Need for players with Multi Service Capability in LPO Space

There has been an explosive growth in the LPO industry in India in last few years.

Currently, bulk/majority of the revenue in LPO currently comes out of Document Review which is considered to be lower end of LPO value chain. The fear surrounding such work is always that over a period of the time these services get commoditized. The commoditized business is easier to replicate and hence entry barriers for competition is lower. To add to woes of LPO Service Provider beyond cost arbitrage client do not perceive any value add of the service provider. This creates significant long term sustenance issue for LPO service provider.

LPO service providers in India have also ventured in the following services:

• Contract Management
• Intellectual Property Services
• Legal Research Services
• Litigation and Administrative Support Services

I have an analogy here.

One can't help but notice the growth of IT services just a decade ago. The services offered then were largely on labor cost arbitrage, application development and maintenance (ADM) to be specific. Now India is a leading IT Service provider. Now, top IT services providers manage end to end processes rather than just ADM. Moreover the nature of outsourcing has moved deeper from one that required single capability to multi-capability like ADM, Infrastructure Management, Project Management, Consulting, PLM, Validation and testing, analytics, business intelligence, predictive modeling, BPO to name a few .

LPO Industry as it matures will also move from primarily traction processing to process outsourcing to being a value added legal services partner.

However to be a true legal service partner, clients will require transformation partners who can understand their business and provide value added services.
This leap however requires a different set of skills, mindset, organizational capabilities and strategies.

If one goes by the same trend as IT Services, I reckon that the following skills and capabilities (not exhaustive though) will be a part of any legal services engagement in very near future:

Quality and Process Management: These skills are key to any successful engagement.

Utilization of Technology for LPO Domain: This involves continuous improvement on the quality, process, turnaround time, consistency etc., through development of specific and reusable technology, IT tools, most of them developed in house.

Knowledge Management: This is key for knowledge intensive services like LPO. As any (fast) growing industry, attrition will be a problem in future in thin industry which makes this skill critical for this industry. Every client in LPO space has its own associated processes, terminologies, methods, procedures, rules, nuances, a lot of which may change routinely. A robust KM process will ensure alignment of the LPO engagement with the client.

Project Management and Transition Management: These capabilities will be required for management of any large/complex project or engagement especially in a multi service LPO environment.

Associated BPO Services: There are associated services with any process and LPO domain is not an exception. These services will be required as the client engagement in LPO domain deepens.

Global Sourcing: Getting right skills at right place and time will go a long way in maintaining competitive edge for LPO firms. Deeper engagements will require onsite-offshore model.

Consulting: These services are provided as a value add and for upselling. These services will be offered as the LPO firms build domain expertise. The services can be as varied as consultation on CRM to benchmarking for law firms.

One may simply argue that any new service starts as a simple offering and progressively gets inclusive, deeper, complex with interdependent disciplines as the service matures. Hence, the same will also apply to LPO services. My point is that though that is true, standalone transaction focused LPO service providers will find it incredibly hard to scale up on the skills mentioned above.

Hence the LPO industry today requires multi-service players as it matures. These players are/will be much better placed in terms of business value add to customer and also in terms of overall competitiveness.

Standalone transaction processing oriented players unless they are able to find niche or acquire domain skills, will be acquired or loose competitiveness.