Thursday, May 1, 2008

The Recovery Agent : India's Latest Export ?

In India, the term recovery agent or debt collector throws up chilling images of unnerving phone calls, bounces landing up at the door, goons intercepting your car at a traffic signal and throwing you off as they repossess in mid traffic and all of that. So unsavory have the tactics been that the courts have often been asked to intervene and codes of conduct have been laid out as to how banks will go about the business of collecting bad debts.

But according to the New York Times, India’ s “ability” to recover debts is some thing that attracts American companies very much and it might b the next big thing, that might be out sourced to India. It seems according to the NYT report that in recession hit USA, consumers are finding it hard to keep up their payments on time and this is exactly the scenario, where India’s famed recovery agents are just equipped to step in and ring in the coins.

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.”

Of course those in dialogue with India’s debt collectors would be best placed to respond to The Encore CEO’s comments that Indian debt collectors are very polite, very respectful and don’t raise their voice. Possibly he is right and the collectors don’t need to. Who ever said that a deep, coarse and gravelly voice was necessary to send your spine tingling and your mind twirling!

So are debt collectors going to be India’s latest export? It would seem to be so, though it does not look that the business model that the US companies are adopting would see them sponsoring Indian recovery agents for an H1B visa just yet. But the ubiquitous call center executive is swiftly evolving to perform one more function - the sweet talking tele caller who will coax and cajole though not threaten delinquent customers into agreeing to pay at least a minimum amount an earn bonuses for managing to do so.

Given that the call center based recovery agents would not have the luxury of dropping into some body’s house and bull dozing them into payment promises – both for geographical reasons as well as legal, the collection agents’ methodology is dependant very heavily on through study and home work of the clients’ profile and behavior patterns. Encore is for instance coaching its staff bout the intricacies of the IRS refunds- the refund season beginning in May and the caller might know based on their study and research, just how much refund a particular lien is likely to get.

One thing to ponder here is that in this system, although there is a lot of psychological pressure and implied threats of “further action” –meaning law suits, there is no physical violence involved. The tele recovery agents essentially depend on their wits and the eventual might of law suits to get the reticent clients to pay up. Does this mean any thing for India? Will these global best practices in debt recovery which Indians are using to service debt across the oceans get adopted in their own country or the Indian experience will continue to be that of hoodlums and goons and people howling in newspaper columns and consumer courts? Let us wait and see and in the meanwhile, not wanting to take any chances, not run up any unpaid debt at all!

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