Infy gears up for larger rural BPO movement

Written by P P Thimmaya | Bangalore | Updated: Apr 16 2013, 01:51am hrs
Wants to create social impact, besides taking advantage of lower cost structures

The business process outsourcing (BPO) arm of Infosys, Indias second largest IT services exporter, will engage further with Bharat to evolve proof of concepts which will take their activity deeper into the rural shores and prove that there can be very viable models from this largely untapped segment.

For Infosys BPO, the rural segment has been an area of focus for quite some time and it currently has three centres which employ around 300 people. The three centres are located nearer to Mangalore in Karnataka, Hyderabad in Andhra Pradesh and Ghaziabad in Uttar Pradesh. Talking to FE about their plans for the rural segment, Infosys BPO chief executive & MD Gautam Thakkar said, Our objective is to build a proof of concept and we are talking with our existing customers who will invest with us and take it forward.

Currently Infosys BPO uses the rural BPO centres to service their domestic customers and are engaged in basic transaction activity. Abraham Mathews, chief financial officer, Infosys BPO said, Rural BPOs can be used very easily for servicing the India business and that will be the initial thrust for us. If the India model is successful we can see how to service international clients.

The company believes that there is a clear value proposition in rural BPOs where the biggest draw is the lower cost structure but there are other factors which are to be considered like the productivity levels and infrastructure facilities which can support their business activity. Despite the obvious cost effectiveness of a rural BPO, the big challenge for many companies to enter into this segment is the limited availability of talent. Many firms have to undertake longer periods of training to improve the quality standards of these employees.

The biggest incentive for Infosys BPO to get deeper into the rural segment will be its engagement with the domestic customers. According to Mathews, Indian companies are in early stages of BPO outsourcing and as they grow larger in size they would be able to take this work to the rural centres.

Infosys BPO is already engaged with certain domestic customers like the income tax department and India Post, and this list expected to grow in the coming years. For example, it is working with the department of rural development, Andhra Pradesh, to set up a rural BPO centre where it will handle the backend processes of social security pensions and processing pension disbursement for government agencies. However, the company is very clear that there would not be any large scale operations from rural BPO and it is expected to be viable only in the long term. As of now, Infosys works in partnerships with other firms in setting up the rural BPO centres. In Karnataka it has partnered with another rural BPO firm Desicrew and in Andhra Pradesh it is with RuralShores.

Infosys BPO ended the 2013 fiscal with a revenue of $583 million, recording a growth of 19%. Currently it employs around 25,000 people spread across 23 centres globally with six located in India.

Rural BPO has often been looked as a very lofty concept with fewer companies being engaged in this segment. The Nasscom Foundation believes that as the BPO sector continues to mature and evolve new models, organizations are getting increasingly focused around responsible business while addressing ever increasing employment costs in urban areas. The Nasscom Foundation is working to address these issues with initiatives targeted at increasing long term employments in the BPO sector for those with limited opportunities basically what is being termed as impact sourcing.

According to the foundation, such BPOs could be in the 50-500 seat centres to utilise local talent for running various processes. It also advocated that mainstream BPO organisations sub-contract their work to rural outfits for cost effectiveness. Lastly, there could be also a sizeable social impact through these measures.