American mortgage lender IndyMac Bank is looking at setting up a captive office in India for outsourcing of analytical work and IT-enabled services as part of its long-term growth strategy.
The bank will hire 500 people in India to meet its requirements and invest up to $250 million. The US-based bank has sought to put in place a hybrid model that incorporates both the captive office and existing tie-ups with IT vendors.
Currently, IndyMac Bank has arrangements with Cognizant, Excel and WNS Global Services Ltd, which have teams based in Pune, Noida and Mumbai.
It is also in talks with these companies for a possible tie-up for the proposed captive outsourcing office. Explaining the rationale behind the decision, Ashwin Adarkar, IndyMac Bank's CEO, consumer banking and global resources, said, "Having a captive office results in insulation from a host of factors, while only having arrangements with vendors restricts us from undertaking several initiatives."
Through this captive office, IndyMac Bank plans to outsource analytical functions and IT-enabled services. Apart from Pune, the bank is also exploring the option of having the office either at Mumbai or New Delhi.
As part of the plan, the bank is looking to double its existing workforce in the country to 1,000 personnel by 2006. Adarkar said that it aims to increase it to 2,000 by 2008.
Apart from investments made by vendors from the IT space, IndyMac will be investing an amount ranging between $30,000-$50,000 per employee. The outsourced functions include sophisticated analytical work, involving compilation of daily reports and MIS-related calculations.
Typically, once the prospective borrower submits his loan application form and the firm communicates the interest rate range to him, there could be drastic movements in the rates. This entails the bank to sufficiently hedge its lending operations. The Indian chapter will specially focus on this function, Adarkar pointed out.
When asked about the bank's plans to foray into lending opportunities in the Indian market, Adarkar said, "Although there are no immediate plans, we might look at this area once quasi-governmental organisations are given the go-ahead to provide guarantees on home loans."
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