The challenge: Lower costs while improving debt recovery performance
The client is a large “buy here pay here” auto dealer in the US with more than 40 companies and 150 franchise locations in the Midwest and East. It sought an outsourcing partner that could assume employment of its existing 80-person staff and supplement it with additional FTE located offshore. In addition to reducing expenses, the client wanted to expand capacity in collections while creating a complementary inquiry handling role supporting its dealers and franchisees.
A technology upgrade was needed to link the client’s processing platform to our proprietary collections workflow. It would bridge the onshore and offshore teams and enable workflow improvements needed to achieve the targeted cost reductions. Firstsource was selected for its global outsourcing capacity, technology resources and its willingness to meet an aggressive timeline while guaranteeing five-year expense savings.
The solution: Create a global debt recovery and lead management operation
Firstsource set up global operations with its Receivables Management solution that combines the best of what humans and technology have to offer.
We re-badged 80 of the client’s employees located in two US facilities and staffed an offshore facility in Manilla that complemented the US-based operations. We integrated the client’s and our processing networks and made numerous workflow enhancements to improve efficiency. We developed a more robust risk assessment approach that enabled the client to selectively increase new loan balances to customers, increasing asset levels and improving portfolio performance.
A dedicated and tenured Firstsource management team spent six months embedded in US operations to familiarize themselves with these practices. This management team then created a talent development plan for the Manilla operation that facilitated knowledge transfer in debt recovery and business practices. The new operations team was also trained in qualifying sales leads, which were immediately referred to the client’s dealer network and franchise owners.
The technology integration was detailed and involved integrating the client’s systems with Firstsource’s proprietary collections workflow to improve efficiency. The new, integrated platform bridged the onshore and offshore teams to enable seamless coordination and handoffs of tasks and assignments.
The result: Better financials and improved sales efficiency
Re-badging US-based employees immediately lowered the client’s labor costs while retaining a core group of employees experienced in the client’s business practices. The updated risk assessment approach established loan limits based on individual borrower risk profiles. This improved the asset level carried by the client as well as revenue from P&I payments on outstanding balances.
All in all, the shift from a wholly US-based collections operation to a more flexible onshore/offshore model has been wildly successful for the client. At the enterprise level, the client enjoyed improved financials resulting from cost savings that represented a 35% reduction in collection expenses, a three-point improvement over the target. Dealers and franchisees enjoyed cost savings from lowered cost of collections, saving $6.3M over five years. Loan balances increased as a result of the new risk management approach and sales efficiency improved as a result of the newly centralized lead generation and inquiry handling. The newly modernized debt recovery workflow system and the CRM application were implemented with no CapEx spending required by the client.
Since the initial agreement term, we have expanded to now handle four lines of business.