A Research Report on

“New market opportunities for BPOs in legal & equity

Research outsourcing.”

Submitted in partial fulfillment of the requirements of

the MBA Degree Bangalore University

Submitted by
Mahesh B Patil

Register Number
05XQCM6043

Under the guidance of

Prof. Jai Raj Nair

M P BIRLA INSTITUTE OF MANAGEMENT

(Associate Bharatiya Vidya Bhavan)
43, Race Course Road, Bangalore-560001
2005-07
 DECLARATION

I hereby declare that the project report titled “New market

opportunities for BPOs in legal & equity Research outsourcing”
is a record of independent work carried towards the partial fulfillment
of the requirements for the Masters Degree in Business
Administration course of Bangalore University, at M.P. Birla Institute
of Management Associate Bharatiya Vidya Bhavan, Bangalore –
560001.

This has not been submitted for the purpose of an award or degree of
any other institution.

Place: Bangalore. (MAHESH PATIL)

Date: (Register Number: 05XQCM6043)
 ACKNOWLEDGEMENT

A teacher is a perennial source of inspiration and guidance in all the

academic activities of his students throughout. I whole-heartedly
extend my deep and sincere gratitude to Prof. Jai Raj Nair, faculty
for System, MPBIM, for his continuous guidance and help provided
for completing this research study.

I am also grateful to Dr N S Malavalli, Principal, M.P Birla Institute of

Management for his full support and encouragement while I was
conducting this research.

I am also thankful to Prof. S.S. Santhanam, M.P Birla Institute of

Management for sharing his expertise in the field of Statistics with me
whenever I approached him.

I also express my gratitude to all friends and family members for

extending their helping hand whenever I approached them. Without
their help this research could not have been presented in a proper
manner.

MAHESH PATIL
 GUIDE CERTIFICATE
This is to certify that the dissertation entitled “New market
opportunities for BPOs in legal & equity research outsourcing”
is an original study conducted by Mahesh Patil, bearing register
number 05XQCM6043, of M. P. Birla Institute of Management,
Associate Bharatiya Vidya Bhavan, under my guidance. This has not
formed the basis for the award of any Degree/Diploma by Bangalore
University or any other University.

Place: Bangalore
Date Prof. Jai Raj Nair
 PRINCIPAL’S CERTIFICATE

This is to certify that this report titled “New market opportunities for
BPOs in legal & equity research outsourcing” is the result of
project work undergone by Mahesh Patil, bearing the Register
Number 05XQCM6043, under the guidance of Prof. Jai Raj Nair.
This has not formed a basis for the award of any Degree/Diploma for
any University.

Place : Bangalore
Date : Dr. Nagesh.S.Malavalli
Abstract:
Having made an indelible mark in the global BPO business, Indian IT and ITeS
sector is now thriving in Knowledge Process Outsourcing (KPO). RNCOS, in its
market research report "KPO - The New Outsourcing Avenue for Indian BPO
Market" estimates that the world BPO market is worth US $234 billion with the
contribution from India, worth $5.7 billion. The Indian BPO industry includes basic
data and market research, equity research, management, engineering design,
animation and simulation, medical content & services and education and
publishing. India as a major KPO player in the world has inherent advantages
because of its intellectual and Internet resource. The resulting economic success
of the BPO industry has taken many firms to their advanced knowledge work to
off shore destinations.

The Indian KPO sector has immense opportunities for the SMEs. The SMEs can
change their costs as per the short-term demands, which can create new
business models. This market research report presents the evolution of KPO
market in India, tuned for the growing offshore business. The report analyzes the
demand and supply, new opportunities and challenges faced by the KPO
industry.

This study is an attempt to identify the new market opportunities for BPOs in the
areas of Legal process outsourcing and Equity Research Outsourcing
REPORT HIGHLIGHTS

• Overview of the BPO and KPO industry and its key economic indicators.
• Study of the present global scenario, Indian BPO and KPO scenario, and
a clear roadmap ahead for the new entrants and present operators.
Presentation of a vertical industry perspective and forecasts by corporate
functions.
• Highlights of the NASSCOM initiatives and strategies.
• BPO market size and growth by sectors, BPO companies' shares,
employment opportunities and attrition rate.
• Comparison of Indian BPO sector with other leading BPO countries like
China, Russia, Philippines, Ireland, Canada and more.
• Challenges and threats faced by the Indian BPO industry in current
economic standards.
• Recent developments and current issues in the industry.
 CHAPTER 1

INTRODUCTION
What is outsourcing?

Outsourcing is the transfer or delegation to an external service provider the

operation and day-to-day management of a business process. The customer
receives a service that performs a distinct business function that fits into the
customer's overall business operations.

There are two principal types: "traditional" outsourcing and "Greenfield"

outsourcing.

In "traditional" outsourcing, employees of an enterprise cease to perform the

same jobs to the enterprise. Rather, tasks are identified that need to be
performed, and the employees are normally hired by the service provider. For
example, an information technology outsourcing may include a transfer of
responsibility for management of data centers and networks (LAN, WAN, and
telecommunications). In the field of facilities management, individuals acting as
property managers might become employees of a facilities management
company.

In "Greenfield" outsourcing, the enterprise changes its business processes

without any hiring of personnel by the service provider. For example, the
enterprise might hire a startup company to provide a new service, such as
wireless remote computing, that was not previously managed internally.
1. Legal Outsourcing

Legal outsourcing refers to the practice of a law firm obtaining legal support
services from an outside law firm or legal support services company. When the
outsourced entity is based in another country the practice is sometimes called
Offshoring.

Legal Outsourcing has gained tremendous ground in the past few years in the
United States. Legal Outsourcing companies, primarily from India , have had
success by providing services such as document review, legal research and
writing, drafting of pleadings and briefs and providing patent services.

In-house law departments of some multinational firms such as DuPont , General

Electric, United Technologies, Bayer, Microsoft, Cisco, Oracle Corporation and
Sun Microsystems have been using legal outsourcing for many years.

India has a huge potential in the legal outsourcing market. A study by Forrester
places the number of jobs in the field increasing to 79,000 by 2015. Though India
had earned over $6.7 billion in United States-based outsourcing services such as
software and call centers,as of March 2005, the field of legal outsourcing has
been largely untapped owing primarily to the complexity of the work and the
fragmentation of the legal market in the United States.

The biggest criticism to legal outsourcing is the distinction of legal work as being
complex and specialized to the particular jurisdiction in which a client seeks
representation. Unlike other types of outsourcing the practice of law remains
constrained by ethical and technical difficulties. Lawyers in the United States, for
example, are limited to practice in the federal court system and in the state court
system in which they have passed their BAR exam. This means that direct
outsourcing of law work, such as representation in court, remains in the hands of
lawyers in those particular countries. This leaves business process outsourcing
as perhaps the most lucrative area in legal outsourcing. Legal outsourcing,
therefore, consists of general accounting, forensic accounting, legal drafting,
legal research, document sifting, forensic analysis of administrative
communications and printed material, as well as secretarial and administrative
tasks. Nevertheless, many criticisms have been leveled at even this kind of BPO
work done by outsourcing corporations.

Criticism of legal business process outsourcing consists of two kinds of

complaints. The first is leveled at law firms utilizing these kinds of outsourcing
services. It is alleged by many in the legal profession that firms that outsource
their client’s work risk loosing control over the quality of the work. The risk of
loosing quality is substantially larger with legal outsourcing than with other kinds
of outsourcing because of the combination of forensic, technical and legal skills
that many clients require from a law firm in order to successfully deliver on a
client’s request. A successful use of BPO by a legal firm requires constant
communication and supervision. Moreover, since most of this work is being done
in offshore locations this creates its own difficulties. The caliber of the people
working at many offshore locations is suspect as they may not have the requisite
experience that is needed to complete a client’s request. It has been noticed by
legal firms that outsource on a regular basis, that the easier the work that is
outsourced the better the value of any such outsourcing. Thus, standardized
work, such as non-forensic accounting, the drafting of straight forward legal
documents from templates etc. have had much more success than more
complicated and analytical work process that requires long term experience,
supervision and a level of comfort in communication that comes through time
which BPO has yet to match.

