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30 April 2008 - News Updates
Debt collection from India - New York Times
Call my lawyer.... in India - TIME magazine
The Doctor is online -Washington Post
Debt
Collection Done From India Appeals to U.S. Agencies
24 April 2008, New York Times, By HEATHER
TIMMONS
In a glass tower on the
outskirts of New Delhi, dozens of young Indians are on the telephone,
calling America’s out of work, forgetful and debt-stricken and asking for
cash. “Are you sure that’s all you can afford?” one operator in a row of
cubicles asks politely. “Well, how do you take care of your everyday
expenses?” presses another.
Americans are used to
receiving calls from India for insurance claims and credit card sales. But
debt collection represents a growing business for outsourcing companies,
especially as the American economy slows and its consumers struggle to pay
for their purchases.
Armed with a sophisticated
automated system that dials tens of thousands of Americans every hour, and
puts confidential information like Social Security numbers, addresses and
credit history at operators’ fingertips, this new breed of collectors is
chasing down late car payments, overdue credit card debt and lapsed
installment loans. Debt collectors in India often cost about one-quarter the
price of their American counterparts, and are often better at the job, debt
collection company executives say.
“India will be the only
place we grow this year,” said J. Brandon Black, the chief executive of the
Encore Capital Group, a debt collection company based in San Diego. India is
the company’s largest operating area, with about half the company’s
collection force of more than 300.
Although the stereotype of
a collector may be “some guy with chains and a cut-off shirt,” Mr. Black
said, collectors in India are “very polite, very respectful, and they don’t
raise their voice.” He added, “People respond to that.”
Companies like Encore buy
bad loans from banks and credit card issuers for pennies on the dollar and
pocket the cash they collect. The delinquent borrowers often owe at least a
thousand dollars. So far just a tiny fraction, maybe 5 percent, of American
debt collection is done outside the country, industry executives estimate.
But new business is in the pipeline.
Financial services clients
are saying, “We want you to collect my debt, to analyze it and change the
way that we sell” the loans, said Tiger Tyagarajan, executive vice president
at Genpact, the business processing company spun off from General Electric
that has roots in India. Genpact, which works with lenders to get customers
to pay, rather than buying loans directly like Encore, employs thousands of
debt collectors in India, Romania, Mexico and the Philippines, and is hiring
in all those locations.
In the past, the
prevailing wisdom about wringing money from late payers has been “if you’re
calling the Midwest, you want someone from the Midwest to twist their arm,”
said Mark Hughes, an analyst with Sun Trust Robinson Humphrey who covers the
industry. That theory is changing as the pool of trained phone professionals
in India and other locations deepens, and companies look outside the United
States for lower costs.
Telephone debt collection
represents new, more aggressive territory for India. “This is really a sales
job,” Mr. Hughes said. “It is commission-intensive, and you’re paid on your
ability to collect.” Like many sales teams, Encore’s collectors in India
gather for a daily pep talk before their shift. In one recent session, they
were schooled on the intricacies of American tax policy.
“One hundred thirty
million U.S. families will get a tax rebate this season” as part of the new
economic stimulus package, Manu Sharma, the team leader, explained to a
roomful of top-earning collection agents, most in their 20s. Those who
qualify for the rebates will get as much $600 a person or $1,200 a
household, he said, and “the I.R.S. is going to start paying this money in
May.”
Start bringing up the
rebate during calls, he told them. “This gives you an advantage so you can
increase your wallet share,” he went on. “Get them set up on minimum balance
arrangements” based around their tax rebates.
Once the calls start
flowing, Encore’s Gurgaon office resembles nothing less than the
headquarters for an enthusiastic fund-raising telethon. Just minutes after
collectors have put on their headsets, a supervisor yells out “Rajesh, for
$35 a month for three months.” All employees enthusiastically respond by
clapping three times, and Rajesh is the first on the day’s sales board.
Companies like Encore
often schedule dozens of payments and make dozens of calls before the loan
is paid off. Encore — which also operates as Midland Capital Management —
also files sheaves of lawsuits against customers who do not respond.
Sometimes the debt is so old that the statute of limitations for filing a
suit has passed, and it may already have vanished from a person’s credit
report. If the debtor makes a new payment, though, the statute of
limitations starts all over again.
Credit counselors in the
United States say more and more of their clients are being contacted by debt
collectors based in India. Sometimes, it can cause problems. When clients
“run into someone who doesn’t speak English well or there is a communication
gap, it can add to the frustration of the customer,” said Bill Druliner,
manager and financial counselor for GreenPath Debt Solutions in Milwaukee.
Debt collection, no matter
who does it, can have “a devastating impact on people’s lives,” Mr. Druliner
said, because calls can stress family relationships and sometimes debtors
are pressed into paying late bills instead of buying necessities like
prescriptions. Still, he said, he had not run into any specific problems
with overseas debt collectors. “What they may lack in authority or ability
to handle slang, they do handle the process very well and are very well
spoken,” he said.
