BPO operations head into rural India

Inside India: Will villages be the next outsourcing destination?

Indian services companies are opening business process outsourcing (BPO) operations in rural villages as a way of keeping down costs for customers while bridging the digital divide in the country.

With the growth of the IT industry some Indian cities have seen greater prosperity but so far this has passed the rural areas by.

As part of an attempt to address this two BPO centres have been set up in villages and a third is being developed. The three centres will employ 250 people, and there are plans for more sites in the pipeline. See here for more picturesof how technology is changing rural India.

Verghese Jacob, lead partner at the Byrraju Foundation, which is masterminding the operation, said: "The pace of rural growth has been much slower than urban growth."

This rural BPO programme is called GramIT, and the centre comes with back-up power and bandwidth so there is interruption of service.

And as well as boosting the rural economy in India, there are some solid business reasons why companies might want to outsource to the villages - they work out 15 to 20 per cent cheaper than urban BPO.

Jacob said: "There is a big cost advantage to a company locating in rural areas because the infrastructure costs are low. We believe there are 80 to 90 million people that could be trained to take care of the back-office needs of the entire world."

Employee churn is less than four per cent compared to 25 per cent in restless rural call centres. The employees earn around 3,500 to 4,000 rupees per month - around £50, which is about twice what they would otherwise be able to earn. Staff at the centres deal with processes such as short-listing candidates for jobs or booking taxis for corporate travel.

Jacob said that when the BPO jobs are created, other types of jobs appear within a few months - with restaurants or taxi companies to serve the workers, further boosting the local economy.

He added: "The challenge is not to set up, the challenge is to make sure it remains sustainable and you have to have a viable business."

Current customers for the programme include technology company Satyam and the government of Andhra Pradesh.