The second type of complaint leveled at legal outsourcing primarily comes from
ethical issues related to the confidential nature of the client’s work that is
normally found in a legal firm. Most firms have to handle sensitive and protected
information that has great value to the client and in many cases to the client’s
competitors. Outsourcing usually entails the employment of workers in offshore
locations where compensation is drastically lower. This means that the workers
handling most of the law firm’s important documents have an economic incentive
to transfer the information into the hands of the highest bidder. Other types of
outsourcing also uncovers similar issues but unlike the development of software,
legal work consists of quantifiable and finished documents whose transfer is both
more viable and the transfer of which might not raise red flags. For example a
piece of software under development in an offshore location might consist of
already protected and published pieces that are hard to steal or transfer. Legal
work, on the other hand, consists mainly of pieces of intangible information that
are floating around that can easily be exploited without much warning as to its
compromised status. In many cases legal work is more susceptible than other
kinds of outsourced work since it consists of easily identifiable clientele on the
other side of the litigation for the purchase of information.
2.Equity Research Outsourcing

If numbers are anything to go by, then the KPO industry will help create a very
bright future for India. The story of the KPO’s is fairly new and KPO’s might not
be very large, however the numbers predicted are huge.

The Mckinsey Global Institute estimates that the volume of offshore outsourcing
will increase by 30 to 40 % for the next 5 years. 3.3 million Jobs will be generated
overall by the year 2015. Deloitte research predicts the outsourcing of 2 million
financial sector jobs by 2009.

In this scenario, India will act as the primordial sea using its biggest strength -that
is a supply of at least 2 million graduates and 300,000 Post Graduates - to help
the KPO industry evolve into a mass job generator. There are many countries in
the race. However, today all roads lead to India.
Primary reasons for such an attraction being the cost of labour, which is
significantly lower than in the West and that India is, tested ground. Through its
BPO and IT industries, India has proven that it can deliver high quality services.

Equity research is one of the key areas in which KPO will flourish. On average
Wall Street is losing $ 4 billion a year on producing equity research. To save on
costs and to increase their value proposition to clients, Wall Street is discovering
the value proposition of operating in low cost countries.

Many global investment banks have also been quietly building their back office
research in India. No matter how cost effective a back office in India might prove
to be it is still a field where experts can establish themselves and carve a niche
for themselves attaining marked professionalism. Copal Partners is one such firm
having complete expertise in the financial research outsourcing market
Joel Perlman, Co-founder and President of Copal Partners says, “Outsourcing is
a very good thing for India. It will totally change the Indian economy. In 10 years,
India will have become the knowledge center of the world. And it will not be
because India is cheaper (this will go away), but because India has the scale in
terms of people.”
CHAPTER 2

REVIEW OF
LITERATURE
LEGAL OUTSOURCING

Legal outsourcing refers to the practice of a law firm obtaining legal support
services from an outside law firm or legal support services company. When the
outsourced entity is based in another country the practice is sometimes called
Offshoring.

Legal Outsourcing has gained tremendous ground in the past few years in the
United States. Legal Outsourcing companies, primarily from India, have had
success by providing services such as document review, legal research and
writing, drafting of pleadings and briefs and providing patent services.

India has a huge potential in the legal outsourcing market. A study by Forrester
places the number of jobs in the field increasing to 79,000 by 2015. Though India
had earned over $6.7 billion in United States-based outsourcing services such as
software and call centers, as of March 2005, the field of legal outsourcing has
been largely untapped owing primarily to the complexity of the work and the
fragmentation of the legal market in the United States.

Outsourcing is gradually becoming the backbone of Indian service sectors. In the

last fiscal India earned $6.7 billion by providing services in software, technology
and manufacturing outsourcing. The benefit of the outsourcing companies in the
US would translate into a cost saving of about 10% to 12%. The potential of the
Indian resources to absorb the increasing demand in legal outsourcing is
because India enjoys the economic advantages of the wage difference and less
perks and overheads,” the report says.

National Association of Software and Service Companies (Nasscom) also

projected that legal processing outsourcing providers (LPOs) in India will soon
rise up to three to four billion dollar.
However, this glossy figure has many challenges ahead. The most important
challenge to the newly born sector is the need for Indian lawyers to pass US bar
exams, conflict of interest rules, and data security.

Legal Process Outsourcing (LPO), a niche segment within the Knowledge

Process Outsourcing (KPO) space, is attracting international law firms who are
outsourcing legal work to India. Within the LPO industry, it is patent outsourcing,
which is catching up faster than the rest of LPO jobs.

While major firms in the US quote up to $15,000 for preparing and filing a patent
application, companies based in India deliver the same work for $2,500-3,500 in
India. This allows companies to file additional patents within the same budgets.

Patent outsourcing includes technical research, proof reading, prior article

search, drafting patent application, patent amendments among others. This
includes a huge amount of research for patents being filed in US courts. Some
Indian companies have already targeted the opportunity, specialising in patent
outsourcing.

It is not just pharma, but also engineering companies who need to patent their
designs. Some multinational engineering companies with captive engineering
design centres in India are already off shoring patent research and filing.
According to Nasscom estimates, the legal offshoring segment of the Indian BPO
industry is worth about $60-80m. It also estimates that the industry has about 50-
60 firms that employ about 700 lawyers. Though cost arbitrage is definitely the
most attractive proposition, patent work is coming to India as US and UK law
firms are facing a talent crunch.

It is estimated that about 35,000 attorneys in the US work on intellectual

property-related issues, but the increasing workload will ensure more off shoring
for non-core services. Many companies too are cashing on this trend.
LPO salaries range from Rs. 25,000-30,000 per month for a fresh law graduate.
Interestingly, players in the segment say that the curriculum in Indian law
colleges is comprehensive. Looking at the growth opportunity, LPOs are keen to
move up into patent outsourcing.

Legal Business Process Outsourcing service helps Law Firm's to increase there
service value by outsourcing low end legal work to LPO firms and freeing
attorney's to concentrate on specialized legal BPO services. It is a way of
transforming law firms into a more effective organization.

In today's competitive, worldwide legal market; effective legal support requires a

combination of legal capabilities: the ability to deliver highest quality, clearly
stated legal BPO service, deep knowledge of client markets and their individual
commercial and regulatory standards; acceptance by regulators; and perhaps
most importantly, common sense understanding of the client's commercial
objectives. When you require legal BPO Service in relation to: Transcription,
Coding, Document Management, Scoping, Billing, Secretarial and Paralegal bpo
services; state of the art service is available from these providers who have a
team of experts.

As a full service Legal resource, such firms offer specialized solutions across the
broad and diverse legal marketplace – From small boutique practices to regional
and national law firms..

The gamuts of Service Offering in Legal BPO are the following.

Legal Transcription

Offers accurate tape and digital voice transcriptions for Law firms. Transcribes
your audio files (wav, vox, dss, mp3, etc.) all within a 12-hour period or as per the
client requirement with an accuracy rate of 98.7%. These firms have expertise in
transcribing for all known specialties. Delivery of transcripts is by secure Email or
through FTP.
These firms go to great lengths to control the quality of their transcription service.
All their transcriptionists have excellent legal terms knowledge and typing ability.
They have attorneys from the top Indian law schools, having at least three years
of legal Practice experience. Their final quality control screen is done by
Experienced Attorneys, who thoroughly review the work for accuracy and proper
format.

