Global Legal Process Outsourcing market crosses US$ 1 billion in revenues in 2012

According to a study by LPO program, the global legal process outsourcing market has reached the $1 billion mark and is continuing its growth at an annual growth rate of 32 per cent. According to Global Outsourcing Association of Lawyers blog post on www.kpoconsultants.com, the global spending on legal services is estimated to be around $250 billion. United States alone contributes about two-thirds ($167 billion) in terms of legal services. For law firms and organizations outsourcing of legal services to India can be considered to be a lucrative option but it is not feasible to outsource every type of legal service, hence the market for legal services outsourcing stands at around $111.2 billion. Out of which India can only target only 3.6% ($4 billion) and in reality only 2% ($80 million) has been outsourced till now. This highlights the fact there is a relatively big untapped market available for the Indian LPO vendors and other global LPO vendors to exploit which also helped the industry to cross the billion-dollar mark in 2012. According to a Nasscom market intelligence report, the LPO segment is expected to touch $15 billion by 2015.

The Indian LPO space is dominated by pure play LPO vendors such as Pangea3, CPA Global, Unitedlex, Integreon, Intellevate and Evalueserve. In 2010, Pangea3 became part of Thomson Reuters, the world’s leading provider of intelligent information to legal and business professionals. In the initial days of Legal Process Outsourcing (LPO) to India most of the work used to be backend processing like transcription but the high end work like IP processes, legal research, pre-litigation documentation, document analysis, preparing software licensing agreements is presently being outsourced to India along with the low end work as the Indian LPO vendors have matured and have built the capabilities in terms of skills and hired talented lawyers. One of the important process for companies is the patent filing which is also being outsourced to India  which is known as Patent Process Outsourcing (PPO and the process has more than 900 professionals who are qualified and trained to provide patent related services at a cost of $2,500 compared to $8,000-$12,000 charged by U.S. firms. Currently, the entire Indian LPO sector only employs some 50,000 people, according to Sanjay Kamlani, the co-CEO of New York-based Pangea3.

India already has more than a million practicing lawyers, and another 70,000 new graduates are added every year as they pass out from various law colleges across India and these lawyers are educated in English medium, similarities between Indian Legal System and U.K., U.S., Canada, and parts of Europe, labour cost arbitrage, time zone advantage, experience in providing various types of outsourcing services, and the clear edge that Indian LPO vendors have in terms of cost, quality and turnaround time. Along with the pure play players Indian Outsourcing giants like TCS, Infosys, Wipro all offer LPO services and they work with very prominent US clients. Despite the hype in the past years the Indian LPO industry had been growing steadily but far slower than the other types of outsourcing which are Information technology, Business process, and Knowledge process.  Most of the time the high end work cannot be outsourced and the reliance on the low end work is not highly profitable and to increase the high end work Indian LPO vendors are also setting up onshore centers in United States and United Kingdom. According to ValueNotes, market intelligence and consulting firm the large pure play LPO players are financially strong and they can survive in the industry and grow but smaller pure play LPO players will struggle due to their inability to maintain consistent operating profits, resulting in rising debt levels. Overall Indian LPO vendors majorly the pure play vendors will dominate the Global Legal Process Outsourcing Market and will see steady growth in the next few years.

Table of various services provides by Legal Process Outsourcing Vendors

Low skilled quantitative tasks consist of:	High end qualitative tasks include:
Paralegal Services & Legal Coding Corporate Secretarial Services Legal Memo Development Medical & Legal Transcription Document Management Litigation Support Data entry Immigration data analysis and working on labor relations	Intellectual Property Rights & IPR Portfolio Management Patent Search & Application drafting TM and Copyright Registration Legal Research/Opinion work Document Review and Analysis Intelligence Services Contracting and Administration

Source: http://www.kpoconsultants.com/resources/blogs/2012/08/12/12-legal-process-outsourcing-to-move-beyond-mere-billion-dollar-status.html

India Legal Process Outsourcing Industry 2011 - Key players and growth forecast

According to The LPO Program, the Global LPO market is expected to grow 34% ($217m) in 2011, from a base of $640m in 2010, to $857m. Corporate legal departments followed by UK-based law firms and US law firms are very active in the market. According to Research and Markets the global legal process outsourcing (LPO) market was worth $400m in 2010 and is expected to be worth $2.4bn by 2012. The Forrester report estimates the global market for legal services to be $250 billion with the US accounting for more than two-thirds of the market, the vast majority of which comes from U.S. companies and law firms ($170 billion). LPO includes include legal research, case briefing, para legal services, documents management, case research and study etc. The charts below highlight ValueNotes estimates and Evalueserve estimates respectively.

