The Spreading of Outsourcing
More and more services are susceptible to offshoring especially if they can be completed remotely. In-person services, like lawn care services, are less vulnerable to outsourcing.
CEO magazine (see: www.chiefexecutive.net July/August 2006 "Next, Outsource All the Lawyers") ran a piece last year that outlined the case for executives to move more legal work offshore. The case for using lower cost legal resources is a compelling one. The economics make sense and, for the right kind of work, using these resources is a prudent use of corporate resources.
The article identified several offshore legal tasks that are appropriate for outsourcing. These included:
- drafting of contracts
- documentation reviews (i.e., during the discovery process)
- patent research
The article also correctly points out that many legal services/tasks are not appropriate for offshore providers. Services involving securities transactions, in-court appearances, etc. still require an in-person, local touch. Those roles/services will likely remain unchanged for some time.
Every service industry is being impacted, positively and negatively, from offshore service delivery. Offshoring has had a significant impact, of course, on IT and is gaining footholds in architecture, legal, medical and other disciplines. As these changes are integrated into each service sector, workers and employers must adjust. Workers must get closer to customers and develop deep niche expertise. They must also get really 'local' in the clients they serve and get 'detailed' in the knowledge/service they provide. Employers must alter business models, change compensation methods, adjust offerings and re-think their value proposition.
The labor arbitrage that will likely set in to this profession could certainly have an adverse impact on one group of law workers: the paralegals. These folks currently provide a number of the more repeatable or research oriented aspects of law work. They're less expensive than a lawyer and they provide a great, lower-cost, local source of talent. The tasks they perform are often the same tasks being targeted by offshore legal services firms.
I work with a number of law firms and have yet to see material reductions (or for that matter any reductions) in average rates charged. I'm actually looking forward to seeing some downward cost pressure occur in this space.
This should be an interesting area to watch.
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