The Birth of a U.S. Collection Agency in India

By Patrick Lunsford, CollectionIndustry.com

When Dennis Sholl surveyed the landscape of Indian call center outsourcing in 2001, he identified a noticeable absence in the market: a company focused entirely on collections. Major US financial services firms like American Express and GE Capital had been using call centers in India for a while, and those centers did make collection calls. But there were no independent call centers in India focused exclusively on collections.

With competition for accounts among collection agencies in the US at a fever pitch, Sholl knew that Indian call centers would present a lower cost alternative to creditors searching for contingency collection outsourcing. He decided to open a call center in India that would focus exclusively on collecting for US-based clients. Furthermore, he intended to directly compete with his American collection agency counterparts for the business.

With the help of investment banking firm ChrysCapital, Sholl opened his new firm, Global Vantedge, in the beginning of 2002. Global Vantedge had 15 collectors when the first calls went out. The first client was a major US collection agency looking to offload some of its more difficult accounts.

The ramp up speed for the initial accounts was very slow. Sholl and his partners continued to market their services actively to their main target: US creditors. Global Vantedge quickly discovered that collection success at the Indian call center would depend even more heavily on the type of accounts that were being worked. The older, more difficult accounts were not seeing the rate of recovery that was expected. The thinking of the client was that it was worth the minimal fee to let the Indian collectors try to collect on these difficult accounts. Sholl knew that this was the wrong approach. He knew that his collectors had little, if any, collection experience. He needed different paper.

Training the initial group of Global Vantedge collectors had been a chore unto itself. The core group of collectors had some call center experience, but none of them had collection experience. As with most collectors, they were trained in FDCPA compliance and talkoff techniques. But these were completely, and literally, foreign concepts to the collectors. They were fairly slow in grasping the ideas. But that didn?t necessarily turn them off. “Turnover was very low in the beginning. They stuck with it,” explains Sholl.

Then came the difficult paper. Sholl admits that the collectors were a little discouraged at first. They just weren’t collecting anything. “These were accounts that American collectors couldn’t even collect on,” says Sholl. How could call center reps in a foreign land with no collection experience possibly be expected to collect on these accounts? Besides the challenges associated with the actual paper, the Indian collectors were very passive in their collection efforts. They had just learned a new trade and they were taking it very easy at the beginning.

Sholl began to experiment with the types of accounts his collectors would be calling on from India. Gradually, he inspired US creditors to outsource earlier stage accounts to Global Vantedge. This meant they could work on fresh paper, early stage stuff. He also began experimenting with accounts from different types of creditors, like telecommunication firms. Global Vantedge was trying to find its core competency.

The firm quickly discovered that after a relatively slow ramp up period on a particular type of paper, the collectors could perform very well on certain kinds of accounts. On the 1-90 day past due accounts, Global Vantedge was meeting, and in some cases exceeding, US collection metrics. Telecom accounts also seemed to be particularly well suited to Indian collectors. Sholl had finally realized his initial vision: an India-based contingency collection agency working exclusively on American accounts and competing against American collection agencies.

In direct competition with its American counterparts, Global Vantedge was consistently ranking first or second in collection success for its clients in first party, early stage collection business. On the telecom side, it was the same story. Global Vantedge did lag in some categories; aged credit card debt recovery was one of them. “To me, the high volume, low balance accounts are the best candidates for offshoring,” notes Sholl. While some may see this as having success on work that would be described as “low-hanging fruit”, Sholl sees it as a part of an overall collection strategy.

“American creditors can use the offshore option for these early stage accounts rather than doing it internally. They can then outsource the older paper to more seasoned collection professionals in the US,” he says. Sholl said that in the long run, this scenario will actually benefit US collection agencies.

In order to stay competitive, Sholl believes that US agencies will need offshore relationships. The initial thinking from US collectors was to offload uncollectable paper to the low-overhead Indian call centers. But this is not a relationship Sholl sees as being successful. “There needs to be a partnership, a true working relationship with an offshore partner, whether it be in India or somewhere else,” he notes.

Many creditors, and agencies, in the US have taken note. Collection outsourcing in India has boomed in recent years. About the same time that Global Vantedge was getting started, another collection-only call center was opening in India, Epicenter Technologies. There are a handful of others that followed in Epicenter and Global Vantedge?s footsteps. Also, most of the major credit card issuers and creditors have collection operations in their Indian cell centers now. A major US collection agency, IRMC, recently launched its own operation in India. There are also the major business process outsourcing (BPO) players that offer collection services in India, one of which — ICICI OneSource — bought a US collection agency last year. And Global Vantedge is also seeing its business grow.

From the 25 employees and one client it counted at launch, Global Vantedge has grown into a large operation with more than a dozen clients spread out all over the world. By June, the company expects to have 1,000 employees. With clients in the US, the UK and Australia, Global Vantedge has positioned itself to make calls nearly round-the-clock. The model appears to be working.

The Indian collection option will not be going away anytime soon. US collectors that have decried the outsourcing of American jobs to India may be best served to heed Sholl?s advice: establish a partnership in India and work it to your advantage.