Knowledge Services

Measuring Shopper Loyalty - emerging dimensions

2011-08-10T10:16:07Z

Imagine this...A family of four walks in to your lifestyle apparel & accessories store...shop a few brands, a few of your labels, swipe their cards (bank card + your shopper card) & walk-off. Sure your store associate would have made it a nice shopping experience for the family, and sure your shopper loyalty card would have captured this transaction & accrued points.

Zoom into the future - a day later, the father of the family tweets about 'a nice shopping experience over the weekend, at xyz'; and the girl child of the family writes about her new shoes in facebook, uploads a picture, and 'Likes' your brand: and 10 of her friends like it, enquire the place of buy and 2 of them land-up at your store the next weekend...how does such behavior get treated in your loyalty program today?

Traditional loyalty programs based on transactional behavior needs a rethink to prepare for the near future (or probably even for today!), given the data environment around businesses is now growing ever so big. Using only trips, basket sizes & values as measures of loyalty is sure to bias the program in favor of customers that have a bigger household size (given a base level of activity).

In the above example, the family may be a much smaller household compared to 'AVG_HHOLD_SIZE'! of customers in your database. However, such experience sharing may probably put them at the top league of your loyal customers. So, what data are the dimensions of customer behavior that become relevant to measure loyalty?

Measuring all these dimensions and tagging that to specific customers / households (especially social media influencing behavior of the primary & members of the household) will represent a technical challenge. Also relevant is to keep in mind how much shoppers would like to open up their social media behavior for loyalty marketing activities (my assumption is that it depends on how aspirational + trustworthy the brand is as perceived by the shopper)

However, starting to think about these will become essential to differentiate by enhancing the shopper experience even further.

Services Price Indices (SPIs) - Are they an answer to India's inflation issues?

2011-04-28T06:44:25Z

A couple of days back, the Department of Industrial Policy and Promotion (DIPP) announced on behalf of Ministry of Commerce & Industry - Government of India (GOI) that it plans to bring out the Service Price Indices (SPIs) for service sectors like telecom, transport, banking, insurance, ports and aviation. These indices will be used to come up with the final Services Price Index. The GOI hopes that by having knowledge about the inflation in the services sector using the Services Price Index, it will be able to put a tab on the inflation in India.

The first index to be released will be from the banking sector. The weights of the indices will be decided by an expert committee, headed by C.P. Chandrashekhar of the Centre for Economic Studies and Planning, Jawaharlal Nehru University. The committee has already decided that the indices will be released on a quarterly basis.

Historically in India, inflation is calculated using two indices namely, Consumer Price Index (CPI) and Wholesale Price Index (WPI). Since a couple of years the rate of inflation, measured using CPI and WPI, has been persistently high. However, the problem of inflation was not felt a lot till now because of the high rate of economic growth and the rise in real income of the population.

World over, India is perceived as a services based country as majority of its exports coming from services. Additionally, services account for 57% of India's Gross Domestic Product (GDP). Inspite of so much dependence of the Indian economy on services, there were no indices to track and understand their price movements.

With the consistently high inflation rate, it becomes important to know about inflation in Services sector, which currently forms more than half of the Indian economy. Having said that, just by forming the SPIs and tracking inflation in services sector will not solve the problems of millions of poor in the country who are not part of the current growth story. In order to save the people at the bottom of the pyramid from volatility in the prices of daily goods, it becomes important to find an answer to the volatile agricultural output which is due to poor infrastructure, bad supply chains, poor storage facilities, and the like.

The solution to problem of high inflation and inflation related volatility is not just to bring out the SPIs but also to work on broad macroeconomic issues like volatility in agricultural output. However, formation of the SPIs is a step in the right direction.

