NCO Group Looks Offshore to Ease Labor Costs

NCO Group is realizing cost savings benefits by leveraging offshore labor, and the company has plans to open more international collection offices, company executives told investors during a conference call Wednesday.

The announcement follows the release Monday of 2007 annual and fourth quarter results by the global accounts receivable management and business process outsourcing provider. NCO reported that its collections, or ARM, unit payroll and related expenses dropped more than 11 percent to $95.8 million while revenue in the unit increased by $4 million to $204.3 million in the quarter.

CEO Mike Barrist said yesterday that labor costs had been reduced because the company is placing more collections work at centers in near-shore and offshore locations, and that improved technology platforms were creating labor efficiencies.

The company is planning on opening a new office in the Philippines – its third in that country – and is looking into opening a new office in Latin America. NCO currently operates an office in Panama in Central America and offices in Barbados and Antigua in the Caribbean.

The company’s most recent SEC filing underlines the shift to locations outside of the U.S. In its annual report filing for 2007, NCO said that last year, it counted revenues of $76.4 million from locations other than the U.S. and Canada, a 163 percent increase over the total in 2006.

NCO noted that the work performed in locations outside of the U.S. is typically for clients in the States, but that it was increasing the work it does for foreign clients. In 2007, 8.1 percent of the company’s revenue came from work for clients in Canada, the United Kingdom and Australia.

NCO said that at the end of 2007, it counted approximately 22,400 full-time employees and 1,600 part-time employees, of which approximately 19,000 were telephone representatives.