By Shrot Katewa
Business process outsourcing (BPO) in India started around the mid-90s as captive units for MNCs, such as American Express and General Electrics (GE). It is currently the fastest growing segment of the ITES (Information Technology Enabled Services) industry.
Indian BPOs enjoy a 56% global market share, and contribute to 1% of the country’s GDP with annual revenues at approximately $11 billion dollars (NASSCOM 2012). Amongst its competitors such as Australia, China, Philippines and Ireland, India is a clear favourite. This is attributed to India’s large English-speaking population, skilled talent pool, and cost-effective resources. The investor-friendly tax structure has also given India an edge.
While India remains as the “most preferred location” for BPO services over the last decade, new destinations such as Philippines, Vietnam, Malaysia, Myanmar etc. have increasingly become a threat to this status. This is largely due to an increasingly favourable BPO environment in such emerging markets, and inflation in the cost-of-living in major cities in India.
Although, the Indian BPO industry has utilized its first mover advantage by moving up the value chain, and providing higher-skilled end-to-end service solution, increasing costs can be detrimental to India’s efforts to combat this scenario. So what is the answer?
Introducing the rural BPO
Impact Sourcing Service Providers (ISSPs) have emerged as a solution to sustain the cost competitiveness of India, and as contributors to the growth of Tier II and Tier III cities. More commonly known as a rural BPO, ISSP is a term used for an organization that creates sustainable, formal employment in the BPO industry for individuals from rural regions. It has a two-fold objective i.e. making urban job opportunities available to the massive rural talent pool, while delivering superior quality services on a timely basis to clients at a competitive price.
Apart from the typical advantages of a BPO setup, the rural BPO additionally creates social impact. It provides rural youth with training that imparts necessary skills which enable them to work on projects for international companies while based in rural locations.
Creating jobs within the vicinity of their villages allows rural youth to earn a dignified living with higher wages; this stems the need for them to migrate to urban cities.
However, the challenges faced by rural BPOs are unique. Some of the challenges being cultural differences, constraints with regard to infrastructure, and shortage of skilled resource pool for mid-level management.
The key challenge being the apprehension of large-scale MNCs to outsource jobs into rural locations thus hampering the sustainability of the organization itself due to lack of continued business.
Despite these challenges, the rural BPO has a strong business case. It addresses the high attrition rates faced by urban BPOs by creating jobs in employment deprived locations. Most importantly, it leverages the lower real-estate, operational and overhead costs to provide cost competitive services. Thus, the rural BPO model is inducing a paradigm shift in the way we look at the BPO sector, and has emerged as a viable option when competing with international markets.
Case in point: Piramal Udgam
To illustrate this further, let us take a look at Piramal Udgam, which is one such ISSP operating in a similar challenging socio-economic environment. What started in 2007, as a pilot in the Grassroots Development Laboratory under the Piramal Group, to test the viability of training and employing rural women in technology driven jobs, is now a full-fledged, 135-seat, state-of-the-art rural BPO at par with any of its urban equivalent. It started off with 10 women who had never seen a computer in their life.
Using customized training modules, Udgam successfully taught the women basic computer skills along with other process training that involved entering data into the system. The very first project that Piramal Udgam worked on was with India’s largest NGO, Pratham.
Initially, even though the services were rudimentary in nature, the high calibre of these rural women was evident. During the assessment of the quality of work processed by all its partners, Pratham concluded that Piramal Udgam processed the highest quality of data among all its competitors. A point to note was that Udgam was the only rural BPO among Pratham’s 21 other competing service providers. Pratham was so impressed with its first partnership with Piramal Udgam that it collaborated with Udgam on over 10 additional projects.
Business impact
During its inception phase, Piramal Udgam began with services such as data entry and data management services. However, as the organization’s employees became experts in managing these processes, and as the clients became increasingly impressed with the quality of the service delivery, the natural progression was towards providing higher skilled services. Moreover, the workforce displayed exceptional motivation in learning higher cognitive processes and services.
Moreover, the workforce displayed exceptional motivation in learning higher cognitive processes and services.
