Posted Aug 12, 2008 07:54 pm CDT
In a trend that obviously has significant implications for law firms and their clients, banks increasing are arranging for much of their work to be done outside world financial centers and, often, offshore.
As they cut costs in a struggling economy, banks are also cutting jobs in New York, London and Hong Kong, according to the New York Times. However, many of these jobs aren’t completely eliminated—just shifted elsewhere. Banks are both hiring employees in less expensive cities and outsourcing work to third parties, the newspaper says.
“Proponents of the change say Wall Street’s wary embrace of the activity may signal the beginning of a profound shift in the way investment banks are structured, with everyone but the top deal makers, client representatives and the bank management permanently relocated to cheaper locales like India, the Philippines and Eastern Europe,” writes the Times.
The trend has taken off in the last five years, and firms that provide outsourcing services to banks say their business is up some 40 percent this year alone.
As discussed in earlier ABAJournal.com posts, law firms also are increasingly shifting less-skilled tasks and even work requiring some expertise to lower-cost and offshore sites.
“There’s a huge amount of grunt work that has been done by $250,000-a-year Wharton MBAs,” Andy Kessler, a former analyst and author of books about Wall Street tells the Times. “Some of that stuff, it’s natural to outsource it.”
ABAJournal.com: “Big UK Firms Hire Support Staff in India”
ABAJournal.com: “Indian Lawyers Handling Outsourced Work Do More Than Document Review”
ABAJournal.com: “Law Firms Will Have to Work Harder for Hefty Profits, Competitor Predicts”
ABAJournal.com: “Outsourcing Alternative: Law Firm Sets Up Own Shop in India
ABAJournal.com: “More Gen’l Counsels Mull Outsourcing Options”
Thelen Reid Loses Another Name Partner