challenges for lpo industry

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  • 8/8/2019 Challenges for Lpo Industry

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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 forquite 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 listand 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 theabove 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

    [email protected].

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