Document Management

Database developers work with the law firm's legal team to design a custom
database to provide efficient and secure document access. They ensure that
their database solutions meet their client’s document management needs, and
are backed up according to industry standards.

Legal Billing

These firms’ accounting personnel will be responsible for processing attorney

time sheets and related billing functions. Billing scheme is flexible, accurate.
They have standard billing as well as client specific on case to case basis.

Legal coding

Smart intuitive coding and indexing documents can give law firms a competitive
edge in a case and in the courtroom. These firms assist the client in developing
the coding specifications. Typical fields include Bates Numbers, Attachment
Range, Document Title, Author, Recipient, Names in Text, Dates, Document
Type and Document Characteristics.

Scoping & Court Reporting Services

Their team of experienced scopists have extensive experience in the legal arena
such as that of expert witnesses and patent infringements etc. They can handle
heavy technical work and will always research any and all unfamiliar names and
terms. Court reporting service that they offer is done through experienced , fast ,
reliable and certified/licensed professionals specializing in medical malpractice;
patent law; construction defect liability; product liability; conventions;
administrative hearings; seminars; conferences; meetings; arbitrations etc.

Legal Translation

Language Services combines a large in-house translation staff with helpful,

personalized attention in order to provide clients with a service that responds to
their language needs. Whether you require the translation of a summons and
complaint or the transcription of an evidentiary tape, they provide professional
solutions. They also assist on special projects such as the preliminary review of
foreign language documents in discovery, and research on foreign language
legal texts.

Data Entry Service

Legal data entry services can eliminate document overload by taking your hard
copy data of depositions, hearings, arbitrations, meetings, and other events etc
that need to be documented and moving it into a workable database. Enabling
better control over your law firms information and regulate knowledge
management more efficiently in all aspects of your business. Online data entry
services will accelerate business processes by collecting paper documents and
turning them into accurate information for your business applications and
databases.

These firms go to great lengths to control the quality of our services. All their data
entry personnel have excellent legal terms knowledge and research ability.
Experienced Attorneys, do quality control from top Indian law schools, having at
least three years of legal practice experience. Attorneys thoroughly review the
work for accuracy and proper format.
Secretarial and Paralegal BPO services

It includes a range of paralegal bpo services which include processing claims,

data entry, proofreading services, document review, deposition digesting and
shepardizing cases.

e Filing Service

e Filing Service offers a world class electronic return and payment submission
solution to attorneys and corporate counsels for Incorporation submission etc..
The state of the art technology solution evolved in house for form processing can
handle real time, on demand requirements. Electronic applications received via
the electronic form service are transferred from the XML server to the back-end
system, which makes encoding and data entry unnecessary.

OCR & Scanning Service

They pride on their ability to meet clients' document imaging needs. They use the
latest scanning technology and documents will be scanned to standard TIFF,
PDF or other formats to meet the client's specific needs.
Legal work outsourcing potential waiting to be tapped'

RIGHT from filing patents to drafting transnational contracts to creating

necessary information back-up for global corporations in litigations and providing
support in contract management - - ,one can outsource a wide range of legal
work, bringing in similar scale of economies that business process outsourcing
brings to companies.

Indian companies have come of age offering legal outsourcing and making a
difference. They are eyeing the $200 billion US market. Significantly, while there
are different projections as to what is in store for the Indian market place, one
estimate by Forrester puts this at about $3.9 billion by 2010.

Interestingly, this is not just about attorneys, law grads or practicing professionals
of law at the bar alone. A host of other professions such as engineers and
technology experts would be part of this trend, bringing in different domains and
pooling resources to provide the end product and service.

The co-founder, Chairman of Pangea3, a legal outsourcing services provider

based in the US with operations in India, Mr Sanjay Kamlani, said, "a patent-
related services can be offered from outsourced centres at a fraction of the cost
needed to process it there.. That means for the same amount, a US company
can file for more patents."

Speaking to Business Line, Mr Kamlani, a co-founder of OfficeTiger and its

general council and Chief Financial Officer then, said that Pangea3 has been
seed funded by Mr Sunil Wadhwani, a co-founder of iGate and Mr Avinash Bajaj,
former CEO of eBay India.
"There is lack of clarity in what constitutes legal services in the outsourced mode.
This has created different assessment of the current market size and the future
potential India holds in the international marketplace, given its advantages.

If you look at all major IT firms, and leading business process outsourcing
companies, they all handle legal services in one form or the other. But when it
comes to classifying them, they are clubbed with general BPO players. This
brings in disparity," he said.

If you analyse the market size from a different perspective, it clearly emerges that
the market is now about $1.5 billion and is projected to grow to about $3.9 billion
to $4 billion by the year 2010.

This is something which research firm Forrester also predicts.

They come to us

"If what can be offered under the ambit of legal services is analysed, we are just
looking at the tip of the iceberg. This can be expanded to a range of related
services including content and support services. It brings many advantages. This
can be gauged from the fact that we don't have to market our services. In fact,
law firms approach us for services," Mr Kamlani said.

"Often people believe that such services require different skills covering a range
of services. It is not the case. What it needs is know-how, and not just
knowledge. Since the approach is more or less similar be it in the US, the UK or
India, it is pretty easy to adjust to requirements," he said.
Legal outsourcing to fetch 79,000 jobs

Outsourcing is gradually becoming the backbone of Indian service sectors. In the

last fiscal India earned $6.7 billion by providing services in software, technology
and manufacturing outsourcing.

Legal services are the next destination for a cool BPO. According to a study by
the US based Forester Research, the current annual value of legal outsourcing
which is worth $80 million can rise up to $4 billion and can fetch 79,000 jobs in
India by 2015.

“The benefit of the outsourcing companies in the US would translate into a cost
saving of about 10% to 12%. The potential of the Indian resources to absorb the
increasing demand in legal outsourcing is because India enjoys the economic
advantages of the wage difference and less perks and overheads,” the report
says.

National Association of Software and Service Companies (Nasscom) also

projected that legal processing outsourcing providers (LPOs) in India will soon
rise up to three to four billion dollar.

But this glossy figure has many challenges ahead. The most important challenge
to the newly-born sector is the need for Indian lawyers to pass US bar exams,
conflict of interest rules and data security.

EQUITY RESEARCH OUTSOURCING

If numbers are anything to go by, then the KPO industry will help create a very
bright future for India. The story of the KPOs is fairly new and KPOs might not be
very large, however the numbers predicted are huge.

The Mckinsey Global Institute estimates that the volume of offshore outsourcing
will increase by 30 to 40 % for the next 5 years. 3.3 million Jobs will be generated
overall by the year 2015. Deloitte research predicts the outsourcing of 2 million
financial sector jobs by 2009.

In this scenario India will act as the primordial sea using its biggest strength - that
is a supply of at least 2 million graduates and 300,000 Post Graduates - to help
the KPO industry evolve into a mass job generator. There are many countries in
the race. However, today all roads lead to India. Primary reasons for such an
attraction being the cost of labour, which is significantly lower than in the West
and that India is tested ground. Through its BPO and IT industries, India has
proven that it can deliver high quality services.

Equity research is one of the key areas in which KPO will flourish. On average
Wall Street is losing $ 4 bn a year on producing equity research. To save on
costs and to increase their value proposition to clients, Wall Street is discovering
the value proposition of operating in low cost countries. Many global investment
banks have also been quietly building their back office research in India. No
matter how cost effective a back office in India might prove to be it is still a field
where experts can establish themselves and carve a niche for themselves
attaining marked professionalism. Copal Partners is one such firm having
complete expertise in the financial research outsourcing market. Joel Perlman,
Co-founder and President of Copal Partners says that “outsourcing is a very
good thing for India. It will totally change the Indian economy. In 10 years, India
will have become the knowledge center of the world. And it will not be because
India is cheaper (this will go away), but because India has the scale in terms of
people.”
India could emerge as a favourite outsourcing destination for US financial groups
for equity research as the investment banks face severe pressure from market
watchdog Securities Exchanges Commission to separate research from market
activities following series of violations of investors' rights, the Nasdaq Vice-
Chairman, Mr David Weild IV, said.

