Another week another outsourcing of legal support staff story, or so it seems in 2011. At the time of writing the latest is Allen & Overy and their move to outsource to Belfast. This follows other firms, like CMS Cameron McKenna giving it’s support staff the choice of Bristol or India.

It’s like the mid 90’s all over again. Well for me it is. At that time I was starting off in IT in the utilities industry. In the UK the government had privatised the regional electricity companies and they were suddenly in a competitive market. Very similar to the position law firms find themselves in now, a time when a fairly comfortable profitable market was suddenly plunged into an arena that was getting very competitive very fast.

The mantra was to cut costs and quickly. As a reader of Janders Dean’s blog points out “They’re doing this to cut costs aren’t they and if that means cutting some of the flab out of the headcount so be it. This is a business after all”. And as in the utilities then, it’s the same in law firms now, target headcount and target support functions.

I totally agree with the point in the quote above, that business needs to cut flab to remain competitive. And although not nice for those involved, good companies do tend to handle this well and look after the employees affected.

But it always reminds me of the story of East Midlands Electricity and what can happen if the sole focus of an outsourcing deal is money saving. You can read more details of what happened here and here, but the summary is that EME didn’t see the business changes that the deregulation of the UK’s domestic electricity and gas supply market would bring. And when those changes came they realised that there was no substitute for experience of an internal IT department and that there was a need for them to take direct control of all business-related IT projects. This led to a cancelation of a 12 year deal some 5 years early and a recreation of an IT department.

I think maybe A&O’s response is a better play, I’ve often wondered why a number of the London based UK firms persist in maintaining support functions in the capital, where the cost of offices and staff is much more expensive. So rather than outsource why not shift the functions to cheaper parts of the UK, say for example Yorkshire!!