Sources:

§ Govt. plans new index to track price variations - Mint newspaper, April 19, 2011

§ Service sector to have own price index - Business Standard, April 27, 2007

§ India inflation rate - Tradingeconomics.com

§ Bringing tears to India's eyes - The Economist, Jan 21, 2011

Automation and Legal Industry

2011-01-12T09:13:30Z

The legal profession around the world is not confined to the courtroom anymore. The new generation lawyers in collaboration with technical experts are designing several automation tools to enhance productivity, reduce cost and generate revenue. Automation tools are used for a range of legal services ranging from legal searches, contract management, document review, process automation, e-discovery and intellectual property, etc.

The US and UK had Westlaw, LexisNexis and Bloomberg law as leading search engine tools for a long time, making life easier for lawyers and law students alike. Law information product movement in India started with the introduction of Grand JURIX in early 90s, followed closely by Manupatra and LexisNexis India.

For decades, Westlaw and LexisNexis kept serious competitors away, but with the launch of Bloomberg Law in US, the scenario has changed. Bloomberg not only provides lawyers with primary legal content but also enables them to monitor their clients' businesses by harmoniously integrating law and news, making it more lucrative than its competitors. However, Bloomberg still has strong competitors in Westlaw and LexisNexis as these two companies have been used by law firms and schools around the world since a very long time.

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In India, Manupatra has been more popular than its competitors, LexisNexis India and Westlaw India because of being the first online Indian legal tool. However, it's only a matter of time before Westlaw and LexisNexis take over the Indian legal software market as well with their superior technical knowhow and ability to make continual investments. The latest entry in the Indian market is the Legal Information Institute of India (LII of India) which is a free legal portal on Indian legislations, treaties and case laws, with the aim of free access to law movement throughout the world.

Since 2002, the International Criminal Court started a series of electronic legal services project known as Legal Tools project. The aim was to provide a comprehensive collection of resources relevant to international criminal law, combining modern technologies into the investigation, adjudication, prosecution and defense of complex international crimes. The UNODC (United Nations Office on Drugs and Crime), with the aim of facilitating effective implementation of international drug control and organized crime treaties has also developed a variety of legal tools such as the mock trial case training tool, the mutual legal assistance request writer tool and the omnibus survey software .

At present there are several tools in US such as, FASTDRAFT 1.3, MASTERDRAFT 2.0, NOVADOCS 2.0 and SCRIVENER 3.2, etc., which have been developed to help in computer-aided document drafting and document assembly.

Many lawyers have wanted technological revolution to take place in the legal profession. The lawyers today have a better understanding of software tools and technology and therefore are able to collaborate with software developers to develop relevant technology and lower costs. Law firms and lawyers that are able to take advantage of these technology interventions will be able to serve their clients better by lowering costs and significantly increasing their productivity, thereby serving their clients better.

Sources:

1. http://www.unodc.org

2. http://www.icc-cpi.int

3. http://www.westlawinternational.com

4. http://www.lexisnexis.com

5. http://www.ejurix.com

6. http://www.bloomberg.com

7. http://en.wikipedia.org

Consumerism: A Need for a Change

2010-12-21T10:35:08Z

Consumer Protection Act of 1986 ("Act") is a benevolent piece of social legislation. The Act was enacted so that it could be developed into a very useful social legislation that safeguards the rights and protection of the consumers. The Act aims to provide speedy, inexpensive and summary redressal of consumer disputes by superseding traditional common law rule of 'CAVEAT EMPTOR' (i.e. Let the buyer be aware) and adopting 'CAVEAT VENDATOR' (i.e. Let the vendor be aware). This is an attempt to shed light on the present scenario of the consumers in India.

The Act provides four-tier structure consisting of the Supreme Court, National Commission, State Commission and the District Forum. These authorities have readily interpreted consumer usage terms in favor of consumers. The Act also helps to curb anti-consumer activities like misleading advertisements and fraudulent Multi Level Marketing (MLM) schemes. It is noteworthy that investors are taking assistance of this Act as an effective tool to file cases against defaulter banks, financial institutions rather than concentrating on traditional remedies. It can be seen that the consumer courts have held directors of such defaulter banks and financial institutions as jointly and severally liable. Hence, it can be said that the Act has accomplished its object in one sense, but still has long way to go to acieve its objective due to its lack of speedy remedy etc.

