India’s $20-billion business process outsourcing (BPO) industry, which has been a role model for many emerging markets, has not been able to replicate this success in rural India, stymied by the perception of customers. The hesitation on part of businesses to outsource their requirements to centres located in semi-urban or rural areas has become a major stumbling block in the growth of rural BPO firms.
According to investment research firm Venture Intelligence, the space has managed to attract just one funding last year and no deals so far this year. In 2012, Ventureast and responsAbility invested $1.3 million in Chennai-based rural BPO DesiCrew Solutions. The challenge for investors is to build a sustainable and commercially viable business in the long term.
The obvious benefits rural BPO firms offer in terms of cost and low attrition are offset by the fears of clients about the quality of services and data security done from such locations. Continuity of services is another issue.
“It is about client mindset. There is some kind of apprehension in the minds of clients when you say that a job is done out of a remote centre in a rural area. That’s why we prefer not to call it a rural BPO centre, but a low-cost or sustainable centre model. Clients typically prefer it in known locations, where they can visit easily,” Infosys BPO India business head Narayanan Sampath said.
Infosys forayed into the rural BPO space in 2010 with partnership with two players — Chennai-based DesiCrew and Bangalore-based RuralShores — and has about 120 people in six centres spread across states of Karnataka, Tamil Nadu and Uttar Pradesh.
Sridhar Mitta, managing director, NextWealth Ventures, a social entrepreneurship organisation, which runs three rural BPO centres concurred that there is a mindset challenge with customers unwilling to give business to them.
However, some are of the opinion that despite these challenges, it is possible to break certain processes to get work done out of rural BPO units. Quatrro CMD Raman Roy said, “Many large companies do not have the mindset of running a rural BPO business and one needs to explode the processes.”