Over the years, Piramal Udgam has played a key role in some highly impactful projects. A few indicative, but not exhaustive, examples include the measurement of Gross National Happiness index for the Kingdom of Bhutan, several research studies by Abdul Latif Jameel Poverty Action Lab (J-PAL) which is a research centre at Massachusetts Institute of Technology (MIT), back-end work such as mapping of roads for Traffline which is India’s largest indigenous real-time traffic information website, and working with Empowering India which included collating information about political candidates, constituencies and political parties. Empowering India is
Empowering India is India’s one of the largest independent non-profit organization that encourages citizens to actively participate in democratic reforms, and promotes transparency and accountability in Indian politics.
Social impact
Piramal Udgam has directly impacted the rural women it employs and the community it operates in. 75% of Udgam’s employees pursue higher education. Women learn teamwork, management and other soft skills which they take back to their families. As an outcome, there has been a mind-set shift in the community where women are now encouraged to take up jobs. They have become role models and play a larger role within their families, and act as agents of change within their community.
Piramal Udgam managed to create a strong business case apart from being a catalyst of massive change for the rural families.
As an outcome, there has been a mindset shift in the community where women are now encouraged to take up jobs. They have become role models and play a larger role within their families, and act as agents of change within their community.
Moving up the value chain
Udgam has developed an expertise in complex data management and ancillary services, financial management services as well as providing call based customer care and support services. In the recent past, it has offered its services to prominent companies in telecommunications, insurance, education, MFIs, government bodies, etc. and continues to expand its portfolio to other industries. Piramal Udgam has till date partnered with over 46 clients spread across the globe.
In its 5000 sq. ft. facility, Udgam has two dedicated leased lines of 2 mbps each offering high-speed internet and 24×7 connectivity, secured premises through its CCTV surveillance cameras, restricted access through its biometric attendance and access systems. Additionally, top class antivirus and firewall, a secure FTP network along with the data encryption facilities ensure the safety and security of client data. It takes pride in ensuring superior customer service to its clients as well as providing an ideal and an ergonomic work environment for its associates.
Sustainable solutions through partnerships
As part of the Piramal Foundation, Piramal Udgam now works towards creating ecosystems for sustainable solutions through partnerships. Udgam believes that for India to develop in its true sense, the progress in the cities needs to be paired with the inclusion of rural India, where still nearly 70% of the country remains largely forgotten. The challenges of poor infrastructure, poverty and unemployment that threaten to restrict the span of advancement need to be solved through integrated development and strategic partnerships. There is a need to expand the horizon and build platforms for socially sustainable investments that bring entrepreneurship to the doorstep of every village. This will not only make each citizen independent but also make them enablers for change, thus considering rural India as an essential partner in the growth of the country.
With over eight years of expertise in managing operations in rural areas, Piramal Udgam has now arrived at an open-source replicable model that can be utilized by other corporates, foundations and government organizations alike through partnerships with a huge potential to create ecosystems for widespread social impact.
Role of the government
The rural BPO also addresses the need for creating jobs for “educated” rural masses. According to the census report of 2011, literacy levels in India have jumped from 58.7% in 2001, to 68.91% in 2011. However, the job market has not kept pace with the growing demands of job seekers from villages.
The bigger cause for concern has been that the unemployment rate among the rural educated youth is higher at 13.9% as compared to its urban counterparts at 7.6%.
While many organizations work towards generating skill based employment with skilled/unskilled workers, but not necessarily educated persons, not many opportunities exist for educated masses.
The rural BPO model, demonstrated by Piramal Udgam, showcases a unique replicable solution that cater to the livelihood needs of the “educated” rural youth.
The upward trend of the number of rural BPOs cropping up, along with the visible positive impact on the lives of the people employed, has garnered Government’s attention particularly considering the strata of people impacted by ISSPs. This is evident from the recently announced plan by the Union Government to put together a rural BPO policy.
The policy aims to establish nearly 48,000 seats across rural India by incentivising corporate organizations to leverage and invest in untapped rural markets.
While incentivising the initial capital expenditure may not necessarily solve the problem completely as availability of consistent work is essential in order to ensure sustainability of such centres; without which these centres will not be able to create a lasting impact. It certainly is step in the right direction.
Katewa is the Co-Founder and Head of Business at Piramal Udgam
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