Currently, there are 604 District Forums, 34 States Commissions, and a National Commission. However, these are underfunded and more so, overburdened. According to the National Commission report, 87.51% cases were disposed in National Commission, 78.98% in State Commission and 91.23% in District Forum until September 6, 2010. However, 8223 cases are still pending in National Commission, 1,08,384 in State Commission and 2,52,149 in District Forums. Statistically, it would take many years to dispose all the pending cases.

Recently, the Supreme Court expressed its concern over the 3.5 Crore cases pending across all categories in the country and also mentioned that filing of cases has grown by 28% in the past few years. Although the Government makes the consumer aware of their rights through various activities like 'Jago Grahak Jago', however there is a lack of basic requirements like funding to ensure smooth disposal of cases.

Until now, there is no strict procedure for filing complaint. A simple letter containing details of the grievances are treated as a complaint in front of the Consumer Court. In fact, the consumer is required to give a brief about the grievance which should include important clauses like limitation and jurisdiction. Therefore, a common man is compelled to appear through his advocate. Moreover, it has been observed that additional staff from the Food and Drug Adulteration departments are moved to the Consumer Courts and they are not well versed with the consumer redressal procedure.

My hearsay experience is that in 2008, there were numerous cases filed in the District Forums, but they are still pending in their preliminary stages. Due to the heavy burden of pending cases, the Court grants a minimum of 3 months adjournment. Respondents also do not take the summons of Consumer Courts seriously. Ultimately the Courts have to give a reasonable opportunity of 2-3 dates to appear and file his "version" (1) of the case, or give an ex-parte decision. As a result, in many cases, the actual hearing starts only after a year from the date of filing the complaint. However, the Act says that the decision has to be pronounced within 90 days from date of the filing of the complaint.

Few pointers if taken as a suggestion can bring a change to the whole consumer redressal system:

Consumer Courts should be empowered to execute Power of Attachment and Sale of Property for an order made under Section 25 of the Act. Currently, these powers fall within the purview of the District Collector. Although, the consumer has the order of Court in his hand, he still has to wait for several years for its execution, which leads to disappointment amongst consumers.
The provision of the Circuit Bench should be made at a District level where huge numbers of cases are pending. Currently, the Circuit benches are available only at the State level.
Consumer Courts should be empowered to take cognizance of any misleading advertisement, hazardous goods suo-moto within its jurisdiction and in absence of actual complainant.
There should be a provision made for interim damages, where the respondent admits claim. However, a final decision on the quantum of compensation and damage should be ascertained later on
The President of District Forum should be appointed with the same powers as that of an Additional District Judge.
The President and other members of the District Forum should be provided compulsory training that is provided to the newly appointed Judges through the Judicial Academy, so that they appreciate the plight of the consumers.

Speedy remedy was a paramount object of Consumer Protection Act. However, at this present juncture, the social legislation is not properly executed due to various hurdles in the judgment delivery system.

(1) 2002 Amendment of Section 13 from Consumer Protection Act, 1986.

References:

1. http://ncdrc.nic.in/statistics.html
2. Consumer Protection Act,1986

Research for this blog is courtesy: Kamlesh Limaye

Need of the Hour in India - Corporate Structure of a Limited Liability Company (LLC)

2010-11-22T12:45:10Z

I was just going through the popularity of LLP's (Limited Liability Partnerships) in India. LLP Act, 2008 in India was notified on March 31, 2009 and the rules were notified on April 1, 2009. The first LLP was registered on April 2, 2009 and 2780 LLP's were registered until November 12, 2010. This shows that LLP's allow businesses to run with flexibility which young and innovative entrepreneurs find attractive as the act provides flexibility to devise incorporation agreements as per their choice.

