During the past ten years, my clients have increasingly complained that they received calls from debt collectors who did not have sufficient English language skills to conduct a meaningful conversation. Given the wage differentials between the United States and India, consumers will continue to receive such calls.
In the United States, debt collectors’ wages and bonuses average approximately $ 6,500 per month (or $ 78,000 annually) during 2007.
In India, the average wages are approximately $ 63 per month. Of course, the majority of workers in India are not sufficiently skilled in speaking English.
According to the New York Times (April 24, 2008), Encore (the parent of Midland Credit Management) pays its collectors who are located in India an average base salary of 17,000 Rupees (approximately $ 425) per month plus bonuses which “sometimes” reach more than $ 1,000 per month. An NPR story entitled “India’s Debt Collection Centers Booming” aired on February 6, 2009, confirms that annual compensation for debt collectors in India averaged $ 5,000 U.S. dollars.
According to NPR, studies show that Indian collection agents stay on the telephone 25 percent longer than U.S. debt collectors. But, Indian debt collectors claim that they collect approximately 20 percent more money per call than their U.S. counter-parts.
Based upon the complaints that I receive from Orlando, Florida consumers, I wonder whether a foreign debt collector is as likely to persuade the consumer to agree to pay any money. In other words, I wonder whether the claim that consumers agree to pay Indian collectors “20 percent more per call” refers only to calls where the consumer agreed to pay money.
I welcome comments from Indian BPO or outsourcing companies who are familiar with the actual data.
Cultural differences also seem to contribute to the results achieved by that Indian debt collectors. Aparup Sengupta, the Chief Executive Officer of Aegis, explains :
“Human beings across the world, especially in the West, have a tendency to pay. And if you understand that our job is to work as performing artists and work with customers as partners to find out how we can solve their problem.”
I believe Mr. Sengupta is correct. Countless clients have expressed their deep regret and shame that they are unable to pay their creditors. Nor can I count the number of clients who cried while telling me this.
Even more clients have bemoaned that their creditors refused to work with them even when they called.
Many consumers described how they sent their limited funds to paying the lone debt collector who treated them politely. I suspect that Indian’s deference or respect for others helps them collect the limited funds in a similar way.
Credit card banks and debt collectors are both seizing the opportunity to squeeze out debts from U.S. residents by using foreign collectors.
At Midland Credit Management (a subsidiary of Encore), approximately half of the company’s collectors (or approximately 300 of its collectors) are employed in India. In 2008, Mr. J. Brandon Black, CEO of Encore Capital Group stated “India will be the only place we grow this year”.
Although India is probably the most common source of collection calls from foreign countries to people in the United States, collection outsourcing companies also employ collectors in Romania, Mexico, the Philippines, Costa Rica, Jamaica, and many other countries where a sufficient number of potential workers speak English.
As of 2008, approximately 5 percent of all U.S. collection efforts were outsourced to foreign operations.
As the trend to exporting collection jobs continues, an increasing number of debt collectors will experience the devastation that has already affected families whose income was derived from employment in other U.S. industries which moved abroad or collapsed.
(C) 2010 Donald E. Petersen
All rights reserved.
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