New Delhi, Nov 29 : Facing the heat of recessionary pressure, India's legal process outsourcing (LPO) industry is likely to see a decline in revenue and is expected to reachUSD 440 million dollars (around Rs 2,000 crore) by 2010 end, a report said.
According to a report by business intelligence & research firm ValueNotes, global economic downturn has slowed down LPO industry and is changing the service provider's landscape.
"Revenues from the offshore legal services industry were USD 320 million for 2008 and are expected to reach USD 440 million by 2010 end," it said.
The offshore legal services industry grew at a rapid pace until 2007. However, the slow down in buyer market impacted the offshore industry resulting in falling growth rate.
The industry that was growing at a compound annual growth rate (CAGR) of over 40 per cent over the last four years until 2007, dropped to 28 per cent in 2007-08, and further reduced to 16 per cent for 2008-09.
The fall is pri marily due to recessionary cost pressures impacting the global legal services market and the subsequent affect on the number and value of offshoring contracts, the report said.
However, industry experts are hopeful about the future of Indian LPO sector.
According to Neeraja Kandala, a legal services analyst, "while revenue estimates till 2010 are not very encouraging, we believe the slowdown is short term. Post 2010, we expect the industry to pick up pace as the global economy recovers."
Post 2010, we will see consolidation in the industry with larger players acquiring capacity and capability, as well as global law firms looking for control over India capacity, the report said.
Echoing similar views, Mumbai-based LPO company Pangea3 Co-CEO Sanjay Kamlani said, "we have been seeing growth of more than 100 per cent every 6 months and anticipate a continuation of this trend."
The ambit of LPO industry includes work outsourced is a mix of legal services as well as paralegal work.
"The work includes day to day contract drafting, M&A due diligence, electronic discovery that includes IP litigation, legal research and patent drafting," Kamlani said.
The uncertain economic conditions resulted in many weaker players fading away from the competitive landscape. Over the last two years, more than 20 per cent of the total number of service providers in industry discontinued their operations, the report said.
"While there are various reasons for these shut downs, the economic slowdown added to the troubles of some of the service providers," analyst & co-author of the report, titled"Legal Process Outsourcing: Crisis Creates New Opportunities for LPOs", Suheil Patel said.
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