In light of this encouraging statistic, if one compares legal corporate structures in India and western countries, one will find scope for incorporation of a one more such form of corporate structure in India - Limited Liability Company (LLC).

LLC: Need of the hour

Limited Liability Company is a type of corporate structure which is very popular with small to midsized entrepreneurs in USA and UK.

What India currently requires is a legal corporate structure for small and medium enterprises that provides the advantage of limited liability, simple registration, minimum legal and compliance requirements and filings access to capital and most importantly avoidance of double taxation - at the corporate and personal level.

Surely, this type of structure can help in ushering transparency (as most of small and medium businesses/enterprises run as proprietary businesses in India and notorious for evading taxes and shoddy book keeping) and a vibrant corporate culture.

Thus, introduction of LLC in India will revolutionize the corporate structure as people will be interested in running small to midsized businesses that are currently running as proprietary businesses.

What is LLC?

A Limited Liability Company (LLC) is a flexible enterprise that has the essence of both a partnership and a corporate structure. It is a legal form of company that provides limited liability to its owners. LLC's can represent non-profit organizations as well.

Advantages of LLC:

• Going concern - the entity does not runs the risk of liquidation in event of death of any Directors and other unforeseen circumstances

• Limited personal liability for business debts and obligations

• More capital raising options as compared to a proprietary business as it is a legal entity.

• Simplified registration and record-keeping (annual meetings and minutes are not required)

• Tax Flexibility: Similar to sole proprietorship or partnership, an LLC enjoys pass-through taxation. This implies that owners (also known as "members") report their share of profits or losses in the company on their individual tax returns. The Internal Revenue Service (IRS) does not assess taxes on the company itself. This prevents "double taxation".

• Owners/members are not required to be citizens of the country or permanent residents
Today India is one of the fastest growing economies in the world. At this juncture of time, adopting LLC's and similar concepts will provide the much needed corporate structures for small and medium enterprises that constitute the backbone of the Indian economy. This will also provide legal status to proprietary businesses that are hereto out of the purview of white economy and hence starved for capital. Hence it is high time that Government of India brings in legislation to facilitate corporate structure of LLC.

References:
1. Ministry of Corporate Affairs, Government of India: www.llp.gov.in/
2. http://en.wikipedia.org/wiki/Limited_liability_company

Think fast about alternative currency

2010-11-14T04:10:00Z

Since end August this year when Federal Reserve Chairman Ben Bernanke talked about the possibility of second round of quantitative easing, Dollar has lost close to five and half percent of its value and it continues to fall. In the G20 meeting, concerned nations quarreled over the decline in the dollar and apparent erosion in the value of their dollar denominated assets. To be fair to Federal Reserve, their action was possibly necessary given the continued low level of resource utilisation and the resulting downward pressure on prices. Hence, even if this round of easing does little for the growth and employment in the economy, at least it should help fight the deflationary tendency.

The bigger question, however, is that how would it affect other nations, who sees erosion in the value of their dollar holdings. A good deal pressure on Gold (and other commodities) was already there before this round of easing. Now, it is quite possible that their prices would rise even further. For the sake of stability in this system and to control the volatility related to dollar-commodity cycle as well as to prevent the erosion of wealth of sovereign nations, the world should consider fast on an alternative basket of currencies instead of dollar. The sooner they can do that the better for the world.

Video: Contract Lifecycle Management - An Ecosystem Approach

2010-10-11T08:54:31Z

The time is right for contract and legal teams position themselves as business enablers. The only way to earn the respect of stakeholders is to become partners with clients in closing business transactions on a timely basis while at the same time negotiating and mitigating the risks assumed in the contract. The right balance must be struck.
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71% say it takes too long to close contracts and that contracting teams are too difficult to deal with

56% of respondents believe that contract teams are not involved early enough in the business transaction leading to poorly negotiated contracts and greater risks due to improper structure and lack of bandwidth

49% said that they would like to focus on higher value contracts

46% also said that they would like to like to have closer working relationship with stakeholders

In order to bring in efficiencies, the contracting groups must build the right foundation--efficient processes, adaptable staff, and right tools & services. All of this will require time and money which is worth the investment since 60-80% of business transactions are governed by contractual agreements and a typical Fortune 1000 Company maintains 20,000 to 40,000 active contracts at any given point of time.

