Top 5 Reasons to Use a Nearshore Call Center as Part of Your Collection Strategy
In the quest to be a competitive collection agency or debt buyer there are many aspects to consider. A consideration that may not be immediately obvious, but that could have great benefit to an agency is opening a call center through a nearshore office. We sat down with Phillip Duff of Lighthouse Consulting Inc to ask him, ‘What are the top 5 reasons to consider opening a nearshore office?’”
1. A quality labor pool
It has been Duff’s experience that the labor pool of Jamaica and other Caribbean Islands has been of a very high quality. “The members of the Islands’ labor pools are very happy to have employment, so they can take care of their family,” says Duff. Most of the call centers in countries like Jamaica and Costa Rica are staffed with single mothers while Mexico and Panama are largely staffed by single men. This means most employees are working to take care of their immediate family including mothers, fathers, sisters, brothers and children. In Duff’s opinion this is “important as the workers are very happy to be employed, motivated to work hard to keep their family’s livelihood and do not express entitlement.” In Jamaica and St Lucia, the call center business is the number two industry on the island. Jamaica has fortune 500 companies established there like Amazon and Xerox. As a result, the island technology infrastructure is solid, increasing the labor force demand for call center workers. Educationally, math and English skills are emphasized in schools so that Islanders will be well qualified for the top industries of tourism and call centers.
2. Reduced labor costs
According to Duff, Caribbean collectors are both effective and inexpensive. While it is true that expensive customs and duty charges on electronic devices will often exceed 100% of the value of the item, low labor costs offset this expense. Even though setting up infrastructure costs on the islands may be almost double the cost of the same efforts in the US, the low labor costs allow a nearshore call center to offset those costs, increasing the profitability of the business. Duff claims that Lighthouse has learned that nearshore labor costs “run from $3 to $6 USD hourly in most nearshore locations.”
3. Familiarity with US culture
Being warm weather tourist destinations close to the US mainland brings US, Canadian, British, German and more varieties of citizens to the Caribbean. The familiarity with dealing with US and other tourists in resorts, beaches, and restaurants makes it easy for native Islanders to perform debt collection to citizens in these same countries. Many of the islands have English as their primary language as they were originally British Colonies. Most Caribbean islands are viewing TV stations from major US cities like Miami, Chicago, and Los Angeles. Also, Movies as well as HBO, Cinemax and other movie channels keep these islands very familiar with the US culture. In addition, most Caribbean islands also prefer the US Dollar to their own currency because of the stability of the USD.
4. Ease of management
Due to being located near the US, Jamaica, Mexico, St Lucea, Costa Rica and Panama are all just 2-3 hours from Atlanta or Houston by plane which allows US companies to visit the nearshore call center regularly. Duff quips, “It doesn’t hurt that these locations don’t get snow and almost everywhere there is a beach.” Duff moved to Montego Bay, Jamaica from the US to open Lighthouse Consulting Jamaica 3 years ago because he fell in love with the Jamaican people and saw opportunities for his clients. There are opportunities for managed service centers that can make opening and maintaining a nearshore workforce very easy. Lighthouse is one such group that allows a US business to operate a nearshore office for a fraction of the price of US costs.
5. Return on Investment
Opening an office nearshore can help an agency reevaluate potential clients as they can have deeper portfolio penetration at the same time as increased production. Having a lower cost office can allow an agency to take on clients that it couldn’t accept previously due to smaller potential profit margins. According to Duff, agencies “can take on new clients that have a lower unit yield as the cost per seat can be as low as $8-12 USD hourly verses $25-$30 USD per seat in the US for the same work. The bottom line is the workforce costs are up to 50% cheaper and just as effective as US staff, manufacturing an ROI much higher per agent.”
Licensing a Nearshore Branch Office
Licensing a nearshore branch office is similar to licensing a US branch. Each state has the right to enact its own set of collection laws and requirements. As such, most jurisdictions have very different statutory regulations and application requirements.
- Certain jurisdictions require that all locations from which debtors are communicated with maintain a separate branch license. For several states the branch license can be as involved as the original debt collection license application.
- Some states have an abbreviated branch license.
- Some states require written notification that the licensed agency is opening an additional branch location
- At the time of this article, Connecticut and Nevada are two states that do not permit collections from a location outside of the United States.
In all cases, failure to comply with state licensing and registration requirements could prove costly not only to collection agencies but also to the creditors that they represent. Cornerstone is familiar with the state requirements and can assist an agency in putting these licenses in place.