Latest News
Legal outsourcing may hold billion-dollar opportunity
Prabhakar Peshpande ET
INTELLIGENCE GROUP
LEGAL outsourcing is not a new concept and though a very small component of the BPO industry, we have al¬ways known of its existence. What is perhaps surprising is the potential size of the opportunity. The US legal market size was in the region of $200bn in '04. By end of '04, over 12,000 legal jobs were expected to shift to low-cost countries, mainly India, accord¬ing to Forrester Research. Esti¬mates of what has actually hap¬pened vary considerably with Nasscom estimating less than few hundred having shifted to India.
Forrester estimates this number to triple by 2010, and further double by 2015, thus leading to more than 80,000 jobs shifting to India by 2015. Ganesh Natarajan, CEO, Mindcrest, strongly doubts if 100,000 jobs could get trans¬ferred to India, pointing to the lack of adequate number of lawyers in India and the quality of legal education and training.
Now legal jobs and we are not discussing mere low-end para legal ones are billed at average $500 an hour in US, explains Sanjay Kamlani, co-CEO, Pangea3. Even if the billing from India is at $ 100"an hour, it would mean revenues of $200,000 per annum per person, adds Mr Kamlani.
Mr Natarajan agrees that for some jobs, the billing rate could be as high as $100 per hour. Pre¬suming 100,000 legal jobs com¬ing to India by 2015, this trans¬lates into a potential $20bn op¬portunity for India by 2015. Mr Natarjan doubts that figure, giv¬ing his own estimate of $5bn. Sum! Mehta, VP —research, Nasscom, admits cautiously that huge opportunity could poten¬tially exist but, he adds, that India needs to open up its legal services and amend its Partnership Act.
Nasscom, on its part, is lobbying with government to argue for reciprocal opening up of the services sector at the WTO. Mr Merit? says there are opportunities not only in the legal sector, but other services areas, such as accounting.
The legal outsourcing opportunity, never mind its size, is one that could be extremely profitable. Consider this — even if one pays a good lawyer up to Rs 40,000-50,000 per month, which would translate to a mere $5 per hour cost; at a billing rate of $ 100 per hour, that translates into 2000% profits. And though extremely unlikely, the $20bn in legal outsourcing is not impossible, considering that this would be a mere 5% of the perhaps $400bn US legal market by 2015.