Mortgage loans, which
involve complex state and national laws, are nearly always handled by
collectors in the United States. But credit card, auto and other debt are
prime candidates for collection overseas.
Just over 4.5 percent of
all bank credit card accounts were delinquent in the fourth quarter of 2007,
according to the Federal Reserve, up from 3.5 percent two years before.
Businesses in the United States put $141 billion in delinquent consumer debt
up for collection in 2005, according to a PriceWaterhouseCoopers survey
commissioned by an industry group, and debt collection agencies collected
$51 billion that year. They kept nearly a quarter of that in profits.
Collection veterans are
seeing an unusual phenomena in this economic downturn. “People are walking
away from their homes and hanging on to their credit cards, because that is
their lifeline,” said Rajinder Singh, the head of
global analytic services for Genpact.
Encore hires people with
call center experience in India, and then trains them in unexpected skills
like sympathy. Clients “get very abusive, very emotional, very sad,” said
Manu Rikhye, vice president at the Encore unit in Gurgaon. The collector’s
job is to “try to empathize with the consumer,” he said and try to figure
out, if they’re angry, why. “Maybe it’s us, maybe it’s someone else,” he
said. “You have to hear what they have to say.”
Collectors are taught to
handle abuse by telling debtors: “This attitude is not going to get you
anywhere. We can either work with you or refer you for further action,”
implying a lawsuit. Collectors who raise their voices or try “tough” tactics
are warned, Mr. Rikhye said, and those who misrepresent facts can be fired.
Manju Muddanna, 27, who
uses the name Michelle Green when she is on the phone, is one of Encore’s
best collectors. With laced-up stiletto sandals, wood bangles and a wad of
chewing gum, she wheedles work and cellphone numbers out of debtors’
relatives to track them down. Like most Encore collectors, Ms. Muddanna
handles several hundred calls a day, but actually makes contact with only a
handful of borrowers.
Ms. Muddanna’s telephone
voice veers to the school-marmish, her learned American accent into Blanche
DuBois territory . When people on the other end of the phone mumble, she
upbraids them, politely, “Ahhh just can’t understand you, ma’am.”
Encore pays its collectors
in India an average base salary of 17,000 rupees ($425) a month, and they
earn bonuses — sometimes more than $1,000 a month — for getting customers to
pay. In contrast, collectors in the United States, make about $6,500 a
month. Thanks to the income, a windfall in India, where the average monthly
income is $63, collectors are amassing some of the status symbols that
probably got their clients into trouble in the first place — new scooters,
iPods, Swatch watches and exotic vacations.
Top of the page
Call My
Lawyer ... in India
3 April 2008,
TIME
magazine, By Suzanne Barlyn
Mark Alexander, a Dallas
attorney, says he's ethically obligated to do what's best for his clients,
"and that includes saving them money." So when one of them asks him to
research a securities-fraud topic, for example, or breach of contract, he
doesn't even think about applying his $395 hourly rate. Instead, he calls
Atlas Legal Research, an outsourcing company based in Irving, Texas, that
uses lawyers in India to provide the service for $60 per hr. "When a client
pays me a $25,000 retainer and I can save them money, I will do so," says
Alexander. Handing off the work to a $225-per-hr. junior associate is not an
option. "They don't even know where to stand in the courtroom," he says.
While the Americans learn,
well-trained lawyers in secure offices in Mumbai (formerly Bombay),
Bangalore and Gurgaon (outside Delhi), who typically earn $6,000 to $30,000
annually, do legal grunt work. Alexander's sentiments may explain why
outsourcing is blossoming in the legal profession, which is known--and often
despised--for its high prices. Law-firm partners bill at a national average
of $318 per hr. and at $550 per hr. at large New York City firms, according
to a 2007 survey by Altman Weil, a legal-consulting company. Starting
salaries for attorneys at some large firms now stand at $160,000. So a U.S.
company's simple problem can generate hundreds of thousands of dollars in
fees.
The considerable savings
is perhaps one reason Forrester Research, based in Cambridge, Mass., has
projected the offshoring of 29,000 legal jobs by the end of the year and as
many as 79,000 by 2015. It's part of India's inevitable move up the
corporate food chain, from lower-value business process outsourcing--like
call centers--to knowledge process outsourcing (KPO). The latter category
encompasses higher-skilled jobs, such as engineering and medicine, and
relies on the KPOs to behave more like branch offices of U.S. companies.
ValueNotes, a
business-research firm based in Pune, India, says a
subset of KPO called legal process outsourcing (LPO) has grown revenues 49%
from 2006, to $218 million last year. The figure will nearly triple, to $640
million, by 2010, it says. ValueNotes counts more than 100 legal-services
providers in India, ranging from a handful of overseas corporate legal
offices, such as Oracle's and General Electric's, to companies that contract
to provide low-cost legal services to U.S. and British businesses. Leaders
include Integreon and LawScribe, both in Los Angeles, and New York--based
Pangea3.