Traditional labour arbitrage opportunity coupled with vast talent pool and
increasing outsourcing of back office operations could be the "comfortable"
trigger for such initiatives, he said. "The cost could come down to $24,000 from
$100,000 per analyst per annum,'' he said.

The retail investors who contribute close to 50 per cent of trades on the US
bourses complained their wealth being wiped out following advices from certain
research analysts of investment banks, they relied on. SEC has proposed to de-
segregate the research and market operations.

Research could now be sourced from independent third party vendors and the
analysts are likely to have access to the same quality of information as that of a
retail investor.

Commenting on the virtues of SEBI- proposed simultaneous listing by Indian

companies; Mr Weild said that such a move is likely to offer greater visibility to
companies seeking currency for overseas acquisitions. "Companies can go for a
limited float offerings on the Nasdaq and follow it up with domestic IPO, which
could give them better valuation and ensure flow-back form overseas market,'' he
said.

Most of the US listed Indian companies are thinly covered by US-based research
analysts, which hinder adequate interest in the stocks, Mr Weild said. "For a
company with a market capitalisation of $1 billion, it (market capitalisation)
increases by 2.7 per cent when the stock is covered by six-seven analyst,'' he
said.
Though India tops Nasdaq's priority list among emerging markets, it needs to be
more proactive to "tell its good story to the US investors,'' he added. Nasdaq may
set up advisory services to Indian companies and US investors in association
with local industry bodies like the National Association of Software and Services
Companies (Nasscom), Mr Weild said. "I will discuss this issue with Nasscom,''
he added.

Close to 150 Indian companies follow the US GAAP accounting structure, which
is a fair indication of their intent to go for overseas listing, Mr Weild said.
Commenting on whether the current market conditions cramping such intention,
Mr Weild said, "companies can go for listing whenever they need to raise
capital.''
 CHAPTER 3
INDUSTRY PROFILE
Business Process Outsourcing (BPO) is the leveraging of technology or
specialist process vendors to provide and manage an organisation's critical
and/or non-critical enterprise processes and applications. The most common
examples of BPO are call centres, human resources, accounting and payroll
outsourcing. Business process outsourcing may involve the use of off-shore
resources.
Use of a BPO as opposed to an application service provider (ASP) usually also
means that a certain amount of risk is transferred to the company that is running
the process elements on behalf of the outsourcer. BPO includes the software, the
process management, and the people to operate the service, while a typical ASP
model includes only the provision of access to functionalities and features
provided or 'served up' through the use of software, usually via web browser to
the customer.

Outsource BPO Services to India

Outsourcing BPO Services to India is one of the popular business practices in

today's competitive environment. The Indian BPO industry is constantly growing.

¾ Outsourcing BPO - The Benefits

British Trade and Industry Secretary, Patricia Hewitt, at a national conference of

the Confederation of British Industry (CBI) said, "It is much easier to see the
short term benefits of protectionism than to see the long term costs to consumers
and business competitiveness."

This is the crux of the pro-outsourcing argument. Outsourcing BPO Services to

India offers benefits not only in terms of cost reduction, but also in terms of
increased productivity and quality. Companies along with their customers benefit
since they can access some of the best talent and expertise in the industry at
lower rates.
a) Outsourcing BPO to India - The Cost Savings

Bob Beauchamp, BMC Software President, and CEO talked about the backlash
in the US where an economic rebound had not created jobs. Addressing the
Product and Embedded Software Summit in Bangalore, he said that there may
be a backlash, "But as studies have indicated that for every one dollar invested in
India, the value derived by the US economy is between $12-14." He termed
outsourcing to India as "irreversible" and said it was a "must have" to improve the
Indian and global economy.

NASSCOM has tried to address some of the concerns voiced by anti-outsourcing

parties especially about the benefits to the American economy.

The study shows that US businesses have witnessed significant cost savings by
off shoring to India.

The US banking, financial services and insurance (BFSI) sector's costs

are 7-10% lower than that of its European counterparts
American BFSI companies have saved $6 billion in the last four years by
off shoring to India.

b) Outsourcing BPO to India - Creates Jobs

It seems contradictory to say that the migration of jobs from one country to
another actually creates jobs in the former. However, that can ultimately be the
case. According to the NASSCOM report, the BFSI sector have saved $6 billion
in the last few years and due to these savings have added 125,000 new jobs in
this period thus preventing layoffs.

Nearly 170 Indian IT companies have offices in the US and they employed nearly
60,000 people in the US in 2001. These people paid nearly $810 million in taxes
in 2001. Employees of Indian IT firms bought goods and services worth $1.2
billion in the US and paid nearly $300 million as social security in 2001.
c) Outsourcing BPO to India - The Value Addition

The NASSCOM study continues to explain the added benefits. BFSI off shoring
has resulted in quality and productivity gains of 15-20% and customer
satisfaction of almost 85%.

The report gives a striking example of the success of the automobile industry in
the US due to outsourcing. Today, this industry is the largest in the world and two
of the biggest automobile companies are American. The industry has the same
number of professionals it did in 1994 as it did in 1974, which is 900,000. Over
this same period sales and services in this sector grew 20% from 2 million to 2.4
million. Outsourcing gave this industry a competitive edge and opened up
opportunities in terms of investing in new equipment and re-engineering
processes.

The US steel industry, however, resisted outsourcing and suffered greatly

despite several tariffs and quotas.

d) Outsourcing BPO to India - The Long Term Benefits

Amidst the mounting furor against outsourcing, one has to examine things more
objectively. In the short term, cost benefits and value addition may not be
apparent because of the initial investment involved in training and infrastructure.
Also outcries against migration of jobs seem to cement the argument. However,
as the NASSCOM report shows, the long-term benefits are very powerful. Not
only does outsourcing BPO to India allow global companies to avail of some of
the best talent and expertise at competitive rates, but it also allows the company
to actually save several jobs, which it might have had to lay off otherwise
 ¾ Why Outsource Work?

a) Because you don't have the time to do it yourself.

You have a product to develop and you have to get it into the market before your
competitor does.

b) Because you don't have the money to do it yourself.

Your business is growing exponentially but your resources can't cope with the
growth.

c) Because you'd rather focus on mission-critical issues.

You're not interested in frittering away time and energy on non-core functions.

d) Because you don't have the skills to do it yourself.

You need the best talent in the world, but it's scarce/out of reach/ just not
available in your country.

In today's globalized and networked economy, outsourcing has never been so

easy or made so much business sense. The question is not "Why outsource?"
but rather, "Why not?"

The Outsourcing History of India

The idea of outsourcing has its roots in the 'competitive advantage' theory
propagated by Adam Smith in his book 'The Wealth of Nations' which was
published in 1776. Over the years, the meaning of the term 'outsourcing' has
undergone a sea change. What started as the shifting of manufacturing to
countries providing cheap labour during the Industrial Revolution, has taken on a
new connotation in today's scenario. In a world where IT has become the
backbone of businesses worldwide, 'outsourcing' is the process through which
one company hands over part of its work to another company, making it
responsible for the design and implementation of the business process under
strict guidelines regarding requirements and specifications from the outsourcing
company. This process is beneficial to both the outsourcing company and the
service provider, as enables the outsourcer to reduce costs, increase quality in
non-core areas of business, and utilize his expertise and competencies to the
maximum. Now we can see the benefit to the service companies in India as they
mature, prosper, and build core capabilities beyond what would generally be
possible by the outsourcing company.

