Fifty years ago, companies were vertically integrated, maintaining an internal Department for each business function. Gradually, companies began to outsource, assigning non-essential tasks to third-party service providers. Outsourcing freed up employees ‘ time to focus on core business functions, significantly reducing business costs.
This transition also occurred in the global intellectual property (IP) sector. In the beginning, companies managed all IP functions internally. As IP activities require more skills, in-house IP-reduced departments. Suddenly, intellectual property law firms started catering for companies that need IP analysis, IP filing, IP enforcement and similar tasks.
To remain competitive, companies and law firms began outsourcing support functions such as patent search, patent drawing and administration. However, finding a team with the necessary skills at the right price was not an easy task.
Three reasons to consider an IP back-Office
Companies are realizing the importance of innovation and the consolidation of their IP function.the latest USPTO data explains that individuals and corporations filed 399,055 patents in 2020 alone. But what happens when companies fail to create and implement an IP strategy? There are three situations to consider:
First, I’ve seen that companies that don’t proactively optimize their IP budget often struggle to control costs, especially when managing a growing IP portfolio.
Second, since the return on investment (ROI) in IP is not immediate, it is difficult for business leaders to allocate resources to IP management, resulting in less IP creation. Companies that understand the importance of IP often budget for it. However, others might avoid IP because of seemingly high costs.
Third, while there are several instruments that manage small IP portfolios, their excessive cost is not always justifiable and their poor accuracy requires intelligent human oversight. An incompatible tool or analyst can lead to significant issues, so it can be helpful to work with a dedicated IP management team to complement those tools. (Full disclosure, my company works as an IP back-office, like many others.)
Building a team of IP professionals
Patent professionals include local patent attorneys, patent engineers, patent information professionals, patent illustrators and paralegals. For trademark filing and management, businesses need local trademark attorneys, trademark search professionals, and paralegals. A company can either manage IP portfolio tasks internally or outsource them to a team of professionals. The latter has been a dominant option lately, as explained in the market study.
Outsourcing works with both offshore and nearshore locations. However, nearshore outsourcing has its own set of challenges. In the United States, with a reasonable number of IP professionals, it is not difficult to find talent. However, hiring contractors near the coast can be costly.
In contrast, there are countries where it is difficult to find IP talent.during my company’s expansion to Sweden, I noticed that companies were outsourcing patent drawing work to England despite high costs due to a shortage of local patent writers. This locally unsatisfied requirement for low-cost technical talent led companies to look for offshore locations, and they rated India as the most suitable country.
India: an IP back-Office destination
India’s entry into the outsourcing market in the 2000s gradually changed the game. It offers a large pool of high-quality talent and cost-effective services. It prompted intellectual property law firms and innovative companies to perceive India as a major outsourcing destination. Just as China is seen as “the factory of the world,” India is known as “the internal IP Office of the world.”””
So how do companies tend to outsource to India? They outsource key IP-related legal work to law firms, but outsource support services such as patent analysis, analysis, infringement identification, patent portfolio management, technical writing, paralegal support, patent drawings, and Patent and Trademark Search to companies in India. However, local intellectual property lawyers do not. they are irreplaceable as they have local legal qualifications, licenses and a better knowledge of local laws / Patent Office guidelines and jurisprudence. Therefore, some companies outsource all tasks to major law firms. These law firms then decide on the support services they plan to outsource to India.
Here are some reasons to outsource IP work to India:
* High quality talent: talent has been India’s greatest strength in the intellectual property sector. By searching on LinkedIn, India has nearly 15,000 IP professionals, including approximately 700 patent paralegals and 130 patent illustrators, serving the global industry.
* Proven destination: large companies have chosen India to establish a significant number of In-House IP offices in India. Similarly, major trademark and patent support services companies have their delivery centers in India.
* Low-cost services: in India’s IP services sector, depending on the type of work outsourced, my company has observed that cost savings can range from 50% to 80%.
* Time saving: local lawyers handle the main legal work while outsourcing IP management support to another firm in India. This reduces costs and combines local knowledge of U.S. law with the dedicated support structure lawyers need to run profitable businesses for their clients.
How To Select A Credible Outsourcing Partner
To choose the right outsourcing partner in India or elsewhere, companies can validate credibility by years of operation and classification of third-party media. To ensure good quality work, interview the partner’s employees and carry out pilot projects. Other factors include evaluating data security and insurance policies.
IP back-office association is not transactional. Companies sign this long-term agreement. Accordingly, make sure the partner is friendly to employees. You can do this by checking ratings on agency or third-party websites like Glassdoor. Also, check if the business has permanent employees or hires freelancers. The latter can raise data security issues.
Companies must sign strict confidentiality and non-disclosure agreements with the partner. I also recommend keeping the jurisdictions of such agreements as your home country or a neutral third-party location. Finally, start outsourcing gradually by evaluating multiple vendors over a year and committing to one thereafter.
Organizational structures are very different from what they were 50 years ago. Modern companies can outsource certain tasks to remain competitive and profitable. With abundant and affordable IP talent, India can be a good IP back-office choice for your business to help increase IP insights and optimize internal IP budgets.