In the past, outsourcing has tended to be synonymous with offshoring, but now there’s also a growing demand for onshore solutions. As Matt Packer discovers, in intellectual property and legal services, the ‘right’ approach is often a combination of the two, with some providers offering the best of both worlds
There is more to outsourcing than simple cost considerations, says Simon Webster, Business Operations Director at leading IP and legal services outsourcing (LSO) company CPA Global. And he should know. CPA Global are one of the original legal outsourcing companies, having been founded by a group of IP attorney firms in 1969, initially to handle their patent renewals.
‘Labour arbitrage never was the chief selling point of outsourcing – certainly not for CPA Global,’ Webster tells NewLegal Review. Indeed, argues Webster, within the IP industry, the need to deliver outstanding quality IP whilst battling a shortage of important skills and technical knowledge, ever-changing client priorities in the face of global turmoil, and increasing regulatory pressures has trumped the desire to purely save costs – although costs savings are often a significant additional benefit. ‘The main principle behind IP outsourcing,’ says Webster, ‘is the disaggregation of administrative and paralegal tasks that are best performed by efficient, technology-enabled service organisations, from the work of IP lawyers, allowing the lawyers the time to do what they were really employed to do.’
A highly technical field
In the IP field, disaggregation began in the late 1960s with the establishment of specialist IP outsourcers like CPA Global. Before then, tasks such as patent renewals and trademark renewals were handled by law firms and IP attorney firms through processes that were labour-intensive, time-consuming, and fraught with risk, says Webster. Outsourcing to specialist IP renewals service providers enabled law firms to mitigate risk, improve efficiencies, while managing capacity and cost issues. Since then, the array of outsourcing activities taken on by such service providers has increased dramatically. In today’s globalised IP market, assignments as wide-ranging as docketing services, prior art searching, patent landscaping and invalidity/validity analysis as well as paralegal support are now routinely outsourced.
Given the highly technical nature of IP - and the fact that the most IP-rich industry sectors are technology, engineering and pharmaceutical - effective development and management of a company’s valuable intellectual assets has always required not only legal expertise, but also domain expertise, covering a host of engineering and science disciplines.
However, domain expertise is hard to resource onshore, says Webster. In countries like the UK and US, the volume of high-quality engineering and science graduates needed to undertake this kind of work is simply not available – at least not on any realistic, cost-effective basis. Therefore, the availability of those resources has been a key driver for IP outsourcing.
‘India – and, to a lesser extent, China – have much more flexibility,’ Webster adds. ‘In India, for example, the Indian Institutes of Technology schools produce hundreds of thousands of engineering graduates every year, in an environment where working in the service-industry area of the legal sector is a desirable career path. What this means for our clients is that CPA Global can provide high-quality teams made up of the right people in the right roles at the right time, taking advantage of economies of scale to create efficiency.’
The impetus to move services offshore has led to two terms gaining currency: ‘multishoring’ and ‘right-shoring’. As NewLegal Review reported last month, a leading academic has tipped multishoring as a way for law firms to lower costs, enabling legal activities to be assigned to different locations. But what of right-shoring? Is that simply a case of finding the most suitable territory in terms of available skills, regulatory factors such as export controls – and of course general client needs?
Each client’s needs are different and, for a variety of reasons – such as financial pressures, level of resources, type and nature of the company and the work involved – some will prefer to outsource offshore, some onshore, while, for others, a combination of the two is the preferred option.
‘Ultimately, we don’t make a distinction in the way that others might,’ Webster says. ‘Clients are often in one of two positions: either they need to do more with the same resources; or the same with less. In either of those cases, offshoring has a compelling business case.’
For Webster, the biggest hurdle to offshoring is inertia – where a corporation opts to maintain the status quo rather than embark on a potentially disruptive project with new suppliers in an offshore location that may be unfamiliar to them. ‘To overcome that,’ he says, ‘CPA Global can provide a best practice outsourcing solution, built on many years of very successful client engagements, in which some activities are performed onshore closer to the client, and others offshore – enabling us to ease their comfort level, while still creating value and efficiencies and offsetting risk. Right-shoring is a process of looking at the client’s need and then thinking about which solution is most appropriate.’
The flexibility that high-quality, precisely-tailored outsourcing provides is particularly important for IP-rich companies in the technology sector, who value providers that are capable of varying the location of their solutions to find the best fit. ‘If your organisation is looking to resource only business process outsourcing-type activities within IP,’ says Webster, ‘you could get those resources anywhere. But for major technology companies that live and die by the strengths of their IP portfolios – right-shoring can pay substantial dividends, not just in terms of getting the work done cost effectively, but also in terms of peace of mind, knowing that the work will all get done – and done well.’
There are those who would seek to halt the offshoring trend, citing the usual quality concerns and arguing in favour of ‘in-shoring’ - bringing back onshore work that was previously offshored. However, Webster believes the ‘quality card’ is often overplayed. ‘Whether working with a law firm in the UK or US, or with an outsourcing provider in your home market or overseas, the level of quality, service and performance will differ from one law firm to another and from one outsourcing provider to another,’ he says. ‘At the end of the day, it’s about selecting the right provider.’
To ensure the highest standards for its demanding multinational clients, wherever the service is sourced, CPA Global has a major quality control regime in place. Stringent performance metrics are agreed with clients and included as part of the contract, which is not something corporate clients would generally see from their law firms.
Furthermore, in Webster’s view, a dogmatic push to ‘in-shore’ IP work, or bring it back to a corporate client’s or law firm’s home territory, would make for a system that is not as responsive as it needs to be for global clients. He believes ‘in-shoring’ is often a suboptimal solution that is subject to the vagaries of domestic labour markets. ‘Availability of resources will vary all the time,’ Webster says. ‘For example, an engineer or PhD in North America would typically seek employment on a research programme in a top company or university. Working in IP services would not be top of that person’s list. So a company that in-shores all of its operations is approaching the industry from just one point of view.’
Conversely, the evidence from CPA Global’s experience is that international clients want the best of both worlds - or at least to know that the choice of offshoring and onshoring is available to them in order to meet their changing needs in different markets around the globe.