Since the onset of globalization in India during the early 1990s, successive Indian
governments have pursued programs of economic reform committed to
liberalization and privatization. Till 1994, the Indian telecom sector was under
direct governmental control and the state owned units enjoyed a monopoly in the
market. In 1994, the government announced a policy under which the sector was
liberalized and private participation was encouraged. The New Telecom Policy of
1999 brought in further changes with the introduction of IP telephony and ended
the state monopoly on international calling facilities. This brought about a drastic
reduction and this heralded the golden era for the ITES/BPO industry and
ushered in a slew of inbound/outbound call centres and data processing centres.
Although the IT industry in India has existed since the early 1980s, it was the
early and mid 1990s that saw the emergence of outsourcing. One of the first
outsourced services was medical transcription, but outsourcing of business
processes like data processing, billing, and customer support began towards the
end of the 1990s when MNCs established wholly owned subsidiaries which
catered to the process off-shoring requirements of their parent companies. Some
of the earliest players in the Indian market were American Express, GE Capital
and British Airways.

The ITES or BPO industry is a young and nascent sector in India and has been
in existence for a little more than five years. Despite its recent arrival on the
Indian scene, the industry has grown phenomenally and has now become a very
important part of the export-oriented IT software and services environment. It
initially began as an activity confined to multinational companies, but today it has
developed into a broad based business platform backed by leading Indian IT
software and services organizations and other third party service providers. The
ITES/BPO market expanded its base with the entry of Indian IT companies and
the ITES market of the present day is characterized by the existence of these IT
giants who are able to leverage their broad skill-sets and global clientele to offer
a wide spectrum of services. The spectrum of services offered by Indian
companies has evolved substantially from its humble beginnings. Today, Indian
companies are offering a variety of outsourced services ranging from customer
care, transcription, billing services and database marketing, to Web
sales/marketing, accounting, tax processing, transaction document management,
telesales/telemarketing, HR hiring and biotech research.

Looking at the success of India's IT/software industry, the central government

identified ITES/BPO as a key contributor to economic growth prioritized the
attraction of FDI in this segment by establishing 'Software Technology Parks' and
'Export Enterprise Zones'. Benefits like tax-holidays generally enjoyed by the
software industry were also made available to the ITES/BPO sector. The
National Telecom Policy (NTP) introduced in 1999 and the deregulation of the
telecom industry opened up national, long distance, and international connectivity
to competition. The governments of various states also provide assistance to
companies to overcome the recruitment, retention, and training challenges in
order to attract investments to their region. The National Association of Software
and Service Companies (NASSCOM) has created platforms for the
dissemination of knowledge and research in the industry through its survey and
conferences. NASSCOM acts as an 'advisor, consultant and coordinating body'
for the ITES/BPO industry and liaisons between the central and state
government committees and the industry. The ardent advocacy of the ITES/BPO
industry has led to the inclusion of call centers in the 'Business Auxiliary
Services' segment, thereby ensuring exemption from service tax under the
Finance Bill of 2003.

These measures have led to a steady inflow of investments by large foreign

companies such as Reuters, for establishing large captive ITES/BPO facilities
across India. Moreover, the existing ITES/BPO operations of major multi-
nationals are also being ramped up to cater to the ever increasing demand for
better and speedier service. Almost all of India's top ITES/BPO giants have
announced some form of expansion and are in the process of hiring manpower to
fill the additional seats. India's competitive advantage lies in its ability to provide
huge cost savings thereby enabling productivity gains and this has given India an
edge in the global ITES/BPO marketplace. NASSCOM studies pinpoint the
following factors as the major reasons behind India's success in this industry
(Source: www.nasscom.org):

• Abundant, skilled, English-speaking manpower, which is being harnessed

even by ITES hubs such as Singapore and Ireland.

• Improving telecom and other infrastructure which is at par with global

standards.

• Strong quality orientation among players and their focus on measuring

and monitoring quality targets.

• Fast turnaround times and the ability to offer 24x7 services based on the
country's unique geographic location that allows for leveraging time zone
differences.

• Proactive and positive policy environment which encourages ITES/BPO

investments and simplifies rules and procedures.

• A friendly tax structure, which places the ITES/BPO industry on par with IT
services companies.

Outsourcing to India offers significant improvements in quality and productivity for

overseas companies on crucial parameters such as number of correct
transactions/number of total transactions; total satisfaction factor; number of
transactions/hour and average speed of answer. Surveys by NASSCOM also
revealed that Indian companies are better focussed on maintaining quality and
performance standards. Indian ITES/BPO companies are on an ascending curve
as far as the quality standards are concerned. Organizations that have achieved
ISO 9000 certification are migrating to the ISO 9000:2000 standards and
companies on the CMM framework are realigning themselves to the CMMI
model. Apart from investing in upgrading their CRM and ERP initiatives, many
Indian ITES companies are beginning to acknowledge the COPC certifications
for quality and are working towards achieving COPC licences.

Despite being a fledgling in the global ITES/BPO industry, the Indian ITES
industry recorded a growth rate in excess of 50% in 2002-03. Industry experts
consider this a positive indication of the times to come and a look at the ranking
and the revenue and headcount statistics show the potential of the industry.The
global ITES/BPO industry was valued at around US$ 773 billion during 2002 and
according to estimates by the International Data Corporation worldwide, it is
expected to grow at a Compounded Annual Growth Rate (CAGR) of 9% during
the period 2002-2006. NASSCOM lists the major indicators of the high growth
potential of the ITES/BPO industry in India as the following (Source
www.nasscom.org

• During 2003-04, the ITES-BPO segment is estimated to have achieved a

54 percent growth in revenues as compared to the previous year.

• ITES exports accounted for US$ 3.6 billion in revenues, up from US$ 2.5
billion in 2002-03.

• The ITES-BPO segment also proved to be a major opportunity for job

seekers, creating employment for around 74,400 additional personnel in
India during 2003-04.

• The number of Indians working for this sector jumped to 245,500 by

March, 2004.
 • By the year 2008, the segment is expected to employ over 1.1 million
Indians, according to studies conducted by NASSCOM and leading
business Intelligence Company, McKinsey & Co. Market research shows
that in terms of job creation, the ITES-BPO industry is growing at over 50
percent.

Surveys of the Indian ITES/BPO industry in 2004 expected it to follow the trends
given below:

• Customer care: Customer care and support services will continue to lead
in terms of revenue generation, with a turnover of around US$ 1200
million in 2003-04., up from last year's turnover of US$810 million.

• Finance: With the financial services segment moving into value added
domains like insurance claims processing, financial management services
and equity research, this segment is expected to clock the highest growth,
with estimates of US$820 million in revenue in 2003-04, up from US$510
million in 2002-03.

• HR services: HR services are also expected to grow and revenues are

expected to touch US$70 million during 2003-04, thereby providing latent
opportunities to the industry's dominant players.

• Payment services: This segment has also been identified as a high

growth area within the industry, and is expected to generate revenues of
around US$430 million for 2003-04, up from US$210 million in 2002-03.

• Administration: Revenues from the administration services segment are

expected to increase from US$ 310 million in 2002-03, to US$540 million
during 2003-04.

• Content development: The content development services segment

which includes engineering and design services, digitization (GIS),
 animation, network management and biotech research, is expected clock
a turnover of around US$520 million in 2003-04.