Join me and Tim Cummins - President IACCM, in a discussion on the 22nd of October, at 11:00 am CST to exchange thoughts and seek answers to the following questions:

Why is contracting excellence imperative?
What causes sub-par contracting?
When do tools and outsourced service help?
Which areas can be improved improve upon?

and

How can you build an ecosystem?

Hear about our view on how the contracting function can be made efficient through adopting an Ecosystem Approach

If you'd like to participate, please Register

Required Catalyst from the Indian Government to Contribute to LPO Growth

2010-09-07T07:08:00Z

Legal Process Outsourcing (LPO) companies came with lot of excitement in one hand and insecurities on the other hand. The development and growth of LPO's in India has benefited lawyers due to the lucrative pay packages as compared to their counterparts who are practicing law. Also 'law' now seems to be an attractive career opportunity for students pursuing higher studies in India. However, an often overlooked area or flip side to this is that fresh graduates are apprehensive about their fate as they are no longer tagged as an advocate according to The Advocates Act, 1961.

Professional practice of law in India is governed by The Advocates Act, 1961; however, the term legal "practice" is not defined in the Act. Dependence is thus often placed upon an interpretation concluded from reading of Sections 30 [1-See below] and 33 [2-See below] of the Act which indicates that "practice" is limited to appearance before any court, tribunal or authority. It therefore excludes legal advisory, documentation, alternative dispute resolution mechanisms and similar work that lawyers do.

However, most of us are unaware that India is a signatory to the General Agreement on Trade in Services (GATS), an organ of the World Trade Organization (WTO). Being a signatory, it is under an obligation to open up the services sector to all member nations. The legal profession is also taken as one of the services that are included in GATS.

The Indian government needs to act as a catalyst and facilitate the influx of outsourcing work to India by making necessary arrangements, which include defining "legal practice" in The Indian Advocates Act, 1961, making necessary amendments to the existing policy framework and extending the present tax concessions available to the IT and ITES industry to the LPO industry as well.

[1] Section 30: Right of advocates to practice. Subject to the provisions of this Act, every advocate whose name is entered in the 1*[State roll] shall be entitled as of right to practice throughout the territories to which this Act extends,--
(i) in all courts including the Supreme Court;
(ii) before any tribunal or person legally authorized to take evidence; and
(iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practice

[2] Section 33: Advocates alone entitled to practice.- Except as otherwise provided in this Act or in any other law for the time being in force, no person shall, on or after the appointed day, be entitled to practice in any court or before any authority or person unless he is enrolled as an advocate under this Act.

Legal Case Management - Scheduling Realistic Timelines

2010-09-02T14:35:15Z

Overview

Legal Case Management/Matter management in United States is an effective system to manage events and timelines for a lawsuit. In this blog, I would outline some of the potential challenges encountered by the attorneys, law firms, corporate legal departments and judicial departments in establishing the timelines to effectively manage a legal case from initiation to completion. These risks/ challenges would highlight the need for specialized consultation/heat mapping required for scheduling realistic timelines for cases and the role play of techno-savvy Legal Service Providers.

As per the Federal Judicial Case Load indicators for the twelve-month period ending March 31, 2009 there were 1,413,498 cases pending in US Bankruptcy Courts.

