use western surnames when they took calls for customers, and in a recent bid in 2010 sponsored by Bain Consulting, there was a joke that the US based employees needed to take Indian surnames because Bain had said they would not accept recommending an outsource solution to their client that was not Indian.
In short, and maybe the part that I didn’t expect, was a much more open and honest discussion about outsourcing from all parties, again mostly US and India based vendors and customers. Of concern for India based firms are technologies demonstrated by IBM’s Watson that successfully played Jeopardy given its potential application in the highly manual legal search and research tasks that is the majority of their business. Legal partners discussed how in either case, a fundamental shift is occurring in their law practice given that all of these changes drive towards a pricing model based on services performed and not the hourly rates that have been prevalent. Fixed fee caps and satisfaction guarantees have become a necessary step toward addressing that change, which in turn must drive law firms to lower costs one way or another.
Image credit: m4tik