The availability of technically trained and skilled manpower in India is making

companies across the world look at the country as a profitable base to shift their
high-end support services. Companies like COLT Technology Services are
considering outsourcing their technical back-office support work to India. Other
areas are high-end network engineering/management support. Another field
which is showing immense potential is that of digital content creation and
animation. Animation studios like Walt Disney, MGM and Warner Brothers are
already outsourcing low-end work like clean-ups, tweening and modelling to
India. The availability of skilled and trained manpower and India's ability to keep
in step with the latest technological advances in the industry is prompting foreign
studios to consider India as a base to shift other high-end animation work like
storyboarding and developing original content for animated films ad TV series.
Tele-radiology is the next segment that holds great promise, mainly due to the
time zone differences and the availability of highly skilled radiologists and
companies like Teleradiology Solutions have been offering their services to US
and South-East Asian hospitals for the past two years. Engineering services like
CAD/CAM 2D, 3D and CAE modelling and design automation are the latest
additions to the ever increasing list of processes being outsourced to India.

¾ Reasons why outsourcing makes business sense

When you consider the advantages of outsourcing, you'll realize there's a lot to
gain by using it as an intrinsic part of your business strategy.

By outsourcing, you can:

1. Reduce overheads, free up resources

2. Avoid capital expenditure
3. Improve efficiency
4. Offload non-core functions
5. Get access to specialized skills
6. Save on manpower and training costs
7. Reduce operating costs
8. Improve speed and service
9. Establish long-term, strategic relationships with world-class service
providers to gain a competitive edge/li>
10. Enhance tactical and strategic advantages
11. Focus on strategic thinking, process reengineering and managing trading
partner relationships
12. Spread your risks
13. Provide the best quality services, products and people
14. Be reliable and innovative
15. Provide value-added services
16. Increase customer satisfaction
17. Avoid the cost of chasing technology
18. Leverage the provider's extensive investments in technology,
methodologies and people
19. Benefit from the provider's expertise in solving problems for a variety of
clients with similar requirements.
20. Focus scarce resources on time-critical projects such as application
reengineering
21. Obtain needed project management and implementation consulting
expertise, along with access to best practices and proven methodologies
22. Reduce the risk of technological obsolescence and increase efficiency by
consolidating and centralizing functions
23. Keep pace and minimize the impact of rapid changes in applications and
standards
24. Extend the reach to more trading partners quickly and efficiently
25. Reduce the overall IT management burden while retaining control of
strategic decision making.
 ¾ Why Outsource to India?

Outsource to India for technological agility, quality, flexibility, cost control, time-to-
market and competitive advantage.

India is a talent-rich country: outsource IT talent

India exports software to 95 countries around the world: outsource
expertise in global methodologies
a) India Offers Multiple Advantages

Outsource to stay competitive. Leading companies worldwide realize that

to maintain stay ahead, they need to reduce costs, provide the best
quality, use the latest high-tech skills, and be reliable and innovative
Outsource to a mature industry with world-class systems, systems and
quality
Of the 23 software companies in the world that have achieved the
prestigious SEI-CMM Level 5, 15 of them are Indian. India will soon
have the highest number of ISO-9000 software companies in the world,
according to Nasscom.

b) India has state-of-the-art technologies for total solutions: outsource

turnkey projects

Offshore assignments have moved up the value chain - from data entry to large
and complex turnkey projects of 200 to 300 person years.

Applications include:

E-Commerce
Business Process Re-engineering
System Migration
Maintaining Legacy Systems
System Integration
 c) IT is a major thrust area for the Government of India

IT is one of the Government of India's top five priorities.

The National IT Task Force submitted its 108 point Action Plan to promote
IT in the country. The Government of India has approved the plan and is in
the process of implementing it.
A separate Ministry of Information Technology was set up to expedite swift
approval and implementation of IT projects and to streamline the
regulatory process.
Information Technology Act 2000: The Information Technology Bill that
was passed in the Indian Parliament in May 2000, has now been notified
as the IT Act 2000. The IT Bill brings E-commerce within the purview of
law and accords stringent punishments to "cyber criminals". With this,
India joins a select band of 12 nations that have cyber laws.

Software Technology Parks of India offer world-class infrastructure and

various incentives and concessions to encourage foreign investment and
promote software development in India eg 100% Foreign equity is permitted and
approved under the Automatic Route delegated powers to The Director STPI, tax
holiday until 2010, etc.

d) India has a stable government and is one of the world's 10

fastest-growing economies

Fifty years of democracy: Indian service sector contributes a massive 51

per cent to India's GDP.Within this category, the most promising is
computer software export, which grew at an amazing rate of 40-50 per
cent every year during the 1990s.

Excellent investment potential: India ranked third in Asia, just after Japan
and China, in terms of investment potential for the next 10-year period in a
study by the Export-Import bank of Japan.
 Privatization of the infrastructure sector: A convergent network is being
created by the intertwining of the ISP, Telecom, VSAT, Cellular and
networking sectors. India's large business houses and Public Sector Units
are working towards creating greater bandwidth availability.

¾ Global Market Size of BPO

Rapid transformation is taking place in the global BPO market. It is accompanied

by increased spending in BPO services. Most of the leading business companies
of the world are adopting BPO as a strategic business solution. The BPO
industry is very diverse, with several sub-segments, each displaying its own
unique characteristics.

According to Gartner, a market research firm, the size of the global BPO market
by 2007 would be $173bn, of which $24.23bn would be outsourced to offshore
contractors. Of this, India has the potential to generate $13.8bn in revenue. "The
projection includes revenues of pure play Indian BPO service providers, captives
operations of MNCs operating in India, third party service providers and BPO
subsidiaries of IT services firms.

North America will remain the dominant market for ITES-BPO services,
accounting for nearly 60 percent of the total ITES-BPO market in 2006. The main
verticals in the North American ITES-BPO market are telecommunications,
financial services, health care and energy. Commonly outsourced processes
include internal auditing, payroll, human resources, benefits management,
contact centers/customer care, payments/ claims processing, real estate
management, and supply chain management.

The Western Europe ITES-BPO market is expected to account for 22 percent of

the market by 2006. The financial services sector is the largest consumer of
BPO-ITES services in Europe, followed by utilities and telecommunications.
Human resources, finance and accounting are expected to be the fastest growing
service lines.

The Asia Pacific ITES-BPO market is expected to account for 18 percent of the
total ITESBPO market in 2006. Companies in the Asia-Pacific region have
traditionally outsourced only manufacturing activities. Given the relative infancy
of the ITES-BPO market, this region is expected to experience rapid growth over
the next few years. Growth will primarily be driven by cost-reduction and the
need to focus on core competencies. HR, finance and accounting are expected
to be the key growth areas in the Asia-Pacific region in the years ahead.

¾ Growth of Indian BPO Industry

According to studies conducted by NASSCOM and leading business Intelligence

Company, McKinsey & Co. the Indian IT/BPO segment is expected to employ
over 1.1 million Indians by the year 2008. Market research shows that in terms of
job creation, the ITES-BPO industry is growing at over 50 percent. In the financial
year 2003-2004, ITES-BPO companies were the largest recruiters in the IT/ITES
sector, adding a total of about 70,000 jobs.

An estimated 70,000 new Jobs expected in 2005 in the field pf ITES. Plus there
will be additional hiring to replace industry attrition that is around 25%. On the
other hand BPO and outsourcing services would generate around 1, 25,000 new
Jobs in 2005. McKinsey & Co. predicts global market for IT-enabled services to
be over $140 billion by 2008. In that the opportunity for India will be around $ 17
Billion.

¾ Future Prospects

The future for the IT/BP industry holds bright. It is estimated that 56% of the BPO
market could be India's by the year 2006 with the demand for BPO services
increasing at an annual growth rate of 50 per cent during 2004-06. The pace at
which the Indian BPO market is increasing is tremendous. The market of BPO in
India is likely to be around $9-12 billion by the year 2006 and will employ around
0.4 million people. The BPO market is ready to fire up and India Inc is all geared
for this big opportunity.

