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Challenges for LPO industry

One of the latest entrants on the horizon to help and make the world flatter, in a way famously
elaborated by Thomas Friedman, is the industry we all popularly know as the LPO (Legal
Process Outsourcing Industry). Although the legal outsourcing industry has been around for
quite some time now yet the transformations have been quick as compared to other industry
verticals. Quite naturally the journey over the learning curve has been quite steep over the
years. From the low end transcription and data processing jobs to the top of the line research
projects the story so far been fast and exciting.

There have been various reasons for this journey, riding on the back of developments in the
Information and Communication Technologies, the industry was a quick response to the
growing need for radicalizing the cost inefficiencies that had crept in the legal services industry.
The traditional model for law firms had started tilting too much in favour of the big law firms and
the need for a more efficient service delivery mechanism was long felt. This change in fact was
only a matter of time once clients started realizing the benefits of off-shoring and outsourcing in
different areas.

The commoditization of legal services led to newer players in the legal services realm and these
new entrants changed the picture forever bringing in pricing efficiencies and cost rationalization
in a manner which law firms had not been used to.

However, the LPO industry too has its own set of challenges and in the following paras we list
and analyze some of these challenges:

a) Human Resources

i) Procurement
ii) Training and development

b) Client satisfaction

c) Sustainable profitability

d) Currency fluctuations

e) Market fluctuations

Human Resources

(a)    Procurement

India is a common law country and English speaking population is not uncommon. While the
above two are indeed the two most fundamental skills required for people working in an

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Challenges for LPO industry

outsourcing unit- these are certainly not self sufficient and exhaustive in themselves. A typical
work force for an LPO should not only be aware and adaptable to learning different laws they
should, quite uniquely, also be capable of efficiently handling new technologies.

Technology is at the very heart of legal outsourcing and the differentiating factor.
Hence, LPOs not only require good lawyers but also those who are adaptive and responsive to
newer technologies.

Secondly, unlike traditional practice of law by independent professionals, LPOs work on a larger
scale with projects at times running into a few months and teams of varying numbers working
onto every project. This requires LPOs to have lawyers who can also be good team players and
as and when required – good leaders and managers.

(b)    Training & development

Procuring the right people with the right skill set is just half the job done. As stated earlier,
working with LPOs is about ability to adapt and improvise as and when required. This requires a
receptive and flexible team and also an effective and good management which is able to keep
the workforce on its toes.  

Training is an ongoing process and LPOs should work closely with the clients to keep the staff
well equipped with the necessary skill set.

Client Satisfaction

LPO industry, being services vertical relies heavily on fostering long term relationships. This is
only easier said then done. Developing long term relationships require, amongst other things, a
keen understanding of your clients’ needs and the ability work with them to reach the desired
ends. The first rule of any service industry vertical is that of client satisfaction and without which
there can be absolutely no scope of any significant growth.

One may take a cue here from the success story of Indian software companies which have
survived and flourished through some tough years through the long term relationships forged
with the clients.

Sustainable Profitability

Being a niche industry in its nascent stage- LPOs are yet to have a matured and sustained
marketplace. This would, as stated earlier, be a direct outcome of fostering long term
relationships with clients over varied industries and economies. Sustainable profitability can be
achieved only through a mix of various strategies such as spreading the client base over varied
industries and geographies.

Currency Fluctuations

LPO being an export oriented industry where contracts run into long time periods of sometimes

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Challenges for LPO industry

up to many months and in different currencies (depending upon the negotiated contracts), if
these receivables are not managed efficiently and currency risks not hedged effectively,
situation may get messy. Managing receivables through an effective use of currency hedging
instruments to offset any unfavorable drop or surge in currency prices is a prerequisite skill for
all LPOs in the long run.

Market Fluctuations

LPOs require a long term strategy to offset any adverse impact that may arise out of market
fluctuations. Markets here refer to both the geographic markets in which the clients operate as
well as the industries. For eg recession in the North American market would adversely impact
the workflow for some LPOs and to counter which they should have a diversified client base
spread in other geographies as well. Same is the case with LPOs concentrating on specific
industries.

About KPO Consultants

KPO Consultants is the pioneer consulting company which provides business solutions
exclusively to the LPO industry. We work with the established and aspiring LPOs to set up their
LPO ventures and overcome their complicated business problems and also help management
make big decisions affecting top line growth of their company. KPO Consultants offers
consulting in areas of strategy, operations, technology, marketing and sales, human resources,
and strategic alliances. We also provide end-to-end support across entire business lifecycle;
building business synergies from the scratch till realization of its benefits and ongoing
developments. We have served several clients in the United States, the United Kingdom,
Singapore, Philippines, Mauritius, India, Canada, Australia, and many more countries.
For more information, please visit our website www.kpoconsultants.com or write to us at
info@kpoconsultants.com.

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