This is the fourth post in our five-part series The 7 Deadly Sins of Corporate (Over)Spending: Breaking the Cycle of Legal Waste at Your Company. As reported earlier, many corporations and law firms have begun incorporating the cost- effective strategy of Legal Process Outsourcing (LPO) in order to break the cycle of Legal Waste at their companies. This post examines the latest trend in the LPO field– "Onshoring", sometimes referred to as "inshoring".
Onshoring (the opposite of offshoring) involves outsourcing work domestically. The decision of many companies to move back to the U.S. is attractive because the dissolving differential in labor rates between the U.S. and countries such as India no longer offsets the costs that companies bear in risk management, supervision, transportation, and customer satisfaction when moving offshore. Therefore, many companies are sending their work to small towns in the U.S. or to virtual America where the costs are low.
For example, the Los Angeles Times reports that Dell, Inc. once at the cutting edge of overseas outsourcing, opened a call center in Twin Falls, Idaho after customers complained about foreign workers' English-language skills. Another company, California-based Northrop, Inc. saved about 40% by basing its technical support in Corsicana, Texas rather than in Los Angeles – achieving savings similar to those realized by sending the jobs overseas. "We're getting very high quality and a dedicated workforce," said Thomas Shelman, President of Northrop's Information Technology Defense Group. Similarly, consulting firm Accenture is building a document-processing center on an Indian reservation in Oregon. "We're responding to the tremendous demand among Accenture clients for outsourcing services performed by professionals within the U.S.," said Randy Willis, a senior Accenture executive. Many companies are recognizing that for projects that require a higher degree of expertise, American onshore providers offer a better deal. For these reasons, many companies are reevaluating their decision to ship projects overseas, opting instead for U.S. based outsourcing companies.
There is, perhaps, no field more suitable for Onshoring than legal work. The skill, knowledge, and experience of U.S. attorneys working on American soil is very attractive to companies looking to outsource. The costs are kept low because the work is done in small-town America or by internet-based companies; yet the skills of the U.S.-based attorneys are high. Chicago-based McDermott, Will & Emery just got into trouble by using an outsourcing company that did not understand the nature of privileged documents. Using U.S. attorneys who understand the nuances and complexities of U.S. legal arguments serves to ease the mind of the company who is outsourcing its legal work. Furthermore, in the unlikely event of a problem, it is extremely beneficial to Onshore the work because the laws of the United States will be enforced.
For all of these reasons, Onshoring, the new LPO kid on the block, is here to stay.