Industry Research : Outsourcing Builds a New Life in the Country
India's countryside is undergoing a creeping transformation. You'll find none of the fancy buildings, multi-cuisine food courts, night shifts, 24/7 operations, accent neutralisation training or company gyms that normally accompany the arrival of India's high-tech industry - or any of the other trappings of the big city.
Yet, India's smaller towns and rural areas are beginning to feel the impact of change wrought by the country's IT sector.
Indian IT services and back-office processing companies have already transformed urban economies. Now, they're looking outside the major conurbations and into the countryside, where they are altering the employment landscape and bringing about social change.
India's rural business processing outsourcing (BPO) firms notched up $10m in revenues last year. That figure may seem insignificant in an outsourcing industry worth $60bn in revenues. But employment in rural BPO companies grew 1.6 times during the period between 2007 and 2009, according to India's IT industry body, Nasscom. The 40 or so rural BPOs currently employ 5,000 workers. That number is set to jump 10 times in 2012.
"Rural and small-town BPOs are a few-billion-dollar business opportunity," according to Sridhar Mitta, former CTO of Indian outsourcing firm Wipro. His company, NextWealth, helps entrepreneurs set up BPOs in India's small towns.
The organisation locates its centres in small towns with abundant supplies of talent - as measured by the quality of educational institutions in the area - low costs, availability of bandwidth and energy infrastructure, and local entrepreneurs who are willing invest as partners.
NextWealth has four centres in three locations and employs 500 people. Mitta says employee numbers will rise to 10,000 in the next three years.
To customers, rural BPOs can provide sound economic benefits, such as a 50 per cent reduction in costs over similar operations in Bangalore. That makes some processes, such as NextWealth's services for a German online photo book creator, economically viable.
In that case, the costs come out at less than $3 per photo book, compared with $6 for the equivalent work in Bangalore. The company is also handling the creation of online menus for Silicon Valley restaurants. Both these operations are run out of its BPO in Chittoor in the neighbouring Andhra Pradesh state.
The lures of small-town India are many. There are plenty of skills - found, for example, among local graduates, college drop-outs, housewives and educated women who are bound by societal norms to stay home.
Rural BPOs are cost-effective as labour, property and other operational expenses are low, says Murali Vullaganti, CEO of RuralShores, a leading rural BPO company. Attrition rates are very low compared with those experienced in cities such as Bangalore and Gurgaon.
BPOs are viewed as a boon to rural India. They lessen rural migration, reduce the stress on crowded megacities such as New Delhi and Mumbai, advance standards of living, promote gender equality and improve social and physical infrastructure.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Continuous Improvement
Published: Monday, October 17, 2011