Recession in US is good news for LPOs in India

At least one section of industry isn’t unhappy about the meltdown. The recession in the US is good news for the $200-250 million legal

process outsourcing (LPO) industry in India.

While outsourcing of litigation work from the US and Europe has increased considerably, what is interesting is new forms of businesses like risk management, corporate compliance and know-your-customer (KYC) guidance work from a number of global corporates that have come up.

Companies like Pangea3, UnitedLex and CPA Global consider risk management and compliance a high growth area. UnitedLex’ risk team in India has seen a five-fold growth in the last six months. This is prompting them to hire at a time when other sectors are either freezing recruitments or are firing.

“Regardless of the extent of recession, the regulatory environment will only become more strict so companies will need to comply,” says the co-CEO of Pangea3, Sanjay Kamlani. The LPO setup a new risk management and assurance group recently and this work is already 15% of Pangea3’s overall business.

In today’s scenario, companies want to know their risk profile so that they can disclose and be transparent in order to comply with regulations.

“We are working with a large heavy-machinery manufacturer in the US to understand the risk associated with the thousands of contracts they have with their vendors and suppliers,” says UnitedLex chief solution provider Ajay Agrawal.

With more of this kind of work coming in, they have scaled up their operations and have gone from 98 to 330 employees in India.

CPA Global’s India country head Bhaskar Bagchi says that the industry has been growing at a very fast pace and the current economic situation is a catalyst for even faster growth as corporates start to put pressure on the billing rates of international law firms.

“Huge amount of work related to the recession is in the dialogue stage for us,” he adds. The company is in the process of taking its headcount up from the current 450 to 1,200 by July.

Mr Kamlani feels that as work on the $700-billion troubled asset relief programme (TARP) with which the US treasury department plans to purchase distressed assets, especially mortgage-backed securities from the country’s banks starts, Indian LPOs could see a could see a lot more business. Mr Agrawal says, “This is a Y2K kind of an opportunity for us.”

Source: EconomicTimes