PUNE: When the US sneezes, the whole world catches cold.

This has been proven once again in the last few weeks as one giant corporate after another, ranging from big old investment banks to mighty financial institutions and insurance giants, filed for bankruptcy and as they did the ripples ran all across the global stock markets and industries linked to US, both directly and indirectly.

If Lehman Brothers, AIG, Merrill Lynch, Freddie Mac, Fannie Mae, Bear Stearns, Washington Mutual and Wachovia go under the axe, the blade cuts deep worldwide. Here's however another side to the dreaded Aaachu!

When the US sneezes, isn't there also the need for someone with a tissue paper or napkin, even if we don't talk about anti-cold pills for the time being.

It comes out that among these rare tissue-paper providers who can make cream with the spilled milk, stands the LPO (Legal Process Outsourcing) industry. And that's where Indian LPO players are reaping the opportunity in a period of global crisis.

Because when bankruptcy strikes or various form of bailouts or sail-outs (with M&A) happen, there is clearly a big need and bandwidth for the legal work associated with such events. That could mean a mine of opportunities for LPO, that is expected to be worth $4 billion by 2012.

A typical document review work differs between $300 per hour in US and $25 to 50 per day for the same work being done in India, illustrates Manisha Kanojia, legal expert for Verve Communications, a very nascent LPO in Pune that now has scale-up plans of about a 1000 attorneys by 2011.

"Apart from the LPO work that comes from pharma, IPO, IP infringement etc, of late there is a surge in work owing to the bankruptcy cases being filed. Specially from cities like Chicago, there is a lot of opportunity lying."

Another Legal Services offshore operations firm, Mindcrest that will ramp up to 800 heads by EOY also sees the current US meltdown as a downpour of opportunity. The fall-out of the financial events would be followed by many legal ramifications like shareholder suits or bankruptcy processing, shares MD Rohan Dalal.

"You need a lawyer, be it good times or bad times and that need would only increase in these areas. The impact on LPO industry for sure hence would be positive and legal Budgets would see more outsourcing flavour as companies would see a more stringent mandate of being economic."

The proof of the pudding, however, still remains to be seen. None of the LPO players is so far able to share any concrete numbers or names that signify the sentiment of a crisis-led growth.

But as Dalal clarifies, what's palpable already is the interest and deal-conversations that have started coming from banks and financial institutions.

"We have seen an up tick in interest specially in the litigation work.  Banks and FIs have started talking to us. The numbers are hard to tell at this stage but the magnitude of a surge due to the current US situation would be arguably high.

"It's still hard to freeze as to how many shareholder lawsuits would happen with the firms going bankrupt and how many class-action suits would follow."

Another positive turnout is the change in LPO deals as engagement tenures are becoming longer and credibility factor going high. Earlier, the question mark used to exist on an Indian lawyer, while now a LPO firm's team in India is a virtual and well-integrated extension of teams abroad.

There is more than 50 per cent price point advantage for an Indian LPO provider. From the perspective and experience of Poonam Vasudeva, delivery head, LPO Services, Infosys, there is sufficient traction happening in the financial space as well as litigation space due to bankruptcy and other incidents.

And Indian vendors need not worry on arbitrage yet.

"Legal firms in the US have never really slashed prices and some little movement that has started coming out too in the last month is not that significant and restricted to sectors like Real Estate where some lay-offs have happened. The big ones have still not cut prices. Changes due to the current crisis are limited to the billing formats like hourly or transaction pricing."

No doubt the Infosys LPO arm which would be about 340 FTs by mid December is on track to its scale-up plans of about a 1000 heads in the immediate years.

In fact, as Commodore Anand Khandekar from MCCIA (Mahratta Chamber of Commerce, Industries and Agriculture) asks, with the valuations coming down to attractive levels, why are ITeS players not showing inorganic appetite the way old economy firms have done.

"There is a lot of opportunity lying in countries like Uruguay, Finland, Ireland. South America is not affected much by recession."

So apart from customers, there also lies scope for acquisitions for LPO players in India in the current scenario.

It would be a crisis that will benefit both the buyers and sellers of the industry as an Analytics specialist from a top-tier IT firm's KPO arm points out.

"The demand was always there. The discretionary spends may go down but the total outsourcing work and value will grow. It would move from 'nice-to-have' to 'need-to-have' outsourcing engagements. From the sell-side of the fence, the current crisis would in fact give big names and thus reference able portfolio to LPOs."

As Dalal rightly said, you need lawyers all the time, good times or bad times. And hence it looks like that the bad times, if so for others, bode hope for LPO firms for sure.

The experts were speaking with CyberMedia News on the sidelines of the fifth ITES summit 'Outsourcing Ventures' by VisionIndia in Pune on Friday.

In the recent few years the global spending on legal services has been estimated to be over $250 billion (about two-third is accounted in the US).

And how do you see this possibility?  Can India Inc make hay in the global meltdown?