Outsourcing – a word that has different connotations, depending on who you are talking to.

In the collections industry the concept of outsourcing work to specialist collectors is now established: the amount referred for collection has trebled in six years to £21bn, according to Credit Services Association figures.

When it comes to outsourcing overseas, or ‘offshoring’, some creditors have good experiences, others have bad. For some the great hopes of cost savings have been realised – for others not.

Over time an understanding has emerged that, as ever, the truth lies somewhere between the two - in some situations collectors in different parts of the world have better skills, or will accept a lower wage, than employees in the crowded UK job market. At other times, and for other parts of the process, it is preferable to stay within the UK.

This doctrine of finding the right location, to do the right part of the process with the right debt has been taken to by some of the outsourcers, to establish a working practice known as ‘right-shoring’.

Moving away from the offshoring process of simply using overseas locations to reduce costs through lower wages for skilled staff, right-shoring seeks to transfer work to the right country for the right part of the collections process.

Business process outsourcing

Worldwide business process outsourcing (BPO) is a booming industry. Datamonitor estimates that by 2008, the global BPO market will be worth over $145bn, with financial services, telecommunications, retail, manufacturing and utilities being the major adopters of outsourced business services (see Table 1).

Offshoring is an extension of outsourcing, originally focused on using overseas locations to reduce costs through lower wages for highly-skilled staff. Offshoring transfers work to countries that can offer cost savings, process improvements and time zone advantages, allowing companies to focus on their core competencies, whether it be, for example, banking, financial services, telecommunications, utilities or retail.

India has, over the last decade, capitalised on the offshoring opportunity, often referred to as BPO (business process outsourcing). What started as back-office jobs, which are relatively easy to deal with, increasingly evolved to handling customer service. More recently, an increasing number of major companies have outsourced the collection of their debts, with the likes of Citibank, HP, Dell and Adecco leading the charge to collect from overseas.

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