Rural BPOs are successful businesses

Setting up of rural BPOs is no longer being perceived as just corporate social responsibility. These are viable businesses.

Till a few months back, 20-year-old Srinivas Mangipudi slogged daily as a farm labourer in a remote village in Karnataka. All he got in return was a pittance. His fortunes turned around when a business process outsourcing (BPO) centre opened up a few kilometres from his village.

Having dropped out after 12th standard, he applied for a job and got it. Now, after completing his training, he not only gets a salary of over Rs 4,000 per month but also benefits like provident fund and health insurance.

Mangipudi is simply one among the many educated village youth to join the many BPOs that are being set up in villages of India.

Popularly known as rural BPOs, they include players like RuralShores, Tata Business Support Services (earlier know as Serwizsol), DesiCrew Solutions and Comat Technologies. Some of the organisations that get services from such centres include HDFC Bank, Kotak Mahindra Bank, Axis and many telecom players.

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Data are hard to come by but rough estimates peg the total number of rural BPOs in India in a few hundreds. Most of these centres provide services like data entry, email responses, document checks, data and bill processing.

DesiCrew, for instance, started as an incubatee of IIT-Chennai's Rural Technology Business Incubator and spun out as a commercial entity in 2007.

Today, it employs around 200 people across four centres. The company's current portfolio holds five clients with annuity contracts, 30 clients in all, and over 50 completed projects.

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"Rural BPO needs a conducive environment to grow. The government's role is obviously that of a facilitator, but considering the nascent stage at which the concept is in, there is a case for creative utilisation of the strengths of the government.

There are a number of areas where the governments could benefit by adopting rural BPO models - governance, accountability and efficiency, cost savings are examples," says Manivannan J K, president and chief operating officer, DesiCrew Solutions. The firm will soon open one centre each at Karnataka and Andhra Pradesh.

Realising the employment opportunity that rural BPOs can offer, some state governments, too, have started providing incentives.

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The initiative provided by the Karnataka government, for instance, has led to the setting up of 16 rural BPOs in the state. In addition the recent advertisement for establishing rural BPOs saw another 14 applications for setting up BPOs.

"We provide infrastructure and financial assistance as incentives. For training, we provide Rs 10,000 per candidate to the entrepreneur who plans to set up the centre. Besides they get 50 per cent reduction on internet charges among others. We have approached the central government to adopt this model for a national policy on rural BPO," says Ashok Kumar Manoli, principal secretary to Government, Department of Information Technology, Biotechnology and Science & Technology, Karnataka.

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After Karnataka, it is now the Tamil Nadu government, which is planning to announce a policy for setting up rural BPOs. The reason lies in numbers.

A centre of about 50-75 seats can be set up to cater to the available labour pool for every 20 villages. This will create about four million rural employment on an average wage of over Rs 4,000 per month for the entire year and benefit about 20 million rural people directly.

One can compare this to NREGS, which has created an average 45 days of employment at Rs 80/day in the last five years for 20 million households. Only 4 million households have managed the mandatory 100 days.

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Murali Vullaganti, CEO of RuralShores, however, believes that government incentives should focus on the operation of these centres.

"I think just providing incentives is not good enough. Especially if there is no business or work coming to these centres. There are so many IT projects that the government is coming out with. It can easily give some of the work to such centres," he adds.

RuralShores is among the few that has been able to convince customers about being served from a rural BPO set-up.

The company at present has six centres across India with 100 employees per centre. It has three centres in Karnataka and one each in Andhra Pradesh, Tamil Nadu and Gujarat. It plans to set up three more in Rajasthan, Bihar and UP by the end of this year. Each of these villages have a population in the range of 10,000-15,000.

 "Our aim is to have 400 centres by 2017," says Vullaganti. RuralShores runs its centre on a franchisee model, wherein entrepreneur from each district run these centres.

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While rural BPOs can help in lowering real-estate costs and help in getting cheaper labour for low-end outsourced work, setting up centres in the remote villages of India is not an easy task.

Raju Bhatnagar, vice-president BPO and Government Relations, Nasscom and who earlier headed SerWizsol (a rural BPO) feels that rural BPOs have certainly moved away from being a corporate social responsibility (CSR) activity to a serious business model.

"It certainly is no more a novelty. But the model is very different. You cannot have a 500-1,500 seater. Each centre in a rural BPO will have around 100-150 people. The Indian BPO sector took eight-10 years to get high-end work. Rural BPOs, too, will take sometime to change the mindset."

Moreover, the time taken for training is around six-seven months, and sending mid-managers to these centres is a task. Training includes even a simple task like opening a bank account.

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"Skill-training is a continuous process. Besides you have to be very choosy when it comes to sending-manager level personnel's to such centres. These people will drive the growth and culture of that centre. If in anyway these guys give a wrong impression, it become difficult to operate," opines Milind Godbole, President APAC at Aditya Birla Minacs.

Aditya Birla Mincas, under its initiative of 'Connect India', plans to tap the potential of rural India. Under the hub-and-spoke model the company will have hub with headcount in the range of 800-1,000 will handle 20-25 per cent of volume.

The rest will be distributed among the spoke, which would have capacity of 100 seats or slightly more. He adds: "We will go live at two centres. The Kolkata centre with 400 employees and the Ranchi centre with 100 people have recently gone live."

Manivannan of DesiCrew concludes, "the next 12-18 months are crucial in the evolution of rural BPOs where a lot of large companies are in the process of committing their best resources to derive value out of rural BPO models".