This is really great news for India Inc since we have to tackle the BPO backlash
as well. Though there are chances of this party being spoiled by the US led
backlash but then also India is sure to have a large share of the BPO market.
This will go a long way in making India the BPO super power of the world. If the
backlash stays on for sometime, then may be India could only have a 42% share
of the market instead of 56%. Though it is a reality that companies outsourcing
their business operations to Indian BPOs have been saving a lot of money and
also saving jobs of their own countrymen.
 CHAPTER 4
RESEARCH DESIGN
Hypotheses

H0: Legal & Equity Research Outsourcing business is set to grow at atleast half
the rate of the growth rate of the BPO industry

H1: Legal & Equity Research Outsourcing business is not going to create an
impact in the business in near future.

Problem Statement
Business Process Outsourcing, is changing at a very rapid pace. It has given
birth to what is known as the Knowledge Process Outsourcing (KPO). It can be
said that KPO is one step ahead of Business Processing Outsourcing (BPO).
KPO firms provide domain-based processes and business expertise, rather than
just process expertise. All BPOs are evolving into KPOs.

Legal Process Outsourcing is a niche segment within KPOs.It is estimated that

LPOs and Equity Research Outsourcing are going to make a big mark in this
industry.

This study is an attempt to identify the new market opportunities for BPOs in
these two areas of outsourcing which are being talked about in the outsourcing
industry now.
Sampling Plan

1. Population: The target population of my project constitutes of executives

of the BPO industry in Bangalore.

2. Sample survey: Due to wide area of population as well as time and money
constraint, census study could not be conducted. Hence a sample survey
has been conducted.

3. Sample frame: Since the population is considerably large, I could not

obtain a sample frame.

4. Sample unit: The sample unit of my project constitutes of the BPO

executives in Bangalore.

5. Sampling technique: In my project, I have used Convenience Sampling.

This technique has been used due to the non-availability of the sampling
frame and due to time and pecuniary constraint.

6. Sample size: Sample size of my study comprises of 32 respondents.

7. Data collection tools: The data collection tool for my research includes the
semi-structured questionnaire with both close ended (dichotomous) and
open ended questions.
My questionnaire consists of 9 close ended questions and 12 open ended
questions.
Data Collection

Primary Data
The entire primary research study was done in Bangalore. The data collection
tool for my research included the semi-structured questionnaire with both close
ended (dichotomous) and open ended questions

Secondary Data
In addition to the primary research, secondary data was collected from articles
published in dailies, magazines and industry reports through visits to libraries and
also from the worldwide web.

Questionnaire Administration

The Instrument for data collection, in the form of a ‘Structured Questionnaire’,

was designed to elicit information on the future of the legal and Equity research
outsourcing.
CHAPTER 5
ANALYSIS OF
RESEARCH
Total number of respondents = 32

• 100% of the respondents said yes to question no.1. This means that all
the respondents were aware of the term legal outsourcing.

Are you aware about legal outsourcing?

35 32
30
no. of respondents

25
20
15
10
5
0
0
Yes No
answer

From the above graph, we can interpret that the awareness level, among the
BPO employees, about legal outsourcing is very high. Legal outsourcing is
already making its presence felt in the outsourcing industry.

Since the respondents also include the middle management of the BPO
companies, we can say that the awareness of legal outsourcing has
percolated down to this level already.
 • 15 respondents came across the term legal outsourcing for the first time in
the year 2005. 17 respondents came across the term in 2006.

Heard about legal outsourcing for the first time in

which year?

2005
47%

2006
53%

From the above graph we can interpret that there has been a rise in the
percentage of people who became aware of legal outsourcing. This is an
indicator that legal outsourcing is spreading its wings in the BPO industry. Slowly
but surely, it is set to grow in the future. The very fact that the level of awareness
is on the rise among the BPO employees indicates that projects related to legal
outsourcing are increasing in the industry.

47% of the respondents came across this term for the first time in 2005. 53% of
the respondents came across the term for the first time in 2006. The awareness
about legal outsourcing is constantly raising this good indicator.
• 28 respondents have said that legal outsourcing has gained importance
from the time they became aware of it while 4 respondents do not agree to
it.

Has legal outsourcing gained importance since the

time you knew it?

No
13%

Yes
87%

We see that a whopping 87% of the sample say that legal outsourcing has
gained importance since they became aware of it. This reinforces the
statement that legal outsourcing is making its presence felt in the BPO
industry. That is why 87% of the sample feels that it has definitely gained
importance.
• 100% of the respondents said yes to question no.4. This means that all
the respondents were aware of the term equity research outsourcing.

Are you aware of equity research outsourcing?

35 32
30
no. of respondents

25
20
15
10
5
0
0
Yes No
answer

From the above graph we can interpret that the awareness level, among the
BPO employees, about equity research outsourcing is very high. Equity
research outsourcing is also making its presence felt in the outsourcing
industry.

This also reinforces the statement gathered from secondary data that equity
research outsourcing is going to create a lot of jobs in the years to come. The
awareness supports the fact that Equity research outsourcing is going to be
the next big thing in the future.
• 1 respondent came across the term equity research outsourcing for the
first time in the year 2004. 14 respondents came across the term in 2005.
17 respondents came across the term for the first time in the year 2006.

Heard about equity research outsourcing for the

first time in which year?

2004
3%

2006 2005
53% 44%

We can observe that there has been a sharp rise in the percentage of
respondents who became aware of the term equity research outsourcing
since 2004. Hence, we can say that equity research outsourcing has gained
ground in a big way from 2005 in terms of the operations being outsourced.

We can infer that Equity research outsourcing was in the nascent stage in
2004 in Indian BPO industry. We see a sharp rise in the level of awareness in
2005. also, there is a steady rise in its awareness level in 2006. This supports
the fact that equity research outsourcing has come to stay in the business
world. Its not just a passing fad but a business with a huge potential in terms
of value and volume.
• 28 respondents have said that equity research outsourcing has gained
importance from the time they became aware of it while 4 respondents do
not agree to it.

Has equity research outsourcing gained importance

since the time you knew it?

No
13%

Yes
87%

From the graph we can say that 87% of the respondents agree to the
statement that equity research outsourcing has gained importance since they
became aware of it. Hence, we can say that equity research outsourcing has
come to stay in this business. It is not a short lived business but a promising
one.
• Question no.7 of the questionnaire tries to find out if the company, to
which a respondent belongs, handles either or both of legal and equity
research outsourcing.

The survey revealed that none of the companies (to whom my

respondents belong) handle either of the two activities. One of the reasons
is that there are specialized firms that handle the outsourcing of legal and
equity research activities. It would take some time for the bigger firms to
handle these specialized activities in a large scale.

However, one of the respondents says that his firm handles equity
research outsourcing activities though they do not handle legal
outsourcing.

• Question no.8 tries to understand the main activities within legal

outsourcing that a company handles. This question stands not applicable
to all my respondents, the reason for which is mentioned above.
• Question no.9 tries to gather the various activities within equity research
outsourcing handled by the company. One of the respondent said that his
firm handles equity research outsourcing activities.

Following are the 3 main activities under equity research outsourcing

handled by the firm to which that respondent belongs:

Reference Data Management

Trade Processing
Corporate actions (involuntary)
• In response to question no. 10, 100% of the respondents have said that
legal outsourcing business would grow at a good pace in the future years.
The next question tries to find out as to what percentage growth can be
called as good.

would legal outsourcing grow at a good pace in

the future?

35 32
no. of respondents

30
25
20
15
10
5 0
0
Yes No
answer

From the graph it is very clear that legal outsourcing business is not a bubble
that would burst but a lucrative business. Otherwise, the people in the
industry would not have such a strong intuition that it will grow in a big way.
Legal outsourcing has come to stay in business. This is pretty much clear
from the view of the employees of the BPO industry.

