A new article by Ron Friedmann and Joy London suggest some interesting data about offshoring. First, offshoring of legal works seems to be happening at a slow pace — certainly slower than many experts were expecting. From the article:

Our impression, based on reading and talking to onshore and offshore contacts, is that the volume of work moving offshore is not as large as the growth in our list might suggest. One sign of “more smoke than fire” is that several companies on the original list are no longer in business. Another sign is an absence of visible consolidation, which typically accompanies rapidly growing markets. (Just look at the e-discovery market for a great example of consolidation in a growing market.)

Second, and not surprisingly, the greatest growth is in administrative functions, not pure legal functions:

Bigger opportunities probably lie in outsourcing secretarial support and document processing and other law firm administrative functions. Already, several companies on our list offer outsourced word processing. The continuing merger trend among law firms will, we think, ultimately lead to more outsourcing of all sorts. Right now, many newly merged firms are dealing with lawyer and operations integration issues. Once full integration has occurred (which can take several years), outsourcing will likely increase.

Finally, outsourcing by large firms is picking up momentum, but small firms are also taking advantage of outsourcing opportunities. The article quotes an upcoming article from John Tredennick:

“the ease with which lawyers can outsource work to remote parts of the globe. Today, you might consider hiring a paralegal or secretary who lives in another state or even a different country (and people are doing just that). You can speak with them over the Internet without incurring a long distance charge. You can also send files to someone thousands of miles away faster than you could walk down the hall with a dictation cassette.”

Offshoring legal services certainly has a long way to go, and the path is not an easy one. However, I expect that nearsourcing (e.g., hiring someone a city or a state away) will grow at a much faster rate than offshoring, especially as technology continues to shrink distances. However, as John Tredennick observes, with the growth of the Internet, nearsourcing (and outsourcing generally) is often more efficient than walking down the hall. And that’s one of the most interesting trends of all.

Developments in Legal Outsourcing and Offshoring (via LLRX.com)