Rural BPO workforce in India to grow 10 times by 2013

BPO companies are increasingly moving to tier II and tier III cities to tap the potential of rural market. Though 90% of the BPO work in India happens in top 6 metro cities, BPO companies are expanding to rural areas so as to economise their cost of operations. According to a survey done by NASSCOM tiled “Strategic Review 2011” the IT-BPO firms in India are set to increase the number of employees in the rural BPO’s, which now stands at 5000, to 10 times in the next 3 years.

Rural BPO in India to grow by 10 times. Photo courtesy: The Hindu

What is attracting the big BPO companies to shift their focus are:

  • Low attrition rates
  • Availability of manpower
  • Affordable infrastructure
  • Minimum operational cost &
  • Less labour cost

In rural BPO’s the attrition rate is only 3-5% compared to urban centres where this figure stands at 50%. The operational expenses are also 30-40% lower than what is there in the cities. The salary levels in rural BPO’s is also low wherein a person working in rural BPO is paid 30-40% less than what is paid in urban areas. The rural BPO space is dominated by women employees and sometimes it forms 65% of the total headcount in certain companies. There are many companies which are operating in this space. Some of them are:

Even though the margins of rural BPO’s are less there are many big IT-BPO firms like Wipro, Infosys and Genpact are also planning to get into rural BPO space. Wipro technologies as part of this initiative has launched its first rural BPO centre in Tamil Nadu and Infosys has signed an agreement with Government of Andhra Pradesh to start BPO’s in 22 districts. NASSCOM has been trying hard to increase the presence of BPO’s in rural areas. They have collaboration with Information, Communication & Technology (ICT) Academy and the state governments and they have been inviting BPO’s to have centres in rural areas. Though many companies are planning to get into rural space, the fact remains that a lot still needs to be done.

Some of the major issues plaguing the growth of rural BPO’s are:

  • Data Security
  • Lack of skills among people
  • Absence of incentives from the government
  • Lack of good language
  • Lack of good connectivity for voice based services
  • Power back up &
  • Challenges in finding middle level management team

Though the thought of going to rural areas for BPO operations seems to be the flavour of the day, the BPO firms might have to face a daunting task to scale up their operations in the future. One of the major challenge that the rural BPO’s might face is to move up the value chain in the future especially when countries like Philippines, Malaysia and China have started doing so.

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