Posted Dec 12, 2011 11:30 am CST
The cost of outsourced legal work is nearly as cheap in some parts of the United States as in India, according to a new report.
Contract lawyers in the Midwest are charging $25 to $30 an hour, while offshore outsourcing vendors charge $25 to $35 an hour, according to the report (PDF) by Fronterion, an international consulting firm for outsourced legal services. “Wage inflation abroad and soft labor markets domestically in the United States and United Kingdom have significantly narrowed the cost differential,” the report says.
The narrowing wage gap is also affecting companies outside the legal field, forcing them to pay more to run overseas operations. The report notes a salary survey by Aon Hewitt that projected wages in India would increase 13 percent in 2011.
The report, “Ten for 2012: Top 10 Trends in Legal Outsourcing,” includes these predictions:
• Legal outsourcing providers will see a profitability squeeze as they pay higher wages overseas while being forced to keep costs low.
• Legal outsourcing companies will increasingly pair software systems with lower-cost labor to provide cheaper and more efficient legal services. “In the long term, certain manual [legal process outsourcing] services may become automated or eliminated altogether by computer programs which cost less than even the cheapest worker,” the report says.
• Law firms will increasingly use legal outsourcing vendors in response to clients’ request for proposals, and in-house law departments will increasingly contract directly with legal vendors.
• Law firms will continue to adopt outsourcing approaches. “The start of this trend has already been seen in 2011 with a number of law firms making landmark announcements concerning their establishment of wholly‐owned captive centers,” the report says.