Recession is Coming (Probably) Outsourcing May Be the Way Through

Guest post by Doug Austin, Editor of eDiscovery Today

Don’t shoot the messenger, but (to paraphrase a line from Game of Thrones) recession is coming. Probably. According to the World Economic Forum, almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18% consider it extremely likely – more than twice as many as in the previous survey conducted in September 2022. US GDP increased only 2.1% in 2022 after increasing 5.9% in 2021. Year-over-year inflation, the rate at which consumer prices increase, was 6.5% in December 2022.

Sorry if I’m being a “Debbie Downer”, but those are trends that give me pause. Since this is an eDiscovery blog, I’ll discuss the issue in terms of how it impacts eDiscovery, what you need to know, and how you can respond to these challenging economic times. I’m anticipating the questions you might be asking and providing answers to address those questions that (I think) you may have.

Is the Recession Extending to the eDiscovery Industry?

It certainly seems to be extending to eDiscovery, giving many organizations pause as well in terms of how they manage budgets, including legal technology and eDiscovery budgets.

Don’t believe me? Here’s some data to back that up:

Rob Robinson conducts a quarterly eDiscovery Business Confidence Survey on his excellent ComplexDiscovery site, and he just released the Winter 2023 survey, which reflects the confidence of individuals working in the eDiscovery ecosystem. Rob is in his eighth year(!) conducting this quarterly survey, and I’ve covered every one of his surveys in my blogs. His quarterly survey is remarkably accurate in illustrating industry sentiment regarding eDiscovery business. Here are three stats from the latest survey that illustrate where we are currently:

• Current Business: This quarter, we saw a massive 19.1 percent drop off from last quarter to 36.9% this quarter of respondents that considered business to be good (the lowest since Spring 2020 when the pandemic hit and the second lowest ever).
• Expected Profits in Six Months: Respondents expecting higher profits in six months dropped 6.9% from last quarter to 23.1%, which is the lowest number ever – even the start of the pandemic didn’t drop that low!
• Challenge That Will Most Impact eDiscovery Over the Next Six Months: Budgetary Constraints moved back to the top spot at 32.3%, which is the first time alone at the top spot in nearly two years (which, of course, was when the pandemic was at its height, and everyone was concerned about budgets).

Why Not Just “Hunker Down” and Wait for Things to Improve?

Good question. However, I already answered that in my last guest post, where I discussed the Big Data problem of data in businesses doubling about every 1.2 years (if not sooner at this point) and companies facing more litigation than ever.

Regardless of the economic situation, the work not only doesn’t change – there’s more work to do than ever.

So, What do You do When You Have Budgetary Constraints and More Work Than Ever?

Get creative and look outside the organization. Outsourcing eDiscovery services and tasks can be an effective way to balance the increased workload while managing budgetary concerns at the same time.

Simply defined, outsourcing involves the transfer of a business function to an external service provider. When it comes to eDiscovery, outsourcing is simply the support of electronic discovery services and tasks with the use of externally provided technology and expertise.

Why Should I Consider Outsourcing, and How Will it Benefit My Organization?

Here are four reasons why you should consider outsourcing, even during difficult economic times:

1. Greater Expertise: Your team is used to the challenges your organization is addressing, but an experienced outsource provider is used to a wide range of challenges that your organization may not yet have experienced. Plus, it’s their job to keep abreast of emerging eDiscovery challenges that organizations will face. An outsource provider is likely to have workflows to support the types of challenges your organization has yet to face but will be facing soon.
2. Leading-Edge Technology: Challenges in eDiscovery are continuing to evolve, so eDiscovery technology is constantly evolving to meet those challenges. If you’re not continuously investing in (or at least evaluating) new technology, you’re falling behind. Technology is the great equalizer in getting more done with less and outsourcing providers are using the latest, leading-edge technology to address evolving eDiscovery challenges.
3. Cost Flexibility and Savings: You could hire full-time equivalents (FTEs) to support the increased workload, but what happens if those employees don’t work out? Or you need to cut costs? Layoffs are messy. Outsourcing experienced resources gives you cost flexibility that you won’t get with hiring FTEs as they can scale their services up or down to match your needs.
4. Job Satisfaction: Your team can only do so much, so being asked to do more without experienced additional resources that can help right away is a recipe for burnout. Experienced outsourcing resources that can provide immediate expertise and leading-edge technology (without the “ramp up” time of FTEs that need to be trained) will keep your existing team focused and engaged.

Recession is Coming (Probably)

While it’s not a certainty that recession is coming, it’s best to be prepared for it. Based on Rob Robinson’s quarterly eDiscovery Business Confidence Survey, it appears that eDiscovery professionals are already prepared for it. How can you get through it? Outsourcing may be the way to not only get through it but to also improve your eDiscovery capabilities through greater expertise and leading-edge technology while yielding cost flexibility and savings over hiring FTEs and increasing job satisfaction for your existing team. Those are useful benefits in any economic climate. Sometimes, you must recede to succeed!

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Doug Austin is the Editor of eDiscovery Today and an established eDiscovery thought leader with over 30 years of experience providing eDiscovery best practices, legal technology consulting, and technical project management services to numerous commercial and government clients.