Source: Business Standard

First, it was manufacturing, then accounting jobs, services and call centres. Now, legal services are poised to become the next industry outsourced to low-cost Asian destina-tions. Off-shoring legal work to India could transform how lawyers’services are bought and sold in North America. Here’s what you need to know about the next big thing.

More than aware that legal process outsourcing is the next big thing, representatives of 33-Indian legal process outsourcing units (LPOs) met in New Delhi on 28th July to formally announce the formation of the National Association of Legal Process Off-shoring Companies (NALPOC). The objective of the body is to set up e-mail networking between the LPOs in the country. It could also help in bringing about some standardisation in the quality of the services offered.

And, since the IT / BPO industry has considerable know-how and experience in the field, NALPOC hopes to join the National Association of Software and Service Companies (NASSCOM) some time in the future.

The LPO sector has been growing at a breakneck speed over the last year or so. Until now, it has been growing haphazardly, without proper guidelines or understanding among its members. Today, there are over 100-LPO firms in the country, albeit most of them single person organizations.

However, as Russel Smith, SDD Global’s President and Chairman says: “Though the business figures seem small, the pace of growth of the industry cannot be ignored.”

So, if legal off-shoring is the next big thing, what is the general consensus on the trend? “Off-shoring enables a company’s legal department or a law firm to broaden its services without hiring more permanent staff,” claims S. Lata Setty based in New York and an employee of Pangea3, a Mumbai law firm involved in legal outsourcing.

Patent analysis, contract drafting, substantive document review, due diligence, are just some of services offered by highly qualified Indian lawyers, at a fraction of the fees charged by an American, Canadian or European articling student or junior associate. While, off-shoring legal work to lower-cost centres, such as, India is still in its infancy, management consultant James Bliwas recommends that law firms start considering the implications now. “It’s something they need to be thinking about today, so they’re not surprised tomorrow if it takes hold,” says the principal of Toronto-based Atticus Interim Management. Off-shoring can run the gamut from back-office tasks, such as, word processing and data management, to high-level legal services.

Forrester Research, an American market research firm, predicts that the U.S. will outsource up to 40,000 legal jobs by 2010, and as many as 79,000 by 2015. Last year, billing by Indian lawyers to U.S. firms for in-house work ranged between US $5-15 million; with approximately 600-700 people employed by legal process outsourcing in India. While, the U.S. and U.K. have been the first legal markets to feel the effects of off-shoring, there is no reason to think the legal profession in other English speaking countries will remain immune to the forces of outsourcing to India.

No country has benefited more from the off-shoring trend than India, in large part due to its highly skilled, English-speaking lawyers trained in a common-law system. As well, India’s decades of experience in off-shored software development, including call centres has helped. A ValueNotes Database Pvt. Ltd. 2005 study estimates, legal process off-shoring generates US $61-million in annual revenues for India, a number expected to reach US $605-million by 2010.

As with most off-shoring initiatives, corporations are leading the way. Several major Western firms have set up in-house legal departments in India, while many others (reportedly American Express, Microsoft, and Morgan Stanley) contract with local firms to supply legal services.

In-house counsel see the opportunities presented by re-directing routine, but expensive legal tasks from their outside law firms to Indian professionals. Off-shoring helps obtain legal work efficiently and in a timely fashion, thanks in no small part to the much-touted time-zone advantages (Indian lawyers work, while North American clients sleep). However, it cannot be denied that it is the cost savings that are hugely attractive.

According to a January article in India’s Economic Times, basic back-office legal work in India ranges from $15 to $25 per hour. Document management services command $30 to $50 an hour, while patent drafting and legal research can cost $80 to $150 an hour. Compare that to the $80,000 per year earned by some new Canadian lawyers, or the US $145,000 annual salaries drawn by first-year lawyers in large American firms.

“If, you’re filing 500-patents, the difference we bring to the table is quite significant,” says S. Lata Setty, Vice President of Intellectual Property for Pangea3, a legal outsourcing firm with offices in New York, Mumbai and Silicon Valley.

According to Thomas Friedman, The World Is Flat?

“In 2001, India graduated almost a million more students from college than the United States did. China graduates twice as many students with bachelor’s degrees as the U.S., and they have six times as many graduates majoring in engineering. The pay scales are a fraction of what people earn here, and the Internet and a global economy have put all of them in position to compete in almost every product-producing field.

Here is the dirty little secret that no CEO wants to tell you: they are not just outsourcing to save on salary. They are doing it because they can often get better-skilled and more productive people than their American workers.

According to Burgess Allison, Keynote Speaker, ABA

This is not just outsourcing. It goes deeper than that; it goes to the very heart of how we conduct business, what parts of the business we’re going to handle personally, where our value-add comes from, and whether or not our customers will keep coming to us for services or choose someone else.?

