400 Chrysler tech jobs go
Metro positions will be lost when computer technology tasks are outsourced to companies in India, Virginia.
Eric Morath / The Detroit News
At least 400 people will lose their jobs at Chrysler LLC as the automaker outsources computer technology work -- part of an effort to streamline its information technology department and a long-range plan to cut costs.
The transition will start immediately, though some workers may not depart until the third quarter.
Chrysler has finalized contracts with India-based Tata Consultancy Services and Virginia-based Computer Sciences Corp. to take over maintenance and support operations from internal employees, Jan Bertsch, Chrysler vice president and chief information officer, said in an interview on Wednesday.
Eliminating those jobs will allow Chrysler to invest more in advanced technology and expand its overseas reach because costs for routine operations will be greatly reduced, she said. The service contracts are valued in the hundreds of millions of dollars, but Chrysler would not divulge details.
Outsourcing the work will shrink Chrysler's 2,100-person information technology department, mostly in Auburn Hills. About 200 of Chrysler's 1,000 salaried technology workers will lose their jobs. The balance of the layoffs will come from the ranks of 1,100 contract workers in that department. They will leave in greater numbers, but Bertsch didn't offer specifics.
Some employees may be hired by Tata or Computer Sciences, she said, and some work will be moved entirely off-site.
The outsourcing and job losses are part of Chrysler's three-year Recovery and Transformation Plan first announced in February 2007. That plan, which was updated in November, calls for the elimination of 3,000 salaried positions and 25,000 jobs overall.
Bertsch said the plan also requires the more efficient operation of all company departments, including information technology.
Previously, the majority of technology budgets have been committed to routine tasks, leaving little money to invest in advanced technology, Bertsch said
"We are an auto manufacturer, we don't have the same scale and expertise that (technology firms) do," she said.
Tata Consultancy Services, a division of the Tata Group, which recently acquired Ford's Jaguar and Land Rover, and Computer Sciences will service hardware and manage applications for functions like product development and sales and marketing. Chrysler continues to run business analysis, customer-service operations and other key areas.
With clients worldwide, Tata and Computer Sciences are in a better position to support Chrysler's growing overseas operations, Bertsch said. "The companies have global delivery capacity and can easily invest more in new technology," she said.
Top executives have said growing Chrysler sales, manufacturing and engineering presence in developing countries is essential to returning the company to profitability.
Sending "non-core" work to a lower-cost supplier makes a lot of sense for a company fighting to return to profitability, said Van Conway, senior managing director at Birmingham-based turnaround firm Conway MacKenzie & Dunleavy.
"Profitable companies tend to take things in house, and as times get lean you see more outsourcing," he said. "It's smart, if you don't lose quality and can do it economically."
The loss of the jobs at Chrysler is an example of why, when the auto industry contracts, so does Michigan's high-tech employment base, said Scott Watkins, of the Anderson Economic Group.
"This is Chrysler catching up with the times -- most companies outsource work that's not primary to their corporate mission," he said. "This means fewer jobs for the Metro Detroit economy, but it does open up opportunities for new or existing companies to compete in this technology services space."
Debt Collection a New Frontier of India Outsourcing
By HEATHER TIMMONS
GURGAON, India — In a glass tower on the outskirts of 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 new frontier for outsourcing, 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.
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.
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 GenTech.
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.
