Telecommunications

September 21, 2006
Rural BPOs: Is Anyone Listening?

Pradip Baijal

INTRO -- Are rural BPOs possible or this is just a Utopian dream? We should see whether there are any working models and whether a reduction in connection costs to rural areas will multiply such centers. Let us examine.

NEW DELHI -- While in TRAI, I had advocated for adoption of policies, which effectively take communications, both mobile phones and BPO centers to rural areas. The BPO business has four main inputs: communications systems, hardware, infrastructure, and people. The cost of communications and hardware are not in the direct control of the industry, but BPO operators can directly control costs related to infrastructure and people. A direct strategy that allows this cost control is the rural BPO model. Simply put, the rural BPO shifts the location of outsourced work from urban to rural areas.

There are some instances where pioneers have seen the future and set up such centers. They will multiply like mobile phones, in the appropriate policy environment. Lason Inc. (a US-based outsourcing firm), GramIT (associated with Satyam), and Datamation (a Delhi-based group), are three of the key players in the Indian rural BPO scene. Their approaches to the business also frame the different execution possibilities.

Rural BPO Operators

Lason does not own the specific centers that do the processing, but designates them as franchisees, providing the hardware and training, and managing the quality of the output, while the local owner provides the physical location. Lason estimates that about 30 percent of the revenues it earned in 2004 came from smaller city and rural sites. Lason has its regional hub with 1,000 employees in Chennai, with another 5,000 distributed across 60 smaller centers.

Datamation, on the other hand, owns and operates all the BPO centers it runs. The NGOs assist Datamation in hiring and training the workforce for the BPOs. Its operation is run based on a not-for-profit philosophy. It also runs Hewlett-Packard’s rural BPO initiative, which is part of a bigger project called HP i-Community.

The Byrraju Foundation, which is associated with Satyam, has launched GramIT, a rural BPO in village Jallikakinada (AP) that employs 100 rural youth, using the last-mile connectivity provided by Project Ashwini, which connects 32 village centers with broadband wireless. The GramIT centers are set up as co-operative societies, acting as franchisees of Byrraju foundation.

Drivers

One of the central advantages for the BPO is that costs associated with infrastructure and people are much lower in rural areas than urban areas. This allows firms to reduce their expenditures in providing the physical location substantially given cheaper land prices and construction costs. In addition, one of the observations of rural BPO managers has been that employee attrition is lower as jobs are taken to where the people live. This implies lower turnaround and hence, lowers training costs.

Another major driver behind the rural BPO model is that there is a large amount of domestic work available with respect to digitisation of hospital records (proposed by GramIT) and legal documents. As a result, there is a huge pool of work that requires low-cost solutions. Rural BPOs provide the means to satisfy this demand, and have much lower attrition rates.

A story that appeared in Hindu on September 12, 2005 makes interesting reading in regard to Rural BPOs.

Story so far : To check the feasibility of enlisting the services of a village BPO for my company's work, I visited a unit called `Jannal'. To my surprise, I found the outfit was already working for an Australian client, answering farmers' queries, and even thinking of scaling up operations through a network of units in the nearby villages. I wondered whether companies needed to forge service relationships with entrepreneurs in villages as a long-term strategy.

Episode: In response to last week's thought on whether it would be a worthwhile to explore the village BPO option, C. Ramesh of Keeramangalam, Pudukkottai District, wrote: "Dear Swati, farmers and artisans in our villages acquire talent through experience. Though universities and educational institutions experiment and find out advanced techniques, these hardly reach the villages.

"In Japan, scientists in an agricultural university studied the problem of transportation of watermelons to the US. To save space and for easy storage and transportation, the researchers found out a way to produce square or rectangular-shaped watermelons. You'd be surprised to know that in my village, we, in our school-going days, used to make such rectangular shaped watermelons for fun. To forge service relationships with entrepreneurs in villages will certainly promote trade and technology.”

Now, we need to find out if the square melons haven't been patented yet!

"Hi Swati, I'm very glad that you have brought up this question on village BPOs," wrote Pradeep Nevatia, managing director and CEO of Lason India. "I passionately believe that rural BPO is the next wave in BPO because this model makes tremendous business sense and has significant social connotations." That does gladden my heart! Well, there's more in Pradeep's mail.

"In March we started operations in Kizhanur, a small village in Thiruvallur District of Tamil Nadu.Today, the youngsters of Kizhanur are processing documents for our clients in the US."

Great!

"Recently we were approached by Jindal South West Foundation's Corporate Social Responsibility (CSR) wing, which is a part of the OP Jindal Group, to launch a BPO facility in Bellary District, Karnataka. This facility has generated numerous employment opportunities and is helping to bridge the technology divide in the region.

"In future, the Jindal Group may outsource its business processes to this BPO site. This joint venture is an indication of how even non-IT companies can be a part of the rural BPO revolution and benefit from the same." A daring attempt, I'd say.

Do we see a future if we can give reliable and cheap connectivity to rural areas?