Outsourcing Ventures 2008: Knowledge Services Industry to Sustain Growth

Wednesday, 19 November 2008

While the drivers and merits of offshoring knowledge services is well established, a pertinent question that is being asked is whether the growth estimates (of 30% to 40%) will still hold true in the current economic scenario. At a recent conference organized by Visiontekindia on Outsourcing Ventures at Pune on November 14th, the impact of economic downturn was debated at length. The conference primarily focused on two emerging areas within the knowledge services outsourcing industry, namely Legal services outsourcing and Research and Analytics outsourcing. The current global financial crisis and the slowdown in the US economy - these are challenging times for all business. And outsourcing industry is not an exception! However, the impact of slowdown on different sectors and businesses vary to a large extent. The speakers at the conference were optimistic about India's knowledge services outsourcing industry. Especially for legal services outsourcing, service providers view the current situation as an opportunity. According to Ganesh Natarajan, CEO, Mindcrest, "The number of lawsuits would result in greater work for Indian offshore legal service providers. Litigation and bankruptcy work will increase. From the law firms point of view the volume of work will even out. Some practices will see an increase in work while others will see a slowdown." Adds Arihant Patni, CEO, Bodhi Global Services, "While there will be a slow down in terms of decision making, services such as litigation support in general will see a spike in demand. However, the specific areas within litigation need to be identified. There is likely to be a slowdown in services such as legal research and contract review." While other segments within the knowledge services are feeling the pain from the economic downturn, legal services outsourcing is expecting newer opportunities. The Indian legal outsourcing industry is likely to see increasing demand in areas such as litigation support, legal compliance and contract management. While the US-based law firms will have problems responding to the changing market because of their costs and overhead structures, the current situation is likely to push law firms towards offshoring. Partnership with a local or offshore service provider will be critical at this point of time. Further, corporations will focus on containing costs and will push law firms to outsource/offshore more work. Research and analytics outsourcing is another segment where service providers see less severe impact. Analytics is typically used to help in strategy formulation and decision making. While financial research is witnessing a slowdown, service providers were of the opinion that analytics outsourcing will continue to see increase in business (if the service providers address the pain areas of their clients). This would mean aggressive marketing on the service providers' part. Some of the larger BPOs such as Infosys and Wipro discussed the importance of process skills in the context of legal and analytics outsourcing industry. Service providers should have stronger processes in place, which will enable them to break down larger tasks efficiently and effectively. Processes become even more significant as the service provider grows in size. There was also a debate on unlocking India's intellectual capital in order to speed up the growth of the industry. Service providers and academia talked about an urgent need to collectively tackle the problem of talent crunch and training. Says Aditya Khandekar, SG analytics, "There is a big difference between a good analyst and an average analyst. The good analyst is aware and keeps himself abreast of the happenings in his environment. An average analyst just takes the beaten path and is not able to reason." It was also agreed that while it is easier to find senior executives, India lacks a strong middle management layer. The knowledge services industry is driven by talented professionals and a key challenge in this industry is knowledge management. When people leave the organization, they take with them what they learn and hence, adequate knowledge management practices need to be put in place. According to Poonam Vasudeva, Delivery Head, LPO Services, "In order to be able to capture the addressable market for legal services, it is imperative for LPOs to start leveraging the BPO delivery model. Managing scale will only be possible if delivery and process frameworks are mature and stable. Moving from a vendor relationship to a partnership, looking at adding value through business transformation should be the key focus of the industry." While most of the segments under the business process outsourcing industry are reeling under the negative impact of a recessive US economy, stringent processes, innovative service offerings and aggressive marketing will enable the service providers to sustain growth.

 

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