South Africa: IP outsourcing in the ascendant

With the same time zone as Europe and a large skilled labor force, IP outsourcing is booming in South Africa.

In fact, IP outsourcing is not new. It has become a routine business of external law firms, and more and more technology companies composed of lawyers, senior paralegals and process managers have joined in. The management, prosecution, enforcement, and sometimes development and commercialization of intellectual property have been outsourced for decades. At present, the nature of outsourcing is gradually changing, expanding to outsource all or part of services to different countries.

At the beginning of this century, cross-border intellectual property outsourcing in Europe, especially the United Kingdom, was very popular. Based on the high value of European intellectual property firms compared to other countries, the growth of globalization, and the outsourcing trend of the IT industry, countries like the Philippines and India are very popular. It has become the main destination country for outsourcing work. For example, we all know that there are quite a few call centers in India. With the growing trend of remote working and the reopening of markets post-COVID-19, there has been renewed interest in IP outsourcing, and new models and opportunities have emerged.

The advantages of outsourcing are mainly financial. Outsourcing means lower personnel costs, as well as increased skill sets and scale. Conversely, governments looking to attract investment also create incentives for these local companies to attract outsourcing as part of the country's business management schemes, grant schemes and employment schemes.

In the area of intellectual property, it is often overseas law firms that seek to take advantage of outsourcing to make their services more attractive to clients or potential clients. But outsourcing does not mean giving up control, but means increasing the value of services. IP outsourcing can range from projects, to IP management, and everything in between, including writing patent specifications, preparing evidence for litigation, and managing IP assets.

The potential value brought by outsourcing is quite huge. Only based on paper calculations, 75% of the cost can be saved. Other hidden costs, such as management and other possible burdens on the firm, such as culture, language and skills, etc.

In this case, South African offerings are value for money driven by local market saturation and technological change, not entirely from a cost-saving standpoint. It can be summarized as follows:

Size: The local IP market is dominated by a small number of relatively large firms specializing in IP. Some of these firms manage more than 500,000 IP records and employ hundreds of people. This type of scale facilitates business process outsourcing and automation.

Demand: Local filings and investments are growing slowly, and the market has reached a certain level of saturation, so traditional business models need to change, and companies position themselves for upcoming IP outsourcing work as a source of income.

Language and time zone advantages: English is the official English in South Africa, so there is no barrier to communication, and it is in the same time zone as Europe, which has obvious natural advantages.

Save direct costs: The costs of paralegals, secretaries, and IT teams are lower than those in intellectual property-intensive countries. Instead of spending huge sums of money to support the team and paying considerable taxes, it is better to omit these labor costs.

Regulated environment and secure network: Intellectual property work has been legislated as the domain of law firms, which are themselves governed by a bar association that seeks to maintain industry standards.

Information technology infrastructure: Africa's largest telecommunications company is headquartered in South Africa. WiFi and related networks have world-class standards and supporting scale.

Government Incentives: South Africa has recognized business process outsourcing, including IP, and IP investment as a national strategic value and has therefore developed several dedicated government funding programs for outsourcing services and IP creation.