Andy Thompson
Go deeper with GlobalData
Despite the recession, the
outsourcing game in asset finance appears to be gaining
momentum.
A key reason is that as the market
begins to pick-up again, and as other parts of financial services
become less buoyant, the number of new entrants into leasing is on
the rise. These newcomers, some say, will need the services of
outsourcing specialists.
Commenting on this, Philip Davies,
managing director of LPM Outsourcing, said: “We are soon likely to
see completely new leasing ventures that could need outsourced
services. New players like Virgin Money could move into the asset
finance business.
“There could also be launches of
independent Sharia-compliant lessors.”
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By GlobalData
Taking another
look
Another opportunity for outsourcers
has been managing of portfolios of assets which lessors no longer
wish to lend against.
This practice, known as run-off,
has been particularly prevalent in the IT market which players such
as Lombard and Barclays Asset & Sales Finance have pulled out
from.
The current economic shake-up
brings a lot of fluidity in the ownership of leasing portfolios,
which may occasion a new look at outsourcing options by some
lessors.
Marc Tendler, principal for leasing
advisers Alta Group, commented: “We have seen some interest in new
outsourcing projects, though it does not seem to be a high priority
for a great many lessors just now.
Where collections are concerned,
lessors from outside the financial services sector are much more
likely to take the outsourcing route compared with banking sector
players with relatively stable business volumes.
Manufacturer-captives are natural
outsourcing users, especially in sectors like commercial vehicles
where manufacturers tend not to have ongoing interface with the
customer through equipment servicing arrangements.
So, too, are a variety of types of
niche players in leasing. Cisco Capital and Syscap, both specialist
supplier/lessors of IT equipment, are among users of LPM’s
management services.
An interest in
offshoring
Meanwhile, there is understood to
still be some limited interest by larger leasing players in the use
of offshoring.
At least one of the major UK
lessors is understood to have outsourced collection services for
some portfolios in India.
In-house ‘near-shoring’, through
centralised back office support for pan-European leasing
portfolios, is of course a quite different option from third party
outsourcing.
This has been done by lessors such
as CIT and IBM Financial Services, often taking advantage of the
fiscal and other attractions of locations like the Dublin
International Financial Services Centre.
“‘Near-shoring’ poses fewer
operational challenges than some other outsourcing options,” said
Tendler.
“Yet it can have a similar impact on customer perceptions as
‘off-shoring’. Lessees may notice that their accounts are being
handled from a different country, especially if service levels
slip,” he added.
