Rise and Fall of Outsourcing

Abstract

Before 1995, the Indian Car Finance Market was closed to foreign investors, so the Car loan industry was dominated by NBFC’s. The NBFC’sare very professional and used a lot of promotional strategies to attract the customers. They are the first players to use the outsourcing concept for sourcing their business. They appointed agents in all the districts for sourcing their business. But after 1995, Foreign Banks enteredthe Indian Banking Industry. Also a series of foreign car  manufacturers like Ford, Hyundai, Daewoo, Toyota, entered the car market at the end of 20th century. Due to competition in the car market increased and the car prices came down, this paved a way for the increased demand in the Car Loan Industry. Also due foreign banks entry in the market, the interest rates were very competitive and the foreign players used outsourcing concept for tapping the market. But the foreign banks adopted this outsourcing concept in all the areas of their business(sourcing, processing & Collection). But after 2002, the Outsourcing concept started declining on introduction of Dealer DSA concept and also on introduction of In house concept. The In house concept picked up in the last two years and in 2005 almost the entire DSAconcept came to an end and the sourcing business was taken over by the In house team itself. Also in processing business the outsourcing concept came to an end due to various problems. So the processing procedure was undertaken by the bank itself. So only the collection business is still prevailing with the outsourcing concept. So, almost the entire outsourcing concept has taken a new outlook which made a come back of the old dogs (In sourcing) in the same street.