(Reference)

The Administrative Office of the U.S. Courts Office of Public Affairs reports:

"Bankruptcy filings rose 20 percent in the 12-month period ending June 30, 2010, according to statistics released today by the Administrative Office of the U.S. Courts. A total of 1,572,597 bankruptcy cases were filed in federal courts in that period, compared to 1,306,315 bankruptcy cases filed in the 12-month period ending June 30, 2009. This is the highest number of bankruptcy filings for any period since many of the provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 took effect".

"Non-business filings for the 12-month period ending June 30, 2010 totaled 1,512,989, up 21 percent compared to the 1,251,294 non-business filings for June 30, 2009. Business filings totaled 59,608, up 8 percent from the 55,021 filings reported in June 30, 2009".

(Reference)

Potential Challenges:

Some of the potential challenges associated with setting up of timelines for lawsuit management include: a) accurately defining the scope of the "matter"; b) high costs involved in conducting case studies on matters decided under similar circumstances to prepare realistic and effective timelines; c) connectivity with outside counsel; d) lack of adequate trained resources and operational challenges to manage existing ones; e) inability to focus on effective communications and change management process throughout the lifecycle.

Mitigation through effective partnerships:

Sound analysis and project management methodologies could mitigate most of the challenges outlined earlier. Law firms, attorneys, corporate legal departments and judicial departments can partner with specialized vendors to conduct case studies of the matters decided in similar circumstances. Based on such analysis the entire life cycle of the case lifecycle could be mapped to near realistic timelines.This task should ideally be off shored to vendors with capabilities in both, legal and technological sphere. The legal professionals can understand the nuances of the matter and leverage the expertise of technology experts to design the end to end lifecycle of a matter. The process would also reduce unethical legal billing and improve customer relationships.

As the new web-based collaboration tools are fast replacing the conservative matter management systems, law firms and corporates can meaningfully partner with offshored service providers to take this quintessential part of matter management to the next level.

Customized Approach to Contract Drafting for Attorneys

2010-08-30T09:19:39Z

Drafting contracts makes every attorney feel like they do high-end legal work. Even when doing outsourced contract management services, we feel we are at par with actual in-house contract attorneys. The reason is that contracts are entered into for the purpose of doing business, which always involves high-risk and therefore gives us a high. For example, real estate sales contracts, commercial contracts are entered into with the prospect of doing business with profits. Therefore, drafting a good contract and considering the business and legal risks involved is essential to save our clients from expensive lawsuits in future.

Here are a few things that I learnt from my experiences in contracts management projects that kept me "connected" to my client's contracts -

Getting to know the client's business - whether by reading up on them, their industry or asking the client to give us background information on themselves
Asking the business heads why they entered into such contracts - get some background information on the business requirements that prompted them to enter into this deal
Asking myself how adding/deleting/modifying some of the clauses would help the clients
Trying to understand the internal need or purpose of reviewing/abstracting/redlining contracts that deviate from the client's set standards or fallback provisions for the same type of agreement

All contract management professionals should be trained on all kinds of contracting work such as reviewing, drafting, negotiating, abstracting, redlining, re-drafting etc. and gain expertise on all types of agreements such as MSA, SLA, NDA, Partnership Agreements, Joint Venture Agreements, Purchase Agreements, Sales Agreements, Commercial contracts etc.

Execute mock projects/assignments that would help in getting familiar with all types of contracts. For example: A reviewer may initially be assigned to perform contract abstraction work only on MSA's. After that he or she should then be asked to review NDA's etc. Constant feedback should be provided they should maintain a training database that can record their improvements over a period of time.

Contract reviewers could also practice negotiating contracts with the help of sample agreements amongst their team members. This would boost their confidence in the art of negotiation with third parties and striking good deals for their clients.

