Rural Calling

From world’s software major to ITes provider, India has assumed a global leadership, now with corporates foraying in to the hinterlands to set up shops there, the rural BPOs hold the future. ‘Outsourcing’ from the bases of rural India seems ready to lead yet another IT revolution in the country and drive the global economy.
Rural Calling

India has been termed as one of the youngest nations in the world with more than 50 per cent of its population fall in the productive age group of 15-35 years. Majority of this age group resides in the Indian villages and now with access to higher education, they are exploring new avenues of job opportunities. However, limited job options compel this population to migrate to bigger towns and cities. As Mathew Cherian of Help Age India said that rural India does not offer many job opportunities for its population and people migrate to bigger cities in search of employment. However, few developments in rural India may put his thoughts wrong.

For example, the one phenomenon that is catching faster than before is rural BPOs and this trend is catching pace as more and more players are keen on setting up their bases in the hinterlands. This sudden rise in the number of BPOs going to Indian villages has opened job avenues for the rural youth. Now they are getting jobs at their doorsteps. The trend not only seems to check migration but also help them save more as there are negligible expenses when the workforce lives in their own villages. As per the recent report by NASSCOM, the rural BPO industry is evolving and maturing with a healthy pace and in FY 2012 the industry generated revenue approximately USD19 million and as per the latest data provided by the agency, the industry employs nearly 6,000 people in these centres.

Saloni Malhotra, the young Founder and CEO of Desi Crew looks at this huge population as a big business opportunity and she realised it by founding a BPO in Tamil Nadu. Interestingly, there are more women in Desi Crew’s three centres then men.

The concept of rural BPOs emerged after many of the people in the industry realised that overhead costs are going up in the urban centres due to spiraling real estate costs in the metro cities and the business is not as thriving as it used to be initially. So, with the growth of the industry, grew its challenges. So, where they are heading for and what are the solutions?

However, those who were at the helm of affairs in these centres looked at one interesting aspect that more than half of the workforce working at any given time, in any BPO is from the hinterlands. People like Saloni viewed it as a viable business opportunity and set up their base in these areas. This not only provided them with jobs at their doorsteps, it also helped these companies cutting their operational costs significantly.  The opportunity in the words Brett Sedgewick, Vice President at NASSCOM Foundation says is, “The opportunity is huge for rural BPOs and I am really very optimistic about the growth of this sector as more and more leading players are working in this area.”

For Saloni, the opportunity is huge and she looks at it as engaging the rural population in the right direction. “The industry is pretty much similar to its urban counterparts. However, the difference is in the form of low rentals that in turn lowers the operational costs and makes the business viable.” Keeping in mind the very potential of this population, the very first Rural Business Process Outsourcing unit (BPO) was established in Tamil Nadu by the Krishnagiri District Administration, at Sanasandiram village.The objective behind setting up a BPO was to train and employ Naxal affected youth. It is not that these new ‘employment centres’ are opened as an CSR activity by the corporate world but it is a thriving business opportunity but with some hurdles. Nikhil Paruchuri Head of Strategy & Business Development at Source for Change, one of the leading rural BPOs looks it as a ‘viable business with social responsibility’. The BPO, where Nikhil works is founded by Mumbai based Piramal foundation and 65 per cent of its workforce is women.

Started with 10 women in 2007 in Rajasthan’s Mewat region, Source for Change employs nearly 110 employees. However, the most interesting part in the ‘Source for Change’ story is the transformation of women in this Rajput majority area.  “Although, Mewat is an institutional area and we opened our centre here as there was no dearth of educated youth. However, when we started in 2007, there was hardly anyone willing to join us,” recalls Nikhil.

But the journey that started with 10 women is a long one it has brought a paradigm change in the outlook of the male dominated society. Women are no longer asked to stay inside the homes and men in the families of these women are not as rigid as they used to be and people want their female members to work here. From a business angle, setting up a rural BPO is looked as safe investment as cost of setting up a rural BPO is very low in comparison to urban areas but depends upon the place and location in a village. According to Nikhil, typically a 100 seater rural BPO in a rented building may cost nearly around Rs 30-40 lakh. However, Saloni feels that setting up a “rural BPO costs anywhere between Rs 20-30 lakh.”

