Patent Services – The next big segment within legal services

31 Jul 08 Patent Services – The next big segment within legal services

In 2007, more than 1.8 m patent applications were filed worldwide accounting for filing costs equivalent to about $30 b to $32 b. Companies of US origin are the largest client segment for the Indian service providers, accounting for 60% of the work offshored to India. The addressable market is more than 50 times the current Indian patent services offshoring industry (estimated at $46 m for the calendar year 2007).

This is a significant finding from the ValueNotes latest release on “Offshoring Patent Services to India “.

ValueNotes conducted an executive briefing session, at its corporate office, Friday, 25th July 2008 to present the report findings. This session saw a good attendance from senior executives and representatives from patent and legal service providers such as Intellevate India (CPA Global), Pangea3, Mindcrest, Kochhar LexServe, Exactus, Bodhi Global, Integreon and other enthusiasts.

The event started off with a presentation on key findings and trends in the patent offshoring industry. This was followed by a panel discussion based on issues and challenges faced in the industry. Several significant issues were brought up including susceptibility to American jurisprudence, what is the recourse for buyers, how service providers are addressing conflict in accounts handled, security issues, etc. Talent/skill availability versus talent management, recruiting the right people, what the industry could do in conjunction with educational institutes, etc. was also discussed.

Panelists gave their insights on patent services moving up the value chain (and whether this was a realistic expectation), buyer concern in terms of security and onshore presence. Commenting on security, Alex Anthony VP – Legal Services, said, “Many times, IP is the only asset a company has. When the whole business model revolves around IP, it is natural for the buyers of IP outsourcing and support services to be concerned about security. We have to structure our business model so as to address their concerns.” He further cited his favorite example “If someone asks me to send my work to Nigeria, I’d be paranoid and worried.”

Many law firms are still skeptical about issues such as the actual control of the project, quality of output, and conflict checking. Manish Vig, MD, Kochhar LexServe said, “While you can build Chinese walls, if there is a likelihood of conflict issue, being upfront and transparent with the client is the best solution.” The more companies an employee switches, greater the chance for trade secrets to leak out. Most of the service providers agreed that they would think twice about hiring an employee who has switched too many jobs.

On a different note, service providers felt moving up the value chain will address the talent management concern. Moving from lower value jobs like patent illustration/proof reading to complex jobs is bound to excite employees and this would encourage them to stick to the same company for a longer period.

There are about 50 active service providers in the Indian patent services offshoring industry. Out of this, only a handful of them have over 50 employees. In this highly fragmented industry, service providers compete with each other both for clients and for experienced employees. In fact, competition for people is far fiercer than the competition for business, given the size of the opportunity. With large BPOs such as Infosys and Wipro entering the legal services offshoring industry, the competition for talent will surely intensify. However, pure play legal service providers do not consider the entry of large BPOs as a threat. They believe that pure play players (focused on legal services) will be preferred over large BPOs by the clients.

Today, there is absolutely no doubt that the legal services offshoring industry is on a rapid growth path. With corporates and law firms, offshoring greater volumes and more complex work, the future promises to provide plenty of action. However, offshore service providers have a long road ahead to build quality and systems that will help allay the fears of buyers and boost client confidence.

ValueNotes Research
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