 

 According to NASSCOM-CRISIL study, LPO in India with a share of 17.5 per cent of total KPO market, i.e., USD 356.5 million, in FY2010, is the fastest growing segment, driven by impetus from a post-recession environment characterized by higher bankruptcy cases, regulatory compliances, and cost pressures. Legal Process Outsourcing is also expected to record robust growth to a USD 1.3 billion market by 2015. According to eprobe research Indian legal process outsourcing (LPO) industry was valued at USD 640 million last year and is expected to grow to USD 4 billion by the end of 2015. According to Evalueserve, there are over 5,200 professionals in the LPO industry in India and the Philippines, contributing an annual revenue of USD 300 million, and this is expected to reach 18,000 professionals with an annual revenue of USD 960 million by December 2015.

India is commonly preferred destination for LPO and hold around 85 percent of the market share, with advantages like cost savings, similarity in legal systems of both the US and UK legal system, availability of 1.8 million lawyers as skilled manpower with English proficiency and ‘time factor’ which is time zone advantage. Quality of the legal professionals, ethics and regulatory policies are some of the key challenges. US law firms are very active in the market, but continue to be cautious relative to their UK counterparts but some US law firms are shaking off that traditional caution. Law firms can reduce the overhead expenses cost which constitute 17% of total cost by approximately 10%. India is likely to face challenges from the emerging LPO destinations such as Philippines, Kenya, Mauritius and South Africa.

The Indian LPO space is controlled by exclusive LPO service providers such as Pangea3, CPA Global, Unitedlex, Integreon and Evalueserve which are large players with 500 lawyers. Pangea3 is expected to have annual revenue of $25-30 million. CPA Global has a turnover of $1 Bn globally. Integreon has annual revenues of $100 million. Large Indian players like TCS, Infosys and Wipro have entered into LPO market and are investing for future revenue growth in this segment.

Infosys LPO engagements account for 60 per cent of the total KPO business, with over 500 professionals and Rs. 70 crore ($15 million) in annual revenue. Bulk of the work is done from Pune, followed by Bangalore and Gurgaon. According to media reports Infosys plans to start LPO service delivery from Manila, Philippines, by the end of 2011. Wipro Technologies provide legal process outsourcing (LPO) to Microsoft’s intellectual property (IP) and licensing group worldwide. It has been providing US patent and trade marking filing and docketing services to Microsoft’s IP and licensing group since July 2008.

HCL Technologies is another major player and it has been doing well in LPO since last 4 years. TCS does not have a major presence in the LPO segment but is planning to explore the Legal Process Outsourcing (LPO) market. The company has in fact already begun the LPO services on a smaller scale with very few clients and is hoping to compete with its business rivals Infosys and Wipro who already have a share in the multi-billion LPO market. Cognizant debuted in the LPO space just two years ago initially by reviewing contracts for our financial services clients. The company has since graduated to regulatory reporting, disclosure-related processes, and anti-money laundering compliance.

LPO services go beyond simple cost-cutting and focus more on the quality of services like Litigation and business document review, contract management, electronic discovery, legal analytics and document preparation etc. There are still very few offshore legal service providers that provide specialized high end legal services. With demand for LPO on rise, bigger players will enter into market and the outsourcing of specialized high-end legal outsourcing and variety of legal work outsourced in large amounts will definitely attract new players into the market. Post recession large US law firms are also outsourcing the legal work to India; earlier it was large companies that use to outsource their legal departments. LPO industry is expected to grow in the next five years with revenue growth of 26% annually.

Source: Deloitte - The resurgence of corporate legal process outsourcing