However, the ride on the rural bandwagon is not that smooth. There are a range of problems that these firms face. It is like connecting dots to make it work. However, there are many things that have changed in these Indian villages during this five years period. But there are challenges and foremost is infrastructure. Another area of major concern is power and South is better in comparison to North India in this regard.  “The supply of electricity has been erratic and we can’t rely on it. For the back-up, we rely on generators and UPS. Because we cannot afford to lose work,” says Nikhil.

Desi Crew for example has all its three centres in the southern belt of the country and one of the reasons that Saloni cites is that of electricity. “We get around 18 hours of power supply here, however in North, villages receive only 8 hours of electricity and that too is very irregular, “adds Saloni.  So, any prospective BPO needs to budget for a heavy-duty diesel generator and to be fair, that’s an expense for most BPOs even in urban locations. Hiring talent is another area of big concern for these locations. “For entry level jobs we find suitable resources here but finding middle level managers remains a challenge for the industry. However, the problem is not as severe as it used to be a few years back,” adds Nikhil.

The kind of work that these BPOs do may range from data processing to document digitisation to providing voice support. Training time is longer in these centres as the resources they hire, in many cases, are not educated beyond class 10 and it takes at least two-three months to train them. Generating business and sustaining them is the biggest challenge, which these BPOs face. Despite being termed as sunshine industry, there are not many who are convinced with the idea of rural BPOs and as Nikhil said, “the world in rural is still the same. Most of the clients before visiting our centres are skeptical in handing over the work to us as they all have the perception that rural means poor infrastructure and incompetent resources.” Brett looks at it from a different perspective. For him, “ability of these centres to develop sustainable models for business is the key as implantation model is quite different in this regard.”

According to Brett, future of the rural BPOs is great and it holds promise for greater potential. However, the challenge that remains ahead of them is to rub off the perception of being in rural. Commenting on the future of the industry, Saloni says, “The future seems immense and I am sure in the next five years, the industry size will grow with a healthy rate and there will be more positive changes that will replace the hurdles.” The NASSCOM Foundation is working on initiatives targeted at increasing long-term employment in the BPO sector for those with limited opportunities — basically, what is being termed as ‘Impact Sourcing’. The foundation is working to study and grow the ecosystem, and ensuring that growth is profit-driven. As estimated by NASSCOM, Impact Sourcing can reduce costs by around 40 per cent compared to typical urban BPOs and bring down attrition from 40-60 per cent to 8-12 per cent.

Brett is very optimistic about the future of outsourcing in the rural areas and he feels that ‘social agenda plays a very crucial role in the development of this industry.’ The positive point about rural BPOs is that they are addressing the most pressing need of the rural population-jobs. This industry gives direct employment to 6000 persons and interestingly, more women are employed in these centres. In some of the BPOs, the women workers are in majority and the female-male ratio can be anywhere between 60-40 or more.

Despite the fact that the industry is growing at a healthy rate and many state governments are very cooperative and enthusiastic about ‘outsourcing’ industry coming to rural. But there have been concerns of those who are operating in that environment and almost all the respondents we talked to feel that there should be a national policy to address the concerns of rural outsourcing industry.

They also want the government to ensure availability of electricity, which is the basic need. There are few example states from where other states can take inspiration. Tamil Nadu was the first state to set up a BPO and has a state policy to promote rural BPOs. Apart from Tamil Nadu, Kerala, Andhra Pradesh and Karnataka are proactively promoting rural BPOs and this is the reason that majority of rural BPOs are in South India. Highly populous states like Uttar Pradesh and Bihar and rest of North India doesn’t have much to talk about in this regard and many experts feel that a lack of political will of the CMs of the respective states is responsible for it. But, as Nikhil opines, “the industry is here to stay and will grow in future. So, a little support from the government and industry will ensure its growth.”

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The Changing Face of Rural India