RP Sanjiv Goenka Group

Saving a US debt buyer $5M using a global outsourcing model

The challenge: Slash collections costs and create a pathway to profitable growth

The client is one of the largest debt buyers in the US and concentrates on investing in consumer charge-off and bankruptcy accounts.

The client’s in-house collections staff had swelled to 200 FTEs in the US. It was also relying on a network of debt recovery companies with varying degrees of success. The cost to collect ranged from 35% to 42% across their in-house and outsourced operations: too great by their measure.

The client sought to reduce debt recovery costs by outsourcing their entire debt recovery operation. Their portfolio included a variety of products in various stages of post-charge debt, from primes and seconds to out-of-status debt. This required familiarity with and training in collection practices unique to each product.

The client sought to partner with a specialist that could deliver on cost savings and improved collections performance. It also sought an innovator that was pioneering advances in collections technology and compliant business practices.

The solution: Mobilize a dedicated offshore operation with a digital-first approach

We provide an end-to-end Receivables Management solution that blends the human touch with automation was used to build an empathetic and efficient collections process.

A Firstsource-managed collections team was setup in India led by a tenured, dedicated staff. We developed an operations model that addressed recruitment and training. Our team formulated a plan for integrating the client’s US-basEdTechnology platform that supported account servicing and phone dialers and our workflow solutions. The technology integration, which required no capital outlay by the client, enabled our associates to log into client systems onshore and engage customers using a first party model.

We also enabled digital lead generation for the client, where we were able to mass email offer strategies and dunning messages, reducing their printing and postage expenses. We began with 15 associates in April 2015, which has since grown to 180. We are increasing staff quarterly to accommodate growth in the client’s servicing portfolio and new responsibilities delegated to us.

The result: Massive cost reductions in year one with no capital outlay

We delivered 50% cost savings within one year resulting in $5M in annual savings from transitioning collections offshore.  Integrating Firstsource’s proprietary workflow solutions enabled further efficiencies in managing debt recovery. A 20% improvement in collections performance was observed across purchased portfolios and 20% cut in printing and postage expense. A decline in the cost to collect metric, from 35-42% to a seasonal low of 10%.

While the initial solution was designed for recovery collections, the client soon replaced several in-house practices to the Firstsource Mumbai center. Firstsource now manages Quality Assurance, Credit Reporting Inquiries Management & Response, and the Payment Rewards program.

Business impact

$5M

annual operating cost savings


70%

reduction in cost to collect


20%

gain in collections effectiveness


Zero

capex for client


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