We’ve fundamentally changed the requirement for geographic proximity in some of our work, and even though that only changes part of how we provide services, it’s enough to change the basic economic equations for building a business that’s profitable

I don’t care if you look at it as a threat or an opportunity, because it’s both. But … if you’re a lawyer, you’d better pay attention and pay attention fast. If, you’re in a low-margin, high-volume market, I guarantee, you’re a target. And, if you’re in a low-volume, high-margin market, they’re targeting you, too.

And, corporations have also begun to appreciate the pro-active nature of the offerings of off-shore law firms. Case in point, one group of Indian IP lawyers combing the patent portfolios of North American firms, pointed out technical flaws and offered to correct them at no charge, by way of introducing their services. Now, how many North American law firms would make that kind of effort? Nary one, and that is why India is soon going to take over as the global legal off-shoring hub, including the rest!

While, some Western law firms perceive certain threats and opportunities, nonetheless, they are preparing to carve their own passages to India, even though local legislation prevents foreign law firms from setting up offices in India. However, a few American and Australian law firms have affiliated themselves with Indian practices, seeking to catch the wave while it’s still cresting. And, others are sending work directly to India. Leading Setty of Pangea3 in New York to say, Indian LPO firms are successful partly, due to: “Our secret sauce is having the Indian - U.S. attorney mix. If, you’re working directly with an Indian company or an Indian law firm, you would lose the U.S. flavour.”

So, the question remains, how close is English speaking world close to a real legal off-shoring revolution? The answer is that it is beginning to gain momentum, e.g. as Simon Chester, a partner with Heenan Blaikie LLP in Toronto, with personal links to India spanning several decades, says: “I think the first development in outsourcing was Linklaters, which I believe moved all of its word pro-cessing to Bombay. Somebody in Linklaters did the analysis and reckoned that it would be cheaper and more effective, to move the stuff to India than to move it to a different floor in the same building.”

And, other firms are following suit. For example, May 2004 saw global firm Milbank Tweed begin to outsource word processing, editing and proof-reading tasks to India through OfficeTiger, a leading Indian outsourcing firm. More than 3,000 word processing tasks are sent to India every year from Milbank Tweed’s head office in New York, and the firm reported a 98% quality performance result in its most recent survey.

Indian law firms have also begun directly soliciting work from the West. Currently, an e-mail is making the rounds of Canadian lawyers’ in-boxes offering legal research and writing services in India for just US $15/hour.

According to Dhiraj Aggarwal, CEO - EconomicalServices.com, a New Delhi firm that offers legal and paralegal services to Western law firms and sole practitioners, his firm saves its clients 75% on this sort of work.

Alternatively, a law firm could use a third-party vendor with North American offices that handle sales and supervise the work of their Indian legal staff, providing the reassurance of dealing with someone closer to hand. The choices are multiplying, and each is economically attractive.

Mukesh Gupta, Director for Strategic Relations at TCS Canada in Ottawa says, the parent company pioneered the off-shoring of software development in 1968, and today it is expanding its business offerings to include legal services. “Everybody understands that the cost pressures are there.”

Aggarwal of EconomicalServices.com, New Delhi believes: “This industry is all set to grow like the Indian IT industry. The world will look to India!”

And, the smart money is not betting on it being a passing fad, but believes it could seriously upend the North American legal services marketplace? Take for example, Pangea3, which counts Fortune 500 and Fortune 50 companies among its clients, along with a number of smaller businesses and some well-known law firms. New Delhi’s EconomicalServices.com also reports it has Canadian clients, while Gupta in Ottawa says TCS Canada is in discussions with large businesses and law firms here.

Whether, legal decision-makers admit it or not, they are paying close attention to the possibilities of off-shoring. Working directly with a local firm can be a good option for Western lawyers, if they have the skills and resources to identify highly qualified local counsel.

Indeed, off-shoring offers few benefits, if the services do not measure up. Chester has no doubts about the potential for very high-quality work coming from the subcontinent. “There’s been a myth, I think a complacent myth that Indian lawyers have a lesser standard of excellence,” he says. “That’s completely untrue.” He remembers helping a Canadian multinational defend its bid for one of its Indian subsidiaries, and found himself ‘blown away’ by how bright, sophisticated and responsive his Indian counterparts were.

India has one million lawyers. In Bangalore, the National Law School attracts the best and brightest from across the country, selected through fiercely competitive entrance examinations. Its graduates are recruited by top law firms in London, New York and Sydney, as well as, by firms like Pangea3.

“We have a very strong philosophy that what you start with is what you get,” explains Setty of Pangea3. “If you start with excellent people, the work product will be excellent.”

The market will prove how viable off-shoring legal services really is. But, the fact remains that the volume of legal work going over the Pacific from Canada and the U.S. is only going to increase. Lawyer salary pressures show no sign of easing, and corporate law departments are determined to cut costs.

