Rural BPO trends in Indian villages

When BPO revolution started in India in the late 90’s, not many people had thought that rural India, which lacks even basic amenities like drinking water, road connectivity and electricity will ever be able to handle outsourced backoffice work. But almost a decade since then, the state governments, especially in Southern India, are being seen aggressively promoting rural BPO concept not just as an employment generation scheme, but as a mean to groom the BPO ecosystem.

Governments in all the southern states have either launched various schemes or are in the process of developing models to encourage private players to set up BPO centres in rural areas. All these states are talking about creating huge employment opportunities for socially backward classes, school and college drop-outs and graduates who have lack of job opportunities in their areas.

“Rural BPO concept might not be new in the Indian context where a few of these are running successfully with the support of large corporates and NGOs. But what we are trying to do is to create opportunities for youths who are 10th standard dropouts or above, by providing them respectable employment opportunities in their areas, the lack of which often forces them to join criminal and naxalite outfits,” says Santosh Babu, MD of Electronic Corporation of Tamil Nadu (ELCOT), the IT arm of government of Tamil Nadu. “If we can provide urban opportunities in rural areas, it would be a win-win situation for all,” he adds.

Tamil Nadu is perhaps the first state in the country to start a rural BPO centre in early 2006 in Krishnagiri district, under the patronage of the state government. While two of them are currently functional under the brand name of FOSTeRA at Krishnagiri and naxal-infested Uthangarai areas in the state, three more are in the process of getting operational. The Tamil Nadu government has announced to set up 100 rural BPOs in the state, as part of which the government is soon going to come out with a business model.

“We are not looking at providing the interested parties any financial incentives, but coming out with a commercial model for the continuity of business. As the part of the model, we will have a Board of directors at the appex level, who will be assisted by a CEO and the other team members. They will oversee the all the rural BPOs in the state,” added Babu.

Karnataka government has recently announced a rural BPO (R-BPO) scheme as part of which the government is providing various financial benefits such as capital expenditure incentives up to Rs 20 lakhs and per employee training incentive of Rs 10,000. In fiscal 2008-09, the state had earmarked Rs 5 crore for this purpose. In the first year, out of the nine companies and entrepreneurs who had shown interest, four were given approval.

The first govt-promoted rural BPO has recently started operations in Srirangapatnam near Mysore while the other three are in the process of getting operational in Salgame (Hassan), Shiggaon (Haveri) and Gundlupet (Chamrajnagar).

In the current year, the state government, according to the state IT secretary Ashok Kumar Manoli, has received 124 applicants, “with companies like Infosys and Wipro showing interest to set up rural BPOs”.

In order to select the genuine aspirants, the state government has set up a six-member screening committee with three members from the government and three from the industry. The committee to be headed by Aravind Jannu, MD of Karnataka State Electronics Development Corporation (KEONICS), has members including Sridhar Mitta, MD of e4e Labs and S Nagarajan, co-founder of 24/7 Customer.

Kerala, on the other hand, is going for a ‘hub and spoke’ model as a part of which the government aims to set up about 100 rural BPOs at panchayat and district level in all the 14 districts of the state, in the next three years. Under a scheme known as ‘Techno Lodge’, the state-owned Kerala State IT Infrastructure Limited is setting up facilities in the rural areas which are being given on lease to private parties. The government is also providing lands to interested private parties to establish offices and give it on lease to companies intending to set up low cost BPO centres. The first two of the rural BPOs under this scheme have been set up in Perinad and Kadakkal villages of Kerala’s Kollam district, and would be officially inaugurated in November this year, Ajay Kumar, IT secretary, government of Kerala said.

“We expect that when complete, our low cost BPO scheme will generate employment opportunities for about 10,000 people. We intend to have such BPOs at the panchayat and taluk level in every district which will be headed by the district collectors,” Kumar added.

Industry sources say other than creating employment opportunities for rural youths, the rural BPO initiatives would also encourage bigger players to move a chunk of their outsourcing works to these lows cost operations, either to their own centres or to their partners. “Even though we don’t want to set up rural BPOs, we are interested to work with companies who have a base in rural areas in Karnataka. We can bring them business continuity,” said Amitabh Chaudhry, CEO of Infosys BPO.

Says Sabyasachi Satpathy, Partner at Tholons Advisory, “Rural BPO can provide an alternate business model for the opening up of the domestic BPO opportunities. By leveraging the low operations and people cost as well as significantly lower employee attrition, Indian service providers can significantly reduce cost by moving non-complex support operations from large cities to their rural operations.”
* South to see rural BPO revolution
* State governments seen encouraging outsourcing centres in villages
* BPOs have been set up in Perinad and Kadakkal villages of Kollam district
* Inaugration of the Kollam BPOs called Techno Lodges in November 2009