Once again, India's IT industry may be offering inspiration and lessons for legal outsourcing / LPO / legal services KPO companies. Defying the myth that IT outsourcing to India is limited to "back office" functions like programming and coding, i.e., implementing ideas created in the West, several hundred small Indian IT start-ups are developing world-class products of their own. Even the Obama Administration is using them for U.S. government websites (while pretending to be against outsourcing, during the political silly season). Also, this "third wave of India's IT revolution" (as the trade association NASSCOM is calling it) is not happening in the traditional Indian metro tech hubs like Bangalore or Pune. Instead, it is emerging from small towns and otherwise neglected cities.
The Times of India reports as follows:
The Indian IT/ITeS industry may lately have been at the receiving end of US President Barrack Obama's protectionist policies, but when it comes to US government websites, Obama and his boys rely on made-in-India software like FusionCharts for data visualization.
Surprisingly, FusionCharts is no big-ticket tech firm out of one of India's hot and happening IT hubs. Little known back home in India but popular abroad, this niche software firm is just a 30-member outfit based out of Kolkata from where it caters to its Fortune 500 clientele across 110 countries. Even as some of India's IT biggies await Obama's next move in his increasingly protectionist agenda, a small but rising number of Indian startups like FusionCharts, Zoho, salaree.com, tringme, deskaway, kayako are storming the US and world markets, without so much as moving out of their cubicles in India. Some of these are not even based out of traditional tech hubs like Bangalore and Pune, but are catering to global biggies from their small-town centres in Jalandar and Noida. Nasscom has hailed these startups as the third wave of India's IT revolution.
Nasscom estimates that there are over 650 such start-ups in India involved in product development, of which nearly 100 have burst onto the scene in just the past three years.
Nasscom chief Som Mittal has pegged the young tech product development industry in India at $12 billion by 2015.
Unlike the Silicon Valley "me-toos" of the past, this new breed of tech companies are building products that are lean, indigenous and world-class, say experts. "A lot of our talent is wasted in the services sector. Product development, especially on the internet is the future; it is location agnostic and will bring us recognition, credibility and unlimited non-linear growth," says Pallav Nadhani, who co-founded FusionCharts in 2002 as a 17-year-old.
This inspiring development may contain lessons and analogies for India's burgeoning legal process outsourcing industry as well. Is it any accident that the two highest-ranked outsourcing companies in the world for 2010, American Discovery and SDD Global Solutions, are relatively small LPOs? In an article entitled "For LPO Clients, Small Is Beautiful," MSN cites the recent Black Book of Outsourcing survey as evidence that from the point of view of legal outsourcing clients, bigger is not better:
Global companies outsourcing their legal processes across the world seem to prefer doing business with smaller companies, the results of a new survey suggests. The survey conducted across 6,547 clients globally shows that smaller vendors, including legal outsourcing, LPO and legal KPO companies are satisfying more clients and to a greater degree compared to their larger counterparts.
And is it an accident that legal outsourcing company / LPO / legal services KPO SDD Global, which won the top client survey honors in India (in a survey in which over 2700 vendors were evaluated), has been focusing not on "back office" functions, but rather on high-end, high-value, "front office" work such as sophisticated legal research, analysis, drafting, and editing? Here's what the MSN article reports, dovetailing the previous article in the Times of India:
Says [Eamonn] Kennedy, [research director for the Black Book of Outsourcing, which conducted the survey]: "Smaller outsourcing providers like SDD Global have been pushing their specialist knowledge and deep client understanding as their unique selling point for some time now, claiming that specialists provide a better service. While all outsourcers talk up their ability to specialize, this survey suggests that SDD Global and other relatively small players are best positioned to deliver on that promise."
Also interesting is the fact that SDD Global is headquartered in the relatively small, "Tier 2" city of Mysore, rather than in one of the more costly, congested, metro "hubs," which are supposed to be the center of outsourcing revolution. Hmmm. Could someone remind us why it is better to be located in cities where the cost of living is double or more, where office rents are comparable to expensive Western cities, and where employees spend up to four hours each day commuting to and from work, such that their social life occurs mostly in cars, buses and trains? And if metros are "better," then why are smaller cities and towns generating the third wave of the Indian IT revolution?