India has proven once before that it can become a major player in a global, knowledge-based sector. “This industry is all set to grow like the Indian IT industry,” predicts Aggarwal. “The world will look to India for qualified and skilled legal professionals.”

Source: PTI

Based on TCS Financial Solutions (TCSFS) performance in 2006, IDC, a Chinese independent research group has ranked TCS Financial Solutions, a business unit of TCS as ‘amongst the top two IT facilities’ in China.

According to an IDC report: “TCSFS has emerged as a major force in China’s banking IT solutions market, after winning major deals with Bank of China and Huaxia Bank.”

Lauded for its strong capabilities across all IT solutions for the banking industry, the report recognizes TCS Financial Services as the second largest channel management system provider, the third largest payment and settlement solution provider, including being identified as the sixth largest bankcard solution provider in China.

Ginja Pande, EVP and Regional Head, TCS Asia Pacific corroborates: “The recognition from IDC is evidence of TCSFS’ continuous commitment to deliver excellence through its global delivery network, and also its ability to provide Chinese corporations and global customers with best-in-class technology products and solutions.”?

Such commendation for an Indian IT firm, and that too from a country, a would be competitor in the field of IT outsourcing is high praise, indeed! No doubt, but India’s IT prowess is the envy of an Olympic ready Beijing!

Moral of the story, ‘Slow and Steady Wins The Game!’, including ‘All That Glitters Is Not Gold!’ Taken in by all the sprucing up that went on after China’s Communist government decided that capitalism was not such a bad thing, after all, the world went gung ho about China, at the cost of India, constantly sidelining and imposing sanctions for supposed misdeameanors, while disregarding and overlooking even China’s Tiannamen Square! Today, India has proven and continues to prove the pundits wrong, as even China stands awed by India’s outsourcing feats!

Source: Business Standard

Hyderabad-based Satyam Computer’s engineering services division is all set to clinch deals worth $150-200 million (between Rs. 600-crore and Rs. 800-crore).

Just recently, it has bagged four major deals in Singapore, Australia and the UAE, which cumulatively are valued at $70-75 million.

TSK Murthy, Head (Integrated Engineering Solutions), Satyam says: “We see aerospace, high-tech telecom, automotive and industrial manufacturing as the fastest and dominant growing sectors. Besides, with task-based projects transforming into programme-based projects, the deal sizes in this space are getting bigger at between $20-million and $40-million each.” He goes on to confirm that Satyam has eight deals in the engineering services sector in the pipeline, each ranging from $20-million to $25-million, adding “The deals are at various stages of maturity. A few of them may be wrapped up by the current financial year-end.”

According to Murthy, the next three years will see the division investing around $5-million in building centres of excellence (CoEs), along with appropriate infrastructure, and as a part of which, an electro-mechanical lab will come up in Hyderabad and Bangalore.

As well, Satyam’s engineering services division, which contributed 7% to Satyam’s total revenues last financial year, and accounted for 7.2% during the first quarter of the current year, is also set to double its headcount. All part of Satyam’s expectations that its engineering division will add double-digit growth to it’s top line during the current financial year.

Not far-fetched at all, as a 2006 Booz-Nasscom study indicates that by 2020, global off-shoring of engineering services will become a Rs $200-billion opportunity. On the right tack, Satyam is one the first few Indian firms taking advantage of the next big thing i.e. Engineering Process outsourcing (EPO). Even as, Vikas Sehgal, Partner, Booz Allen Hamilton, Chicago, says: “With its inherent talent pool and the growing automotive and aeroplane markets in India, the country could capture 25% of this.”

Source: www.business-standard.com

Satyam Computer Services Limited, one of India’s leading IT services and consulting firm is working with 4-5 pharmaceutical companies, to help them achieve a faster turnaround time in drug development, which in the normal course of things can take anywhere between 15 to 20-years, before a new product is ready to hit the drug stores.

Responsible for providing an integrated solution to the pharma firms for different stages of drug development, including analysis, validation process and better targeting, Satyam will also cover clinical trials.

This strange mix of IT and Pharma may come as a surprise to many, however, it is nothing but another frontier for the IT industry to conquer! Since, clinical trials form the most time-consuming part of a drug development project, IT tools can help drug firms to significantly reduce time, assist in speedy consolidation and evaluation of patient data.

Ram Mynampati, President – Satyam (Commercial and Healthcare business), without revealing any names his firm will be working with, said Satyam’s IT solutions would substantially reduce the time cycles of drug development programmes, resulting in a huge saving for pharma companies in terms of investment and time.

Currently, the Satyam team consists of 40-Ph.D. scholars and medical doctors to help design the applications required in a drug development programme.

This is an evolution in Satyam’s 20-year journey, from implementing SAP to direct involvement in their business development, as the IT firm is demonstrates its capability to thresh out workable pharma industry solutions.

