Wednesday, October 20, 2010

Outsourcing is here to stay …

Outsourcing as a trend has caught the imagination of world but like every successful thing it has its own critics.

In recent times there has been much of speculation about Mr Obama’s policies and its impact on outsourcing. But should we really need to be worried about it? Should we ring the danger bells? Is it a bubble which will burst or is it a flash in the pan?

I believe the answer to all these questions is a big No ...

There is a strong case for the outsourcing industry to stay and in fact grow at a very fast pace. Recent trends show an exponential growth in outsourcing especially in newer areas like legal outsourcing.

So, why am I bullish on the outsourcing industry and particularly legal outsourcing industry? Here is my rationale based on facts: Mr Obama’s comments are more towards IT and software industry and does not affect the legal process outsourcing. In fact American companies generate more than 50 per cent of their business outside the US. To be globally competitive, they have to depend on globally shared services.

Outsourcing started as a way of obtaining services from outside supplier at a cheaper cost than possible in one's own organization or country. It still is the primary motivation but is it the only one? Companies have realized that Outsourcing not only helps in achieving the cost advantage but also provides a quality and timely services.

The compulsion of US to outsource work is also an admitted fact by Mr Obama by the remark that "…. but not enough talent at home”. Hence, to carry out growth, the US companies will be requiring talents from outside.

Infact several researches show that Outsourcing has a beneficial impact on the outsourcing client company. It is no surprise that the biggest employers of the local talent are the companies who are the largest outsourcers.

Trends in the legal outsourcing are even more encouraging with big legal support service providers like Integreon and CPA Global signing up multi million dollar deals with the giants like Rio Tinto and Cameron McKenna respectively. They are also partnering with magic circle law firms notably Clifford Chance, Eversheds and Pinsent Masons showing keen interest in the legal outsourcing. Recently, Slaughters and May has also expressed a keen interest in outsourcing some of its operations to big Indian LPO’s like CPA to reduce its cost.

With trends like this I can say with conviction “Outsourcing is here to stay”.

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