'Mid-market players will change outsourcing landscape'

BANGALORE: "For every big player who already has an outsourcing interest in receivables or is seriously considering one, there are five thousand mid market players who are not yet interested in the prospect. These mid market players are the ones who are going to change the landscape and 2004-05 is going to be a critical time for getting in touch with these players and getting them interested in the game," said Nitin Kapila, President, GRM Group.

He was speaking on How offshore reshapes receivables management at the first day of the 2003 India Outsourcing Summit held here on Wednesday. Kapila said that there were different drivers to push the decision of receivables outsourcing and it was upto the service provider to track and press on the right driver.

“In receivables management outsourcing, first party receivables tracking and collection is the first rung of the cycle, the easiest and one which already has a whole lot of players. But there are already some people who are experimenting with later stage debt collection which involves more aggressive behavior and involves higher risk. Either ways, receivables management outsourcing is set for almost 25% growth among certain verticals in the future,” said Kapila.

Though illustrating with statistics from Tracmail that India has constantly outperformed the US in net collection effectiveness, he warned that there were several barriers in receivables outsourcing including proper knowledge transfer and localization, proper domain expertise, the cultural gap involved in later stage receivables collections and community backlash.

Outlining the critical success factors for a service provider in this space, Kapila said, “One of the most important things in this consideration is to have an executive champ in headquarters who is pushing your cause there. Apart from that one will need a whole lot of domain knowledge, be astute with staffing and retention along with having in country program management.”

Kapila had a bit of advice for the company who is interested in outsourcing their receivables function too. He said, “Before venturing out into the market, a company will have to assess its opeartions and decide on what and how much it should be outsourcing. Then they should evaluate business options like buy, build or JV, following which an action plan will have to be developed and executed.”

As most other speakers before him, Kapila also emphasized that an outsourcing initiative was no ‘one time Y2K’ thing and that vendors will have to be constantly monitored for success in the venture.