Indian BPOs Cashing in on Subprime Meltdown Through Collections

While the problems in the subprime mortgage market continue to make a mess for the American economy, many business process outsourcing companies in India are finding work related to the meltdown as they transition to accounts receivable management services.

Many current clients of India-based BPO providers like Firstsource, HOV Services, Zenta, and Aegis BPO are asking the companies to ramp up their ARM offerings in the wake of rising defaults on home loans, reports Indian business publication Business Standard. The increased demand for ARM services is coming at a time when technology outsourcing, the largest BPO segment, is in decline due to the economic downturn in the U.S.

The BPO market in India already represents a $7.2 billion industry, according to a recent PricewaterhouseCoopers study. Of that, about 43 percent is for IT services, with financial services a distant second at 17 percent. But several BPO providers told the Business Standard that they are getting requests to immediatly start offering ARM services.

“Yes, we have had inquiries from most of our existing clients on our ability to ramp up [ARM] services,” Aparup Sengupta, CEO of Aegis BPO, told Business Standard. “While we do not have any exposure in the mortgage sector, we do have banking/financial services clients who might have loans in that segment.”

But the expansion in ARM will come slowly because of the specific nature of the debt that is quickly entering the collection pipeline. “It will take six months for the business from sub-prime affected accounts to flow to us, as firms normally give 90 to 120 days for disclosure. Only after that the ramp up will happen, if required,” said Sunil Rajadhyaksha, executive director, HOV Services. Rajadhyaksha told Business Standard that ARM services currently account for around 20 percent of his firm’s business.