“Outsourcing” is just a label for the distribution of functions into the hands best equipped to perform them at the lowest cost. Both the functions and the relative costs change over time and need constant re-evaluation. Cost reduction involves more than the lowest rates, and the right marriage of skills does not necessarily require foreign adventures.
I wonder if it was wise of me to write about outsourcing (Do two outsourcing stories in one week presage a trend?). Every mom and pop coding shop from the Himalayas to Kanyakuman has been ringing me up – well, two of them anyway and that is two too many – trying to press their services on me. I had thought that I had seen them off last year.
I object to these calls on so many levels, none of which stems directly from the fact that they emanate from India. One is their grapeshot nature – the fact that the word “litigation” appears on my website seems to warrant picking up the phone to me, without any attempt to determine whether my role is likely to involve outsourcing coding work (it does not). Another is the lack of any attempt by the caller to distinguish his company’s services from the hundreds of others offering similar services; each of them recites some basic litigation support functions as if they had just invented the concept, and if you ask the for something, anything, which makes the caller’s company better than (or even just different from) any other, this is taken as an invitation to start from the top again with the recital of basic functions. I resent the repeated calls – either they are not bothering to record the answer I gave last time or they hope to batter me into submission; perhaps they hope to catch me out in an unguarded moment so that I inadvertently send them a big job. Above all, I reckon that if you are ringing up somebody in England, you should choose someone with a basic grasp of English to make the call. If the salesmen cannot speak English clearly, what might I expect from the technicians if I sent them a job to do?
Despite all this, and the time it takes me to retrieve the threads which were running in my head before the call, I am generally polite in seeing them off (where the Eton-and-Oxford-educated leader of Her Majesty’s Opposition would presumably say “P*** off you T**t” – that story is here if you missed it).
None of this derogates from the fact that a great deal of perfectly good coding work has been done in India, placed there most usually from the US where privacy obligations are less of a concern. The only prudent routes to it, however, are either through a home-based services provider or law firm who has done the legwork and who will be responsible for the QA, or by setting up your own facility. It is these two approaches which were the subject of my recent post.
By chance, the Pinsent Masons and Rio Tinto stories were followed almost immediately by one on the front page of The Times. Headed Union fury as civil service outsources work to India , the article concerns 100 or so jobs at the British Council which are, apparently, to be sent abroad. The unions are pissed off (as David Cameron would presumably put it) partly because it is their job to stand up for British workers and partly because the plan seems to fly in the face of Gordon Brown’s assurances about “British jobs for British people” at a time when the numbers of unemployed are heading northwards in the way they always seem to at the fag end of a Labour government.
What is interesting about this is not that Gordon Brown has broken a promise – that is hardly news – but that the British government appears to be behind the trend in outsourcing work just now. The same edition of The Times carries a story Here, there and everywhere in the drive to trim costs which reports that BT is bringing jobs back from India to the UK, and for hard-nosed business reasons. Recession creates a new workforce in the UK; the depressed value of sterling alters the balance; quality is hard to control.
These factors are as relevant to litigation support work as they are to accounting, IT and manufacturing. I picked up two or three reactions to my story about Pinsents and Rio Tinto to the effect that the rate of outsourcing such jobs from the US had stalled and may be in reverse. It will be some time before we get statistics to back the anecdotes, but there were already suggestions that outsourcing companies (and Indian ones in particular) were beginning to price themselves out of the market, even before law firm job cuts increased the pool (and cut the hourly rates) of home-based contract workers. There were also, it has to be said, increasing concerns about quality, but it is hard to tell whether these were based on actual experience or simply on the relative ease of supervising US-based contract workers.
Anything which reduces the hourly rates for what might be called “mechanical” tasks must be taken seriously and, while I may not think much of their marketing methods, I cannot ignore the potential value proposition made by outsource companies whether in India or elsewhere. There are, of course, several components in the cost of handling litigation documents and I am more interested (that is, I find the subject more interesting) in rule changes, procedural improvements, and the sensible use of technology than in the dull (however important) business of finding coders who will work for a few groats less per hour. I wrote recently about the benefits of working alliances formed between lawyers and domestic suppliers of litigation software and services (Outsource disclosure and share the load). What I envisaged was a joint approach made to potential clients by lawyers and providers who presented themselves as a team, used to working with each other and able to make savings by stream-lined processes and bulk-bought facilities.
Bang on cue, information retrieval company H5 has announced an alliance with O’Melveny & Myers LLP to work in exactly this way. The press release is here, and I have a telephone call booked for later this week to find out more.
Given the nature of the two businesses involved, this has the makings of a sophisticated machine which, as the press release puts it, will provide a “highly effective and economical model for document review”. It is not a prerequisite for the joint approach which I had in mind in my article that either the litigation or the co-operating businesses be as high-end as this. Any competent litigation practice could team up tomorrow with a good litigation support provider and draw on the skills and the client bases of both to the benefit of both themselves and their clients. That may lead, eventually, to the development of hybrid professional services firms of the kind envisaged in the Legal Services Act 2007. It is not necessary to go that far for a combination of legal and technical skills to be both a client-winner and a case-winner.
It seems likely that other law firms will follow Pinsent Masons’ example and strike up alliances with high calibre offshore service providers. Few, I think, will place work on an ad hoc basis with people like my cold callers. It seems sensible, however, for law firms to open discussions with one or more of the better known UK service providers. Their alliances do not necessarily have to have the formal appearance of the one which O’Melveny & Myers appear to have set up with H5, merely the message for clients that the right combination of skills is available at the best possible price.
As an aside, I have to say that I am all in favour of exporting some civil service jobs, preferably along with their holders. The Atticus column in the Sunday Times has a regular feature called “Jobs we cannot afford”. A recent one told of a Treasury advertisement for a “head of common delivery enablers” of which it said:
“Any idea what that is? The advert itself gives few clues. The successful candidate, it says, will concentrate on ‘common delivery mechanisms and spend management solutions, category and supplier relationship management, and stakeholder engagement approaches’. Under civil service rules, the job is also available in English”.
It is the stuff of nightmares isn’t it? You could team up an English civil servant of the kind qualified to perform (or even understand) the job described in this advertisement with the chap who rang me yesterday. They could cold-call people at work and make “stakeholder engagement approaches”. There was an article in The Times a couple of days ago by some union baron, explaining that a large and well paid civil service was needed because its pension contributions are funding the pensions of retired civil servants. Put like that, the entire civil service is a giant state-backed Ponzi scheme and (as we half-guessed from their titles) these new posts are just labels – you could shuffle the words of the job description above into almost any order and the function to be performed would be no more or less clear.
As I have just shown, civil servants and Indian outsourcing companies have one characteristic at least in common with lawyers and technology suppliers – it is easy to tar them all with the same brush and to assume the worst of all of them. I criticise the outsourcers because they make no real attempt to distinguish their service offerings from that of their rivals. Pinsent Masons’ bold step stands out because they have managed to convey the message that the clients, and not just the firm’s bottom line, will benefit from their outsourcing initiative. H5 and O’Melveny & Myers have the potential to achieve the same with their joint initiative.
The label “outsourcing” can be as meaningless as a civil servant’s job title. What matters to the client, even in these hard times, is not so much the absolute lowest cost of every hour (although he may describe it as such) as the conviction that every hour and every pound clocked up on his behalf is the minimum needed to achieve his objective. A lawyer who “knows a bit about technology” is no more attractive than a technology supplier who “knows a bit of law”. A combination of the two, each bringing their skills to the relevant part of the job at a charging rate appropriate to the job, is a much more attractive selling proposition.