Legal outsourcing

Bridging the Process Gap with Managed Outsourcing

Industries including the legal industry all around the world shifted to the practice of outsourcing in recent times while most of it happened during the times of the global pandemic. According to Statistica Research, the growth of the Global Outsourcing Industry has been immense in recent decades and is expected to reach $92.5 billion by 2023. This trend has been driven by the increasing demand for cost-effective and efficient business solutions, as well as advancements in technology and communication that have made it easier for companies to work with remote teams.

In the fast-paced business environment today, companies are seeking ways to streamline their operations, reduce costs, and improve efficiency. One way to achieve these goals is by outsourcing niche areas of the business to external service providers. In this article, we'll explore the concept of outsourcing niche areas, its benefits, and the key considerations for bridging the process gaps.

The Advantages

Outsourcing has become a popular strategy for companies to achieve these goals. In today's fast-paced business world, businesses are looking for ways to stay ahead of the competition and maximise their resources. Outsourcing offers an effective solution for businesses to achieve process efficiency, save time, and reduce costs.

One of the biggest advantages of outsourcing is cost savings. By outsourcing non-core activities such as accounting and payroll to countries with lower-cost labour, companies can reduce their overhead expenses. For instance, outsourcing software development to countries like India and the Philippines can result in cost savings of up to 60% compared to in-house development. This can allow companies to allocate more resources towards business growth and innovation.

Cost savings and the reduction of time and resources required to perform certain processes are key advantages of outsourcing. This can help companies to improve the speed and efficiency of their processes, leading to increased productivity and reduced costs.

Flexibility is another advantage offered by outsourcing. Companies can choose to outsource specific tasks or processes, or even entire departments, depending on their needs. This allows businesses to scale their outsourcing efforts up or down as needed, ensuring that they are always working with the most efficient and cost-effective solution.

World became a Global Village

The world became a global village, wherein everyone was aware of the specialities available across cities and borders/oceans. Eastern countries, such as India, the Philippines, China, Malaysia, and Pakistan, have become the hub for supporting Western countries. Enterprises moved to the then-called hybrid model of utilising internal and external resources, and even onshore and offshore specialities.

India has emerged as a leading destination, with a rapidly growing industry and well-established service providers across different niche areas, including business and legal services.

Innovation is driven by the need

Decades ago, outsourcing started with general cost-centre activities such as inbound/outbound calling services, back-office operations, data entry services, and software development. While enterprises were utilising third-party providers for the above-mentioned activities or so-called business operations, they later realized that knowledge services could also be outsourced and found a need for knowledge services. Before outsourcing knowledge services, these tasks were performed in-house, but once the project was over, the resources became useless.

Knowledge services came with the concept of outsourcing or utilising third-party providers for other cost-centre activities like marketing, research, legal, technology implementation and so on.

Varun Bhatia, co-founder of 3N Serve, a new-age legal consulting and outsourcing company stated, “Legal professionals are result-oriented but unsung heroes. To date, 3N has identified areas that were not explored by other service providers. It is important to understand what is more time-consuming than costly.” He further adds, “Understanding and adapting to client processes and culture is of utmost importance to us. Again, we will not turn your world upside-down when all you require is process adjustment.”

A study discussed in our February 2022 article titled “Alternative Legal Service Providers (ALSP) Adoption Drivers”, found that $6.2 billion is spent annually with legal process outsourcing, e-discovery, and document review service providers. The same study also found that $900 million is spent annually on contract lawyers, in-sourcing, and staffing services.

In the last few decades and mostly during the global pandemic, Client expectations have moved beyond the traditional areas of practice, giving rise to managed services in areas such as law, research, technology implementation, process, and workflow design. This paradigm shift was necessary to meet existing demands. Even mid-size enterprises opted for outsourcing to cater to their client's demands and needs, bring efficiency into work and be competitive players in the market.

According to a study by Research and Markets, the global legal process outsourcing market is estimated to expand at a compound annual growth rate. of 31.8% from 2019 to 2025. The market is projected to reach $35.9 billion by 2025. While having such high projections of expansion the industry is going to observe a blatant rise in the shift to legal outsourcing or legal process outsourcing.

Considering various reports and their statistics, the figures draw attention to the rise taking place in terms of investment and work in this sector. According to the 2023 Chief Tax Officer Outlook survey by KPMG finds 83% plan to use outsourcing, co-sourcing or managed services models in the next three years which shall help them thrive in the industry.

The Potential ahead in a changing marketplace

Managed Services be they business or legal, are a result of innovation, wherein industry leaders realised that the greater potential for any business is scalability with quality. It will be interesting to monitor the ongoing legal sector changes as we adapt to changing market conditions.

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Disclaimer:  The views and opinions expressed in this article do not necessarily reflect the official policy or position of Novum Learning or Legal Practice Intelligence (LPI). While every attempt has been made to ensure that the information in this article has been obtained from reliable sources, neither Novum Learning or LPI nor the author is responsible for any errors or omissions, or for the results obtained from the use of this information, as the content published here is for information purposes only. The article does not constitute a comprehensive or complete statement of the matters discussed or the law relating thereto and does not constitute professional and/or financial advice.

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