Thursday, March 19, 2009

OUTSOURCING - A CAUSE FOR LAY OFFS ?

I remember a woodcutter cutting the branch on which he was sitting. It was really the most foolish act one could think of. Nobody shuns one’s source of existence. In case I am working on a project which is very dear to me then I shall find it hard to share it with anyone else. No doubt, the human psychology always guides people to restrain them from doing any act which is not conducive to their interests.

An old man has beautifully said the hand on the latch of main door controls the outward and inward flow of technology services, jobs, opportunities etc. the decisions which are warranted due to compulsions are not good howsoever economical they may be. The growth of Legal Process Outsourcing industry had put a big question mark on the quantum of outsourcing by solicitor firms. Critic to the LPO raised the issue backed the law firms involved in outsourcing will end up in outsourcing their lawyers out of the firm. They started projecting that it will create a big unemployment in highly skilled and respectable profession of lawyers. On the other hand, outsourcing professionals viewed it differently and claimed it merely as a part of globalisation and win win situation for the providers and outsourcing people. According to them, Legal Process Outsourcing has become necessary and natural due to the different variables of two places and countries.

The outsourcing can be commoditized and compare with different outlooks. An economist might compare it with the usual role of demand and supply. In thermodynamics we describe the flow of energy from one place to another depending upon the variable temperature. The Legal Process Outsourcing had begun with the outsourcing of transcription work similar work had commenced with medical transcription. Slowly medical transcription had grown beyond outsourcing of audio files. The Legal Process Outsourcing has also starting shattering the thin line of outsourcing legal transcription in the beginning. The service industry of developed countries like UK, US found a big support in the growth of Legal Process Outsourcing.

I personally believe lay offs from the law firms were primarily due to their inability to match up the expenses and receipts. They have been charging good amount from the clients and in turn paying solicitors a good amount. As people chose to get the same services at lower rates, the receipt of the solicitor firms fell down and in turn lay off started. Nobody thought of reducing the salaries instead of preferring lay offs. One can easily view; the solicitors already into outsourcing were more capable to match up the receipts and expenditures. Apparently, lay offs are not the result of outsourcing but the net results of fall in profits. A growing organisation cannot lay off people. The misconception spread amongst people needs to be set right. In case of solicitor firms outsourcing works in no way curb them from taking more work. Statistics are clear if a solicitor firm charges US$300 per hour from its clients for a contract review and accordingly pays US$150 to its in-house solicitor. There is a good margin but the same diminishes if the client is able to get the work done from another solicitor firm in half of the rates. But the truth lies in the fact that in case the solicitor firm outsources the work of contract review and the price of US$50 and the in-house solicitor simply vets the work received from the service provider. The client would be happy to pay the US$150 to the firm. In a way firm will also gain by cutting down the cost and marginally passing the benefit to the client.
Post a Comment