Okay, so you are running a legal practice and you keep hearing about this thing about offshoring or outsourcing staff for it. Apparently, there are an increasing number of people doing it but you are not really sure what it is or how it works and the lawyer in you is naturally worried about all the downside risks (there must be lots!).
Firstly, offshoring and outsourcing are two completely different things. With outsourcing, you engage a third party to provide services to you and therefore lose control of your data and the detail of what is actually going on. Offshoring on the other hand is simply engaging staff to work directly for your firm in another country and no. you don’t need to go and set up an office there. Instead, you work through an intermediary who helps you find, engage, host and manage your staff. It works quite like a secondment arrangement where the staff are employed by the intermediary but then provided to you for your exclusive use and you have direct daily control over them.
So how could that work practically? The reality is that with the rapid development of available technology and the increasing demands of our staff for more flexible work arrangements, most firms already have all the basic systems in place that they will need to engage offshore staff. Whether it is emailing the work to be done to the offshore staff or allowing them to remotely connect to your server, there are a range of ways to deal with the connectivity issue. The combination of video conferencing, internet cameras and work collaboration tools also helps bridge the distance and when performed well, can almost be as seamless as having the staff working in your office. Additionally, with the increasing number of firms moving to largely paperless offices and the use of cloud-based IT services, the future possibilities are set to grow significantly.
So why think about doing this? The simple fact is that the legal services market is stagnant at best and clients are now demanding better value from their service providers. Firms must find ways to be more efficient. The potential cost savings from foreign labour are significant. On average, if you compare the total costs in Australia of engaging a staff member (including rent, electricity, support, wages, super, workers comp etc) against the total cost of engaging someone in the Philippines, the likely savings will be about 80%!
In addition, it’s not like this is something that’s new and untested – there are already a number of very large American law firms that have been doing this for years with significant savings. One of those firms, who have an excess of 500 staff in Manila, boasts annual savings of nearly USD$30M!
The functions which can be offshored easily include things such as WP, graphic design, data entry, data mining, search engine optimisation, finance, HR process support and IT support/help desks. If you are concerned about quality – don’t be. The Americans have been offshoring/outsourcing to the Philippines for nearly 30 years and there is a significant pool of highly trained workers who are currently working nightshift for American companies and would welcome the change and opportunity to work for you during the day.
So what happens next?
Whether we like it or not, the structure of the typical law firm is changing quickly. Initially, concepts such as offshoring will only be embraced by the more adventurous but eventually I suspect they will need to be engaged by all who simply wish to remain competitive.