But the twist in this question is, how do we define “good growth”. This term is
very relative. Hence the next question tries to probe the respondents as to
what does good growth mean to them.
• Question 11 tries to identify as to what percentage growth in legal
outsourcing business can be termed as a good one.

What percentage growth can be termed as good?

15%, 14%
40%, 38%
20%, 19%

30%, 29%

The pie – chart says that 38% of the respondents feel that a growth of 40% in
legal outsourcing business can be rated as good.

29% of the respondents say that a 30% growth in this business can be called
as a good rate of growth.

19% of the respondents feel that a 20% growth in this business can be called
as a good pace of growth.

Finally, 14% respondents say that even a 15% growth in the legal outsourcing
business can be called as a good rate of growth.
• In response to question 12, thirty one respondents have said that equity
research outsourcing business would grow at a good pace in the future
years. One respondent said “don’t know”.

would equity research outsourcing grow at a

good pace in the future?

35 31
no. of respondents

30
25
20
15
10
5 0 1
0
Yes No Don't know
answer

It can be interpreted that excepting a single respondent, others believe that

equity research outsourcing would grow at a good pace in the future years.
One respondent says that “he does not know”. Hence, we can give the benefit
of doubt to the rest and conclude that equity research outsourcing is set to
grow at a very good pace in the years to come.

Here again, the same ambiguity arises like in question no.10. How do we
define a good growth? This problem is solved like done in the earlier
questions. The next question requests the respondents to quantify good
growth as per their knowledge and experience in this business.
• Question 13 tries to identify as to what percentage growth in equity
research outsourcing could be termed as a good rate.

what percentage growth can be termed as good?

15%, 9%
20%, 12%
60%, 37%

30%, 18%

40%, 24%

37% of the respondents feel that 60% growth in equity research outsourcing
can be termed as a good rate of growth.

24% of the respondents say that a 40% growth in this business can be called
as good.

18% of the respondents say that a 30% growth in this business can be called
as good.

12% of the respondents say that a 20% growth in this business can be called
as good.

9% of the respondents say that a 15% growth in the equity research

outsourcing can be treated as a good rate of growth.
• Questions 14 & 15 try to identify the biggest markets for legal and equity
research outsourcing. United States is the biggest market for both legal
and equity research outsourcing.

The reason could be traced as the increasing pressure on the US

investment banks from the securities exchange commission to separate
research from market activities. This action was taken as a result of a
series of violations of investors’ rights by the investment banks.

The reason for US being the biggest market in legal outsourcing is that
Indian companies are eyeing the USD200 billion market in the US. It is
estimated that by 2010, a minor share of this (USD3.9 billion), could be
attracted to the Indian marketplace.
 • Question 20 tries to identify whether legal outsourcing would prove
profitable to the firms in the coming years.

would legal outsourcing prove profitable in the

years to come?

20
16
no. of respondents

15
10
10
6
5

0
Yes No Don't know
answer

16 respondents have said that legal outsourcing would prove profitable to their
firms in the future. The reasons given by them are that their firms are gearing up
to start handling more activities in legal outsourcing.

6 respondents have said that legal outsourcing would not prove profitable to their
firms. They feel that legal outsourcing is not their core competency and that they
would need more time to establish in this business.

10 respondents have said that they do not know whether legal outsourcing would
be lucrative for their firms.
 • Question 21 tries to identify whether equity research outsourcing would
prove profitable to the firms in the coming years.

would equity research outsourcing prove

profitable in the years to come?

20
16
no. of respondents

15
10
10
6
5

0
Yes No Don't know
answer

16 respondents have said that equity research outsourcing would prove

profitable to their firms in the future. The reasons given by them are that their
firms are gearing up to start handling more activities in equity research
outsourcing.

6 respondents have said that equity research outsourcing would not prove
profitable to their firms. They feel that equity research outsourcing is not their
core competency and that they would need more time to establish in this
business.

10 respondents have said that they do not know whether equity research
outsourcing would be lucrative for their firms.
 CHAPTER 6
CONCLUSION &
RECOMMENDATION
Conclusion

¾ My null hypotheses would be accepted if the growth rate of Legal & Equity
research outsourcing is atleast or more than half the BPO industry growth
rate.
¾ The growth rate of the BPO industry is 48%
¾ Question no.11 & question no.13 of my questionnaire seek from the
respondents as to at what rate would Legal & Equity research outsourcing
would grow in the future.
¾ The average of the response of all my respondents to these questions
reveal that the growth rate of Legal & Equity research outsourcing would
be 28.6%
¾ This rate of growth is greater than half of the industry growth rate
¾ Hence, my null hypotheses is accepted which states that Legal & Equity
research outsourcing is set to grow at a good rate in the future

Recommendation
¾ I strongly recommend that the BPO companies should get into Legal &
Equity research outsourcing business as soon as possible
¾ The main reason being that Legal & Equity research outsourcing is set to
grow at around 30% as predicted by the people from the industry
¾ Also, the market size of Legal outsourcing business in the US alone is of
the order of USD 200 billion. Hence, it makes sense for the big firms to
enter this area of outsourcing
 CHAPTER 7
BIBLIOGRAPHY
¾ www.google.com
¾ www.wikipedia.org
¾ www.blonnet.com
¾ www.bpoindia.com
¾ www.theeconomictimes.com
¾ www.nasscom.org
CHAPTER 8
ANNEXURE
Questionnaire
1. Have you come across the term legal outsourcing?

Yes No

2. If Yes, When was the first time you heard about it? (Month & Year)_______________

3. Do you feel that it has gained an importance, since then, in the outsourcing business?

Yes No

4. Have you come across the term equity research outsourcing?

Yes No

5. If Yes, When was the first time you heard about it? (Month & Year)_______________

6. Do you feel that it has gained an importance, since then, in the outsourcing business?

Yes No

7. Which of the following outsourcing activities is handled by your company?

Legal Equity research none

8. Name three main activities under legal outsourcing, that are outsourced to your
company

________________________________________________________________________

9. Name three main activities under Equity research outsourcing, that are outsourced to
your company

________________________________________________________________________
10. Do you feel that legal outsourcing business would grow at a good pace in future?

Yes No Don’t know

11. What percentage growth of this business could be called as a good rate? __________

12. Do you feel that equity research outsourcing business would grow at a good pace in
future?

Yes No Don’t know

13. What percentage growth of this business could be called as a good rate? __________

14. Which is the biggest market for legal outsourcing? ___________________________

15. Which is the biggest market for equity research outsourcing? ___________________

16. What is the volume of business (in USD), in legal outsourcing undertaken by your
company till now? ________________________________________________________

17. What is the volume of business (in USD), in legal outsourcing, being presently
worked on by your company? _______________________________________________

18. What is the volume of business (in USD), in equity research outsourcing undertaken
by your company till now?
_______________________________________________________________________

19. What is the volume of business (in USD), in equity research outsourcing, being
presently worked on by your company?
________________________________________________________________________

20. Do you feel that legal outsourcing would be profitable for your company in the years
to come? Why?

Yes No

21. Do you feel that equity research outsourcing would be profitable for your company in
the years to come? Why?

Yes No
Dear Sir/Madam,

I am a student of M.P.Birla Institute of Management, Bangalore undertaking a

study on New market opportunities for BPOs in legal & equity research
outsourcing.

I solicit your cooperation for the same by kindly filling up the attached
questionnaire. Your cooperation would be highly appreciated in this regard.

I assure you that all the information would be kept confidential and used for
academic purposes only.

Kind Regards,

Mahesh B Patil
Coding Sheet