Contract Management Outsourcing Bloopers IV

2010-08-19T11:17:18Z

Please prepare a document at the beginning of the project outlining the scope of the project. Tell the Vendor's team why you are undertaking this exercise and what you hope to assess and gain by way of information. One of my clients was in the healthcare industry and she made it a point to always hammer it to my team that the reason she was doing an assessment on the contracts was because she wanted to know which of her regional contract managers was negotiating the best in the country and which of them needed to be given the boot! This made it amply clear to us that the pricing provisions needed utmost scrutiny in the contracts and we actually developed ways to track different types of pricing and grade the contracts by each region! Think about it - this is the stuff a GC's dreams are made of. She got so much visibility in the company because she held a high level meeting and made a change at a business level. All because she told us what her end goal was!

Baby Boomers Economic Bloopers

2010-08-17T09:15:37Z

Unfettered consumerism that the US economy embarked on with the baby boomer generation seems to be getting shackled as the recession of the century, engendered by the crisis in the financial economy, engulfed the real economy.

This is the generation that learned to live beyond means. Much beyond, infact, as their debt to disposable personal income peaked at 130%. So much so that income ceased to be the criteria for consumption pattern. Wealth did. As cheap credit fuelled strong growth resulting in increased consumption demand leading to further growth, asset prices continued to defy gravity. MEW (Mortgage Equity Withdrawal for the unintiated) became the buzz word. As economic logic took leave of their senses, the boomers felt that they reached their el dorado. The insatiable (nay uncontrollable) urge to splurge led them to devastate their wealth with the foolish notion that the wealth would rebuild itself, as the prices will continue to rise. Little did they realise that Murphy's law will catch up with them.

Something had to go wrong and it did. Unfortunately for them, conducive economic environment meant that things soured much later than they should have. And when it did, it appeared like a tsunami.

Result? 3 out of every 5 baby boomers do not have enough to save, as per an article by Wall Street Journal. It is expected that the return people can hope to earn on their assets has fallen, particularly for those who switch into bonds or annuities to guarantee a fixed income. The average yield on U.S. government, corporate and mortgage bonds stands at about 2.4%, while stock-market valuations suggest a long-term return of about 6%. At those levels of return, some 59% of people aged 56 to 62 will be at risk of not having enough money to cover basic living and health-care costs in retirement, estimates Mr. Van Derhei. If market returns are higher--8.9% for stocks and 6.3% for bonds--the picture isn't a lot better: The percentage at risk falls to about 47%.

In effect, the baby boomers are shattered and consumption is likely to remain muted for times to come. They are spending less and, looking at the pathetic state of their retirement fund, they are more likely to consume less and save more going forward.

My feeling is that this is going to spawn a generation of thrifty consumers, a generation that has seen the devastation wrought by their ancestors, a generation that is experiencing a hard to get job situation. As the unemployment data shows, unemployment among the youth is high. Very high in fact. In such circumstances, it is very difficult to expect another generation of reckless consumption. While this is good for the economy in the longer term, the pain that will be felt during the transition from recklessness to a more responsible behaviour will be immense. There can be no penance without pain.

Need for players with Multi Service Capability in LPO Space

2010-08-13T07:40:53Z

There has been an explosive growth in the LPO industry in India in last few years.

Currently, bulk/majority of the revenue in LPO currently comes out of Document Review which is considered to be lower end of LPO value chain. The fear surrounding such work is always that over a period of the time these services get commoditized. The commoditized business is easier to replicate and hence entry barriers for competition is lower. To add to woes of LPO Service Provider beyond cost arbitrage client do not perceive any value add of the service provider. This creates significant long term sustenance issue for LPO service provider.

LPO service providers in India have also ventured in the following services:

• Contract Management
• Intellectual Property Services
• Legal Research Services
• Litigation and Administrative Support Services

I have an analogy here.

One can't help but notice the growth of IT services just a decade ago. The services offered then were largely on labor cost arbitrage, application development and maintenance (ADM) to be specific. Now India is a leading IT Service provider. Now, top IT services providers manage end to end processes rather than just ADM. Moreover the nature of outsourcing has moved deeper from one that required single capability to multi-capability like ADM, Infrastructure Management, Project Management, Consulting, PLM, Validation and testing, analytics, business intelligence, predictive modeling, BPO to name a few .

