To cope with softening demand for their services in the U.S., Indian outsourcing providers will need to diversify -- in their client bases, their choice of work locations and the services they offer.
Forward-thinking firms are adding clients in regions like Europe and Asia, moving some of the work typically done in India to lower-cost locales and adding new services that go beyond routine IT tasks.
It's the latter strategy that is leading Infosys Technologies to enter the legal process outsourcing (LPO) market, reports The Economic Times. Until now, according to the story, outsourcing giants largely shunned LPO work, leaving it for specialist firms like OfficeTiger, which took on a variety of legal tasks for DuPont in a big case against 10 insurers.
OfficeTiger's CEO tells BusinessWeek that law firms "historically have made much of their revenue on administrative and paralegal work you don't really need a lawyer to do." His company offers such services at a steep discount. According to the story, DuPont expects to shave up to $6 million from its annual $200 million-plus legal budget by employing outsourcers like OfficeTiger.
The CEO of Infosys' BPO business tells the Economic Times that his company studied the LPO market for eight months before deciding to launch the new line of business. Though it will be difficult to gain economies of scale with such niche work, the CEO says it will help build and solidify long-term strategic relationships with its clients -- a key to weathering economic downturns.
Infosys will have an LPO presence in both the U.S. and India. It hopes to employ 200 workers by fiscal year 2009, growing that number to 1,000 within five years, according to the Economic Times.
LPO is part of a broader knowledge process outsourcing market that one expert predicts could quadruple from its current value of $2.5 billion to $3 billion to up to $12 billion by 2o12.