As U.S. banks struggle to maintain margins amid growing regulatory demands, some of them have started to outsource part of the onerous work involved in servicing mortgages and processing foreclosures to India's major technology companies, the Wall Street Journal reported today. The move is creating a new revenue stream for such Indian outsourcing firms as Tata Consultancy Services Ltd. and Wipro Ltd. at a time when many Western companies have been pulling back on information-technology outsourcing. This year, Indian outsourcing firms will bring in $316 million in mortgage work, double the revenue from such work in 2009, according to estimates from HfS Research, an outsourcing consulting firm. The banks are not outsourcing all the work. Citibank, for example, says that most of its mortgage servicing is still done in the U.S., though an Indian outsourcing company now supplements some work as needed. But as the government rolls out tougher rules for home loans, banks have added new financial-verification hurdles, and many of them outsource vetting rather than increasing their own staffs. Read more.