Persuading lawyers to
export work wasn't an easy sell, says Ganesh Natarjan, CEO of seven-year-old
Mindcrest, which has its headquarters in Chicago and employs 440 lawyers in
Mumbai and Pune. "Lawyers are a risk-averse group, so it was a slow process
for them to adopt the idea," says George Heffernan, vice president and
general counsel. Mindcrest's services include document review, research and
support for compliance functions. The last cost large companies an average
of $2.9 million each in 2006, according to Financial Executives
International in Florham Park, N.J.
Educating American lawyers
about India's English-speaking attorneys, who are trained in a common-law
system modeled on Britain's, helped change attitudes, at least among top
lawyers for U.S. companies, Heffernan says. About 75% of Mindcrest's clients
are FORTUNE 500 companies. Mindcrest hired 390 lawyers last year alone, a
staff increase mandated by clients with some large-scale projects, it says.
But outsourcing worries
some experts because the ethical rules that bind U.S. attorneys have no
force in India. "Lawyers are being seduced by the business end of
outsourcing and are not being concerned enough with the ethical issues it's
raising. I'm deeply troubled that outsourcing companies do not understand
the scope of a lawyer's duty to confidentiality, nor are they familiar with
conflict-of-interest rules," says Mary C. Daly, dean of St. John's
University School of Law in New York City.
LPO firms say they are up
to the task of security and confidentiality. At Integreon's facilities in
Mumbai and Gurgaon, for example, guards search attorneys' belongings to
ensure they're not carrying flash drives or laptops, according to CEO Liam
Brown. Computers don't have disc drives, usable usb ports or CD burners, and
most can't print. Attorneys work for a specific client in areas called
dedicated delivery centers, which are accessible via a fingerprint scan and
monitored by cameras. Each room can hold up to 36 terminals--many of them
with dual screens. The company never stores data locally. Rather, the
lawyers work directly on the client's server and only over a secure line or
via the Internet. The space becomes a "virtual extension of the company
we're working for," says Abhishek Khare, head of the Gurgaon office.
Changes in litigation
procedures are boosting momentum in the LPO trade. Amendments to federal
rules require parties to share electronic documents, such as e-mail and
Microsoft Office files. That typically means both sides must review
thousands of documents to prevent the inadvertent disclosure of confidential
information to the other party. The service costs about $1 per page in India
but can range from $7 to $10 per page in the U.S. "Some clients don't want
to spend that much, especially if they don't even know how much their
damages could be," says Conrad Jacoby, owner of efficientEDD, a
legal-technology consultancy in Dunn Loring, VA.
TransUnion, in Chicago,
has successfully outsourced legal work for four years, according to general
counsel John W. Blenke. "Every law firm is really an outsourcer. One lawyer
usually can't do it all," he says. Indian attorneys are currently reviewing
more than a million litigation e-mails for the company, which costs less
than $10 per hr., he says. He would pay $60 to $85 per hr. to a U.S.-based
legal-staffing company for the job. Blenke says he's cautious, however,
about the work he outsources. "You can only do it with a few things. It has
to be an area that you know well, so you can build processes around that,"
he says.
DuPont saved $500,000 in
2006 by outsourcing paralegal work to Chicago's RR Donnelley, which uses
facilities in India and the Philippines to review documents for the chemical
giant, says Thomas Sager, DuPont's chief litigation counsel. "There's been
some internal resistance, and from the outside too, about working with
providers thousands of miles away. But geographic separation is now a fact
of life," says Sager.
Some private attorneys
remain cautious. Says Gregg Kirchhoefer, a partner in the Chicago office of
Kirkland & Ellis: "We don't do, haven't done and don't plan on doing this.
The name of the game for us is quality." Daly, the law-school dean, says an
ethical breach is only a matter of time. "We haven't seen any documented
problems crop up yet, but I'm sure they're there," she says. "We've
certainly seen problems on the domestic side. It would be foolish to assume
they're not on the global side as well." It would also be foolish to assume
that the outsourcing trend in law is anything but robust.
The
Doctor is online
4 April 2008, Washington Post
Patients in Ethiopia are
benefiting from the expertise of doctors in India. With their patients
present, doctors in the Horn of Africa nation are exchanging medical
information via the Web and discussing cases with doctors in Hyderabad in
live video feeds. The $2.1 million telemedicine project seeks to fill major
gaps in Ethiopia's medical system and is similar to one that India is
developing for domestic use.
· Ethiopia has one doctor
for every 37,000 residents.
· India has one doctor for
every 1,666 residents.
· Ethiopia has only one
teaching hospital.
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