Multi-shore delivery platforms have enabled US collections agencies to allocate work according to the most suitable location, depending on the job required and the resources available. One model is to use offshore locations for skip-tracing analysis and scripted early-stage (1 to 180 days) collections, and use the US for mid and late stage (180 days to 2 years) collections, which are much less scripted and often require greater levels of negotiation. However, some collections agencies are also using India for late-stage work too. Another model that has been very successful for some agencies is to test and refine processes onshore in the US before moving them offshore, to take advantage of superior costs savings and to leverage time zone differences to increase processing productivity. Other collections agencies have tapped in to offshore delivery when significant resources are required at short notice - when a debt book needs to be worked very quickly, for example.

Change in the UK

The dynamism of the US collections industry is triggering consolidation. By contrast, the relative immaturity of the UK collections agency market means that it is highly fragmented with many providers - few dominant companies have yet emerged. This fragmentation has not lent itself to strategic creativity.

The size of the US economy, and hence its collections industry, gives it economies of scale advantages translating into lower costs of debt recovery that simply are not available in the UK. However, there is much that UK collections and recoveries agencies could gain by analysing their US counterparts' approach to maximising operational efficiency. Core opportunities lie in making a more strategic use of process improvement methodologies and IT, in developing human capital resources, and in building global models, incorporating offshore delivery to overseas locations.

The drive for change will come from UK corporates and debt companies that will demand greater value from their outsourced collections agents in order to recover rising levels of unpaid customer bills. This demand-driven requirement will lead to a supply side shift as progressive UK collections agencies look to the US to understand how to build world-class, value enhancing delivery capability. A knock on effect is likely to be consolidation in the UK agency market over the next few years.

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