LPO Industry as it matures will also move from primarily traction processing to process outsourcing to being a value added legal services partner.

However to be a true legal service partner, clients will require transformation partners who can understand their business and provide value added services.
This leap however requires a different set of skills, mindset, organizational capabilities and strategies.

If one goes by the same trend as IT Services, I reckon that the following skills and capabilities (not exhaustive though) will be a part of any legal services engagement in very near future:

Quality and Process Management: These skills are key to any successful engagement.

Utilization of Technology for LPO Domain: This involves continuous improvement on the quality, process, turnaround time, consistency etc., through development of specific and reusable technology, IT tools, most of them developed in house.

Knowledge Management: This is key for knowledge intensive services like LPO. As any (fast) growing industry, attrition will be a problem in future in thin industry which makes this skill critical for this industry. Every client in LPO space has its own associated processes, terminologies, methods, procedures, rules, nuances, a lot of which may change routinely. A robust KM process will ensure alignment of the LPO engagement with the client.

Project Management and Transition Management: These capabilities will be required for management of any large/complex project or engagement especially in a multi service LPO environment.

Associated BPO Services: There are associated services with any process and LPO domain is not an exception. These services will be required as the client engagement in LPO domain deepens.

Global Sourcing: Getting right skills at right place and time will go a long way in maintaining competitive edge for LPO firms. Deeper engagements will require onsite-offshore model.

Consulting: These services are provided as a value add and for upselling. These services will be offered as the LPO firms build domain expertise. The services can be as varied as consultation on CRM to benchmarking for law firms.

One may simply argue that any new service starts as a simple offering and progressively gets inclusive, deeper, complex with interdependent disciplines as the service matures. Hence, the same will also apply to LPO services. My point is that though that is true, standalone transaction focused LPO service providers will find it incredibly hard to scale up on the skills mentioned above.

Hence the LPO industry today requires multi-service players as it matures. These players are/will be much better placed in terms of business value add to customer and also in terms of overall competitiveness.

Standalone transaction processing oriented players unless they are able to find niche or acquire domain skills, will be acquired or loose competitiveness.

US stocks and Treasury

2010-08-06T14:21:23Z

Sadly, it's all so funny. Today's employment numbers were too bad and market fell again. Lots of investors sold off and they collected their money to invest in US Treasury. This is becoming far too predictable. With every bad news (and they are coming fast and thick again), investors move to buy the so called "safe asset", US Treasury. The yields continue to be pulled down under this massive expectation. The investors are quite close to irrational expectations from the US government. The government has Federal Reserve on its side, alright -- but they too have limitations. Investors better look for safer places like EM/Gold than Treasury/$.

How dry is the Baltic Dry Index?

2010-08-06T07:27:45Z

Well quite a bit.

The slowdown in the real estate sector has already started reflecting in huge drop in Chinese imports of commodities. Primarily due to this, the Baltic Dry Index (BDI) has fallen by nearly 60% in the past 2 months.

]]> The Baltic Dry Index is a daily average of prices to ship raw materials representing the cost paid by an end customer to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The BDI is one of the purest leading indicators of economic activity. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand.

Free Fall in the BDI

Source: Bloomberg

The BDI has long been seen as a leading indicator of global demand for commodities, which in turn indicates demand from consumers of manufactured goods. The main driver for the recent drop seems to be concerns about the cooling off of China's steel sector. Steel is the biggest user of iron ore and Iron ore, copper & coking coal account for more than a third of the Baltic dry freight.

Sharp drop in Chinese Commodities Imports

Source: Reuters.

China being the world's largest buyer of key base metals like copper and aluminum (consuming about 40% of the total global supply) and being one of the largest consumers of iron and steel, a cooling down of the Chinese economy, particularly in the real estate sector is not a good news for the commodities market.