As well, over 20-pharma firm, such as, Glaxo SmithKline and Novartis, will also be the recipient of Satyam’s consulting and IT services for front end and back office operations.

Breaking new ground, Satyam proves IT firms are not just about writing code!

Source: Times of India

A falling dollar has resulted in a rising rupee, spreading a sense of doom and gloom amongst the Indian IT industry. And, it is the small and mid-sized firms that have been hit hard by an appreciating rupee, rather than their bigger counterparts. So much so, the have seen a decline in their profits for the quarter ended 30th June 2007.

However, whether big or small, how they are impacted all depends on their dependence and exposure to the US. For example, IT majors, such as, Wipro and Infosys have been far-sighted enough to bring down revenue dependence on the US to 60% and less. But, a large number of small IT firms still rely on the US IT market by as much as 70%, or 85%, as in some cases like AztecSoft.

With the rupee appreciating against the dollar, far more than against Euro or Asian currencies, small and mid-sized firm bottom lines have been particularly severe. Vikram Bapat of PWCoopers India believes, small firms need to diversify geographically, since it is clear the rupee will only strengthen further against the dollar.

Indeed, that is exactly what most of them are doing, as the writing on the wall becomes clearer. Phaneesh Murthy, CEO ofiGate Global Solutions, declares: “In Q1, out of our total off-shore revenues, North America contributed 73%, while Europe and other geographies contributed 16% and 11% respectively. We are looking at geographies like Canada, Europe and the UK to decrease our dependence on the US.”

V. Sundararajan, CFO – AztecSoft, says his firm is also seriously pushing for European revenues, while admitting it isn’t going to be easy or a cakewalk. “We are in the niche space of outsourced product development in data management. Such work is substantially of US origin. We’ll try and bring the proportion of US revenues to 75%, from 85% now,” says he.

The reason smaller firms have been hit harder than big ones is, because often they do not have the capacity to undertake Forex hedging compared to bigger firms, in order to contain the impact of currency fluctuations.

According to Libi Baskarn, an analyst, another reason why small IT providers have been hit harder by an appreciating rupee against the dollar, is because they often go for short duration contracts that range from three months to two years. “Most of them are pilot projects. Due to the short nature of the contract these companies do not get the time or flexibility to exercise Forex hedging options,” he explains.

However, firms who have the capacity are increasing their hedges, with Rostow Ravanan, CFO of MindTree, stating his firm’s $26-million hedge in March this year, went up to $69-million in June. Even iGate has changed from six months hedging and is beginning to move towards longer term hedging i.e. one to three years.

Currently, hedge premiums are high, involving considerable risks, as well, smaller firms lack the expertise required for handling hedging complexities. So much so, Bapat believes forward contracts will become hot commodity, while hedging will offer only short-term help.

Accordingly, mid size and small IT firms need to look at more fundamental ways to counter the rising rupee. “Operations have to provide the necessary improvement,” says Neeta Revankar, CFO of Sasken Communication Technologies.

Surely, that should make them wake up and smell the coffee, as it is simply not enough to acquire a project. It is also necessary to execute it flawlessly and assure customer satisfaction is top priority. A few unscrupulous IT firms are only in the game for achieving their main objective i.e. making as much moolah as possible. All at the cost of clients, who face dissatisfaction with the work, pulling out, even though the work has been paid for. A totally unprofessional way of conducting business, completely dishonest, which sends out the wrong message about professional India.

Outsourcing can be a lucrative business and has seen many little jump start-ups expand and grow e.g. Infosys, Wipro, Patni and others. So, why are these fly-by-night operators ruining the party for others. They need to use transparent practices, including streamlining their HR Processes, and recruiting only management material. Weak management can leave a company floundering, just as an unskilled workforce can make them lose client after client. The trouble is, some of these firms start-off well, achieve success and then lose steam mid-way, letting sychophants take charge over the running of the firm. They let talent slip out of their hands, simply because HR has not implemented a retention policy. End result, the firm is in the hands of weak management unable to control groupism, politicking, and the siphoning of money by those who get their way through sheer flattery, not because they have the talent or the skills.

The rising rupee can be combated and does not have to pinch where it hurts most. One has only to follow the example of firms like TCS, Wipro, Infosys and expand their footprint in Europe and Asia, instead of relying solely on USA. Those who keep abreast of the news are aware that it is just a matter of time before America loses its position as a world leader. The American century is over, with Asian giants, such as, India waiting in the wings to establish it as their own.

However, before it does so, Indian businesses will need to streamline and globalise their work practices, giving back to their employees, not simply taking from them. Sweatshops will have to become a thing of the past, human rights respected, and fair wages for fair work the norm! Can India achieve that? Perhaps, with the help of a mindset revolution!