TinkerX

A new report from Deloitte consulting, "Calling a Change in the Outsourcing Market," attracted my attention, because of my business interest in the Indian legal services outsourcing market. Turns out, though, that the gang at Deloitte were using the term "outsourcing" more generically. They’re not talking about getting somebody in India, China or Australia to do the work of a US vendor… they’re talking about getting a vendor to do the work at all in the first place, as opposed to doing it yourself inside the  corporation.

It’s a good read for anybody who works inside a large company, or who has clients who work for large companies. Nudge, nudge… wink, wink… that might be most of you lawyers and legal marketers out there.

There’s a really scary copyright warning at the beginning of the report, so I’m not going to cut-and-paste any of the pretty charts and graphs — and there are plenty. Don’t be scared by the 34 page size of the report. There’s lots of big graphics, good swaths of white-space, nice bullet lists and the aforementioned graphs. You can power-read the whole thing in about 15 minutes.

I can hear you begging, though: "Boil it down for us, Andy! Give us the 15 second version!"

How can I resist my screaming legion of fan.

Here’s the deal: according to Deloitte, many of the benefits of outsourcing — getting a vendor to do work for you instead of having employees do it — may be more than offset by the risks, troubles, costs and headaches. The main benefits that most companies site for outsourcing — cost savings and increased flexibility — may, in fact, be much less zippy than imagined, even before you figure out all the hairy-scary detail stuff.

In short, ironing your own shorts may be the smarter choice.

What does this mean for law firms and legal marketers? It means you may be competing against bigger and bigger law departments again in the near future.

I’m going to put my other outsourcing stick in this pot for a second, too, and stir things around even more. If law firms are competing less and less with other law firms, and more with larger law departments, they will also be competing more with outsourcing solutions from India. Why? Because law departments are nowhere near as hesitant to try new processes and ideas when it comes to shaving 20-80% off operational overhead items. So while the head of a practice group at a large corporate firm may not have a reason to outsource any of his legal support work… if he leaves and goes to work "inside," his priorities will change.

I’ll give you another reason why legal Indian outsourcing services will fare better if/when law departments start growing again: when you reduce the amount of overall legal outsourcing you do, the stuff you do decide to outsource will be subject to even more competitive pressure. Which is good news for Indian firms that can provide some serious downward pressure on costs.

So… while the Deloitte report may not be bode well for the corporate legal industry as a whole, I think it might be a bright light for Indian legal outsourcing. I also think that US firms will need to take even longer, harder looks at how they put forth their value proposition to clients. And that’s a conversation that should include serious, mature marketing folks.

Are you ready to rumble?