Banks Be Movin’

We’ve long felt that the growing onshore trend is one of the most under-reported issues in the legal outsourcing industry today. But what can we exact from the onshoring trend going forward?

 

An article recently published in the New York Times outlined how the growing onshoring developments are also visibly manifesting in the financial sector. According to the New York Times, banks are fundamentally reassessing which types of support work can be more economically performed outside of major metropolitan areas. Headcounts at large investment banks are booming in areas such as Salt Lake City, North Carolina and Jacksonville, Florida while they stagnate in major financial hubs, such as New York City.

 

Many look to the financial industry as innovators in the professional services industry – historically early adaptors in new technology platforms and offshoring – so these developments weigh heavily on other professional service segments, such as legal.

 

The developments leading to these onshoring trends have not gone undetected. As reported in the Wall Street Journal and Fronterion’s own annual 2012 trending report, onshoring in the legal industry has gained shared acceptance in the UK (Herbert Smith, Allen & Overy), as well as the US (WilmerHale, Orrick).

 

While offshore destinations such as India and the Philippines have recently become relatively less attractive, it is important to note that onshoring further reinforces the legal process outsourcing trend.

 

Fronterion defines legal outsourcing as the, “integration of process and the application of technology to the delivery of legal and legal support services by third-party providers.” Fronterion has long felt that categorizing these innovations by purely by offshore destinations is grave disservice to the LPO industry, but also misses the lion’s share of the value proposition (hopefully) provided by LPO vendors. Access to scalability, focused expertise, consistent work product, and innovation, to name a few.

 

As law firms and legal departments seek to reassess their resource allocation strategy similar to the banks mentioned in the New York Times article above, it is important to develop a strategy to first recognize and then retain the value created by legal process outsourcing, even if the work is performed domestically.

 

With the supporting trends of depressed labor rates domestically and wage inflation abroad, those in the legal industry may want to keep an eye on where those banks be movin’…

 

Written by Fronterion