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Business News/ Industry / Infotech/  BPOs looking to take services to smaller cities

BPOs looking to take services to smaller cities

New BPO policy and the govt's push for financial inclusiveness have opened up fresh avenues for these firms

In the next 4-5 years, BPO firms have the potential to create around 100,000 jobs in the smaller cities. Photo: Ramesh Pathania/MintPremium
In the next 4-5 years, BPO firms have the potential to create around 100,000 jobs in the smaller cities. Photo: Ramesh Pathania/Mint

Mumbai: Business process outsourcing (BPO) firms in India are shifting their sights beyond the metros and moving to small towns and semi-urban areas to meet growing demand for customer care services in the hinterland, particularly in the banking and telecom sectors.

Essar Group’s Aegis Ltd, Hinduja Global Solutions Ltd (HGS) and RuralShores Business Services Pvt. Ltd are opening more centres or reinforcing their existing branches in such places to take advantage of the government’s financial inclusion drive through schemes such as the Pradhan Mantri Jan-Dhan Yojana.

Giving a boost to this trend, the government last month finalised a new BPO policy under which it is seeking to create 48,000 call centre jobs, offering financial incentives to companies that set up BPO units in small towns.

The National Association of Software and Services Companies (Nasscom), an industry lobby group, estimates that 80% of 1 million BPO jobs in the country are concentrated in seven major cities, including the national capital region (NCR), Bengaluru and Mumbai.

In the next 4-5 years, BPO firms have the potential to create around 100,000 jobs in the smaller cities.

What is driving this growth? “One is banking and financial services. There is big thrust that is happening in banking. The government is also playing its part. Jan-Dhan Yojana and financial inclusiveness, and secondly, the e-commerce business which is exploding," said Sundeep Sen, chief executive officer at Aegis.

Launched in August, the Jan-Dhan Yojana is aimed at providing financial services to the poor such as a basic savings bank account, a debit card and access to credit at an affordable cost. As of 17 June, 162.7 million accounts had been opened under the scheme, according to the PMJDY website.

BPO firms say the shift towards small towns has also been driven by the lower cost of operations, less churn in the workforce and the availability of staff with multilingual skills at such places. BPO firms are grappling with a high attrition rate with some of the companies witnessing the departure of as much as 20% of their employees last year, according to experts.

Aegis, which has 25 centres in India, added seven new centres last year in places such as Ajmer in Rajasthan, Karnal in Haryana and Shimoga in Karnataka. This year, it plans to hire about 7,000 people from these places.

Sen said more than half of Aegis’s workforce will shift to non-metros in the next two years.

“It’s a big shift we are doing. The benefit as a company is that cost is relatively low and the attrition is less in these places," he added.

Bengaluru-based BPO firm Rural Shores, which only focuses on the domestic markets, has 20 centres, including in rural areas such as Sonari in Uttar Pradesh, Chikballapur in Karnataka and Budhni in Madhya Pradesh, among others. The company plans to open five more centres in Andhra Pradesh, Kerala and Uttar Pradesh and hire about 1,000 people by the year end.

“Initially, most of the clients were sceptical if quality will be maintained or if it will be delivered at all. We continued to focus on enhancing the resources. It took three years to convince our clients. We now have 35 clients as against 2-3 when we started out in 2008," said G. Srinivas, chief financial officer and co-founder of Rural Shores.

The company employs around 2,500 people, with each centre manned by around 150 people.

Piramal Group, which started its rural BPO centre Udgam at Bagar in Rajasthan in 2007, said demand and enquiries from telecom firms and banks for customer care services had increased over the last one year.

“The concept of outsourcing is starting to catch up in the last few years. Back when we started in 2007, we actually had to fend for ourselves… Now companies understand the economics behind outsourcing. It is making great sense when they are trying to cut down cost," said Snigdha Sahal, programme head at Piramal Foundation.

Apart from domestic voice services, industry experts say non-voice processes or back-end offices work such as finance and accounts, logistics or human resource functions are gradually moving to these places.

“Back-office work for finance and accounts, procurement, order to cash, payroll are the functions that we can look at expanding to non-metro cities. Industry or vertical specific non-voice processes can be considered as well," said Aneesh Garg, vice-president and finance head, business process services, Wipro Ltd. The company set up a rural BPO in Manjakuddi village in Tamil Nadu in 2011 and since then it has been ramping up its business, particularly in non-voice services.

Similar initiatives have also been lined up by Hinduja Global Solutions and Serco Global Services, another BPO firm. Both firms said they continue to hire aggressively in smaller towns and cities and plan to open more centres in tier-II and III towns, which are more cost effective.

Apart from the metros, Hinduja Global Solutions has centres in Durgapur, Nagercoil, Siliguri and Guntur where it is looking to add more.

To be sure, these firms have to cope with lack of adequate infrastructure such as power and poor bandwidth in the hinterland—factors that inhibited faster expansions in small-town India in the past. Finding the right talent at the senior level and a shortage of English-proficient professionals are other obstacles.

Despite these challenges, Nasscom vice-president K.S. Vishwanathan says firms should learn how to harness the big talent pool outside the metros.

“IT and BPO jobs are concentrated mostly in the metros. This is not sustainable if we need to maintain competitiveness and bring in inclusive growth within the industry. Besides, enterprises are evolving their business models and trying to expand their reach beyond the metros. Hence, there’s a huge opportunity for BPO services to expand in these areas," Vishwanathan said.

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Published: 28 Jun 2015, 11:36 PM IST
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