Outsourcing and Offshoring – Unplanned Consequences

Foreign ownership

In the early days of online legal research, when everything was uncertain, governments and law societies were legitimately concerned about the prospect of foreign ownership of Canadian legal information. The fear was that the legal heritage of Canada would fall into the hands of “non Canadians”, a prospect viewed with horror in many circles. While no one at that time really could foresee the future of online legal research in Canada, in retrospect, everyone should have expected that the natural “Canadian” predisposition to reconcile differences would produce a solution that would reflect everyone’s interest, offend almost no one, and do the job as well as, if not better than, is done anywhere else.

As things have played out, we have access to online legal information from almost every conceivable source, including

– a flag waving, “more Canadian than thou”, company based in Ontario,
– a quiet low key gentlemanly Canadian business based in New Brunswick,
– a profitable provincial crown corporation based in Quebec,
– a righteous free service owned by the law societies and operated out of a university technology think tank,
– an Anglo Dutch multinational with deep Canadian online roots, and
– a Canadian controlled multinational with its executive based in the United States.

It is the very image of cultural “diversity” that only Canada could produce – a highly competitive environment with something for everyone. Left on their own, Canadians appear to have created an ideal “made in Canada” solution to the potentially divisive issue of foreign ownership and control of our legal heritage. There never really was a need to make a fuss.

Outsourcing and offshoring

Some would argue that our legal heritage is threatened once again. The new boogeyman on the scene goes by the name “outsourcing and offshoring”. In their efforts to reduce costs and maintain margins in the light of falling prices, some legal publishers have hit upon the twin ideas of outsourcing and offshoring.

“Outsourcing” in online legal publishing simply means handing off the job of gathering and processing data and preparing value added content to another company. When “offshoring” is combined with outsourcing, it usually means that the work of creating databases of legal information has also been moved to another country as well as another company. In the process, the legal publisher effectively abandons its traditional responsibility for preparing content.

Based on what I believe to be an incomplete analysis, it has been determined by the leadership in certain companies that the processing of legal information for use in online legal databases and the creation of value added content like case summaries, can be done more cheaply in India and the Philippines, without sacrificing quality or currency. This analysis is based on the assumption that the customer does not care that the legal publisher, having abandoned its traditional role in providing legal information to the legal profession, can no longer provide its “imprimatur” that the legal information that its sells or licenses is accurate and authoritative.

(Offshoring also describes the situation that exists where some legal publishers offer online access to legal information using platforms based in the United States, believing it to be more efficient and cost effective than using a platform located in Canada or the United Kingdom.)

From the perspective of the legal publishers, the timing of these changes couldn’t be worse. Not included in the calculations was any assessment of the impact of such a move on domestic sales in the current political climate and economic climate. “Buy domestic” has emerged as the dominant idea just as some legal publishers have effectively relocated their core business abroad. More than a few customers will have second thoughts about continuing to buy from legal publishers who have pursued outsourcing and offshoring as the panacea for their problems.

While the idea of “buying domestic” is especially strong in the United States, the idea exists in other markets. Canadian consumers in general have been a bit more tolerant of – or perhaps indifferent to – foreign ownership and control of online legal publishing, but this attitude may change. As online products become increasingly competitive in content and price, customers may opt to chose research solutions made entirely in Canada by legal publishers based here rather than built by nameless companies based abroad.

The consequence for legal publishers who have chosen the short term expediency of reducing their costs of production by abandoning tradition may prove to be the further weakening of their overall financial performance. Disillusioned, formerly loyal, customers may take their business elsewhere. Alternatively, customers may demand that the cost savings from outsourcing and offshoring be passed through to them in the form of even lower prices. Either way, the publisher loses.

Post-script

New real or imaginary threats to our legal heritage may emerge in the future. With regard to the sensitive issue of protecting our legal heritage against some unforeseen event, Canadians will have some comfort when the legal publishers deposit electronic copies of their databases in the public archives.