When advising a client on an outsourcing deal, usually the talk revolves around the money you can save the client by handing off an IT or HR function or a business process. However, there's also money to be saved by hiring the right legal advisory firm. To better understand the potential savings, Consulting's One-on-One sat down with Jennifer Wolfe, CEO of Wolfe LPA, a boutique outsourcing legal advisory firm.
Consulting: For what size companies are your services getting the most traction?
Wolfe: We're finding a lot of success with middle market and smaller firms that are pursuing outsourcing arraignments. For these smaller companies, they can't afford $2 to $3 million in transaction costs. That's where we've found an opportunity to help with the negotiation and transition, but with much lower fees.
Consulting: How do you cut down on the legal costs associated with these smaller outsourcing contracts?
Wolfe: Most law firms have a guns blazing approach to price negotiations. If they're representing a Fortune 500 company that can afford to do that, that's great for them. We take a different approach. We do a lot of upfront work to gather stakeholders and discuss the risks associated with the outsourcing arraignment. We discuss issues that the vendors have, and get them to share their preset fee ranges. The more we can discus upfront, the more strategic planning we do upfront, the sooner we can get buy-in from everyone, the less time it'll take and the more money we can save the client.
Consulting: From an advisory perspective, what are the biggest differences in serving smaller clients vs. larger ones?
Wolfe: I don't think there are fewer moving pieces for smaller outsourcing projects than larger ones. The issues are the same for smaller deals. But unlike the first generation of outsourcing deals bought by large companies a decade or two ago, smaller companies [that are outsourcing for the first time] are starting further ahead on a maturity curve. They are buying HR BPO and IT outsourcing. They've watched what bigger companies are doing. Consultants have seen what's worked and what's not worked.
Consulting: When it comes to outsourcing, how small is too small?
Wolfe: If you're working directly with a company in India, there's nothing too small. I've had clients that were one to two person companies that thought something could be done better offshore. So, I don't know that there's any company too small to consider outsourcing. Just because IBM and Accenture won't consider companies they can't make money from, doesn't mean there's not consulting or outsourcing opportunities for other firms.
Consulting: We reported recently about the rising salaries among India's outsourcing companies, which potentially threaten to offset the cost savings there. Are your clients asking about other markets?
Wolfe: We're constantly looking for the cheapest, highest quality options. We recently helped a client look at outsourcing in Guatemala. There are many emerging markets. But for the higher-level, professional service work, I think you'll continue to see India as the primary location to outsource.
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