Obama and the Indian in the LPO.

Overheard recently, “Obama is out to close all the BPOs in India!”

Will President Obama really turn the tide of outsourcing back?  No. There could be lesser work offshored by the US. But it will be mainly the small-change projects that will not be outsourced. And most BPOs and KPOs here are all set to meet this deficit by turning their attention to Australian, UK, and European processes.

So far as LPOS are concerned, Mr. Obama’s policy of taxing the profits earned by offshorers could result in vendors indulging in cost-cutting this side of the pond to increase profits; and the principal area of this cost-cutting is going to be salaries.  One way of cost-cutting will be LPOs hiring mainly freshers on per-contract basis and paying them a minimum salary.  Another method that is fast catching on, is providing a “training period” of two or three months to new employees and/or paying them a small stipend.

Should this side of the pond worry?  I think not. Legal work demands  higher ethics, and a greater degree of confidentiality and security of data than any other field of work.  The attorney-client relationship is very like the doctor-patient one.  It is based on absolute trust- which even a small breach of confidentiality will absolutely ruin.  At the same time, the work produced by the LPOs has to be faultless, since no matter how high the level of trust, if the outcome of the litigation is affected because of  the shoddy work done by vending LPOs, the client is going to yell blue murder.  Therefore, sooner or later, every LPO is going to have to take a call on whether to hire freshers and risk less than perfect output, or sacrifice a percentage of profit and pay experienced professionals to provide a high quality of work.

Incidentally, it is this unique attorney-client relationship that is the root cause of the LPO industry taking a longer time to ramp up.  No matter how convinced a law firm is of the ability of an LPO to meet its efficiency and due- diligence standards, prudence dictates that it test the waters by sending out smaller jobs initially, and then graduate slowly to larger ones.

In his latest post  Mukul makes a conclusion that legal process outsourcing is no longer a hot career option for those interested in legal services. This sounds very much like what the naysayers were saying when Jerry Rao launched Mphasis-There was never going to be a future for those who choose to make a career in BPOs.  It is Jerry Rao and those who did take the leap who are still having the last laugh.  There is never going to be a dearth of lawyers opting for LPOs.  With the lawyers who passed out of law colleges in 1955 still practicing in courts today, where is the place for the hundreds of lawyers tumbling out of colleges each year?

Besides, I find many management students opting to do short-term courses in various branches of law, merely because they do not want to lose out on a chance to work in legal project management.  Many of my lawyer-colleagues with a dozen years and more of practice in Pune courts, are very keen to give it up and work in LPOS.

I do agree however, that if LPOs continue to provide only back-office job work to employees, this may inhibit the more talented legal professionals from entering the industry.  But this percentage is minuscule compared to the hundreds who will find even the more simple back office functions performed in LPOS challenging, mainly because they find English speaking a challenge.

A few LPOs are making hay by providing training in US Law and English language at a fee while they wait for the bigger projects to come in.  Wise ones!  It is not only those who hit the gold lode but also those who provide the spades that win.