India’s BPO companies are gradually moving toward smaller cities and less developed areas adjoining these cities
Rupak D. Sharma in New Delhi
Asia News Network
In September 2009, Tata Power Company Limited opened its first rural business process outsourcing (BPO) unit at Khopoli, about 80km south of India’s financial capital, Mumbai.
At that time, the call centre established by India’s largest private integrated power company was viewed by many as a test subject, with shutters ready to be pulled down in case the business went awry. One year down the line, the unit has outwitted its critics.
Today, it employs 192 people, up 300 per cent from a year ago. And most of the staff in the company are local unemployed youths, who would have migrated to urban centres if the unit had not been set up.
Tata Power calls this an example of how companies in corporate India can help empower people in rural areas and create self-sustained communities. It is now planning to increase the number of employees in its Khopoli centre to 360 soon, while its parent company, Tata Group, is mulling over recruiting 5,000 people in rural BPO units over the next few years.
Lately, smaller cities in India or villages adjoined to these smaller cities are emerging as lucrative destinations for IT and BPO firms. Locations such as Jaipur, Chandigarh, Mysore and Nagpur are being increasingly leveraged by companies to expand their offshore operations, the latest report of Everest Group on global sourcing said.
For instance, Deutsche Bank and Genpact, India’s oldest BPO firm, have set up their branches in Jaipur. Dell and EDS-Mphasis have also opened units in Chandigarh and Ahmedabad, respectively. And some BPO firms like Xchanging and Hinduja Global Solutions have gone even further to places like Shimoga in Karnataka state and Durgapur in West Bengal, slowly changing the face of rural areas.
Lower operating cost is one of the primary reasons why companies are setting up shops in places far away from big cities. In urban centres like New Delhi, Mumbai, Bangalore and Hyderabad, real estate prices have skyrocketed. People in big cities also expect higher salaries, whereas companies in rural areas can hire a person for US$100 a month for an eight-hour shift—almost half of what BPO units in cities pay to an employee. In total, companies can save 40 to 60 per cent on the operating cost if they open BPO units in rural areas.
Another reason why service providers are moving to hinterlands is incentives given by state governments such as tax holidays and subsidies to promote investment in rural areas. Karnataka government, for instance, provides 10,000 rupees ($214) per candidate to each company that sets up the BPO centre in rural parts of the state. On top of that the companies also get a discount of 50 per cent on Internet bills. In August, Tamil Nadu government also announced that it would provide a capital subsidy of up to 300,000 rupees ($6,430) and a training subsidy of 1,500 rupees ($32) per month for each person to BPO companies that wish to start up business in the state’s rural areas. Now, many other states are planning to emulate these policies to create jobs in rural areas.
The attraction of incentives and low operating cost has led to opening of 50 BPO units in rural areas so far, according to the National Association of Software and Services Companies. These units employ about 5,000 people mostly to operate call centres and help desks, and perform data processing and other back office tasks for international as well as domestic companies. Thanks to these efforts, around 30 million rupees ($643,000) a year is flowing into rural areas. Estimates show the number of these centres will increase to 1,000 by 2015, creating jobs for around 150,000 people.
Studies have shown that rural BPO centres, apart from creating employment opportunities for local youths, are also empowering women. For instance, a BPO company called HarVa, which runs three units in conservative Haryana, is already seeing how the lure for money is propelling male-dominated society to unclip women’s wings and let them to do outside work to supplement family income. It is the same in a village called Bagar in Rajasthan state, where women are expected to stay at home and do household chores. But with the establishment of an all-women BPO centre by Source for Change—an initiative of the Mumbai-based Piramal Foundation—the thinking of people have changed.
But all this doesn’t mean setting up BPO centers in rural areas is an easy task. One of the biggest challenges in setting up shop in the hinterlands is infrastructure. Most of India’s rural areas face power outages and many places do not even have electricity supply. It is also not possible to run big units that can seat 500 to 1,500 employees at one time because of lack of quality human resources. At most only 100-150 people can work in one shift.
But many believe the industry will overcome these problems gradually. The country’s now $12-billion BPO industry faced similar challenges between 1998 and 2001, when it was trying to prove that outsourcing work could be done in India. It took the industry few more years to get high-end work. It is said rural BPOs, too, will overcome the problems it is now facing.Published in Aug 27-Sept 9 edition of AsiaNews
Recent Comments