Rural BPOs to drive inclusive growth in future

By : |August 6, 2012 0

BANGALORE, INDIA: Rural BPOs or Impact Sourcing Service Providers (ISSPs) are relatively new in India; yet, going forward, the concept will gain more acceptance and prominence given the changing dynamics and economics of Business Process Outsourcing (BPO) industry globally

NASSCOM Foundation, the social arm of NASSCOM, is driving the initiative of fostering rural BPOs in India and working in direction to bring social and economic change for rural India, aiming towards an inclusive growth in coming years.

CMN: What’s current state of rural BPOs in India in terms of its growth and opportunities?


[image_library_tag 437/19437, align=”left” width=”200″ height=”267″ title=”Rita Soni” alt=”Rita Soni” border=”1″ vspace=”10″ hspace=”10″ complete=”complete” ,default]Rita Soni: The Indian IT-BPO industry has over the years evolved into a dynamic, knowledge-oriented sector that has become one of the most significant growth drivers for the country’s economy, including direct employment for 3 million people.

Presently, rural BPOs have a very small share of the country’s aggregate BPO industry revenue; however, trends indicate their significant potential for growth in the near future. With companies setting up centers in rural areas and training and recruiting rural communities, rural BPOs stand a fair chance of proving their potential soon.

More and more companies are showing interest in setting up centers in rural areas primarily to cut down expenditures on training, compensation, logistics and infrastructure.

Also, as the BPO sector continues to mature and evolve new models, organisations are getting increasingly focused on ‘responsible business’. One example of this evolved CSR involves creating employment opportunities for socio-economically disadvantaged people.

NASSCOM Foundation along with Rockefeller Foundation is working to address these issues with initiatives targeted at increasing long-term employment in the BPO sector for those with limited opportunities – also called ‘Impact Sourcing’. Given this background, there seems to be a lot in terms of growth and opportunities for rural BPOs in India.

CMN: Do you agree that rural BPOs have not grown as fast as one could have expected given the expansion of BPO and ITeS industry? Any particular reason for this slow take-off of rural BPOs in India?

Rita Soni: The concept of Impact Sourcing and those focused on it, Impact Sourcing Service Providers or ISSP’s (the term being used globally) is a few years old. Understanding the requirements to develop the ecosystem, NASSCOM Foundation has taken up the role to foster these ISSPs and showcase their potential to facilitate their growth. With a clear difference between ‘growth’ and ‘mainstreaming’, the emerging concept of Impact Sourcing is focusing on creating networks of units rather than establishing massive centers and seems promising.

The growth of this nascent industry is affected by many ecosystem factors, which are critical for the scale of economies to take place. Even though approximately 6000 seats in rural India may seem like a small number, the social impact is huge.

The right combination of ecosystem factors like industry linkup’s to dispel mindsets about rural areas as delivery centers, larger government initiatives linked to the talent development in the rural areas and state run schemes revamped holistically, can lead to a faster growth.

NASSCOM Foundation’s primary research is estimating that by 2017 the number of seats could scale to 70-80K and the addressable market (potential) for ISSPs could reach US$7.6 billion.

CMN: How important is rural BPO’s growth for the development of rural India?

Rita Soni: India has a massive pool of employable talent and service delivery infrastructure across multiple geographically dispersed locations within the country. This expansion has resulted in the development of a local talent pool and the physical and social infrastructure.

The industry is, at its pace, moving to rural areas creating employment, improving living standards, positively impacting career and personal development, empowering women and developing a social infrastructure, thus leading to inclusive growth.

Impact Sourcing (IS) is providing job access to several excluded communities that either would not have access or would need to migrate to obtain access. From rural youth in disconnected villages to women in orthodox Muslim communities, the IS model is bringing jobs to those that would otherwise have no chance at employment.

Impact Sourcing has a significant bearing on the social fabric of the communities it is working within and aims to bring to them, the benefits that urban India has been enjoying for decades.

With increased employment opportunities in rural areas for locals, it is sure to give a boost to the economy in three ways — economic empowerment, bring changes in social trends and community development.

1. Economic Empowerment: The increased/new income is a big impact for the individuals and their families. Family financial standings improve resulting in better living conditions, more education for younger siblings, healthy living for family members, reduced debt burdens, etc.

There are also backward and forward economic linkages impacting local enterprises, especially in rural communities. In the mainstream BPO space, research shows that each BPO job translates into 4 additional people benefited. In the IS space, the number of people positively impacted is significantly more.

While ISSP salaries may seem low at between Rs. 4000 and Rs. 6000 per month, it is significantly higher than other limited employment opportunities for these individuals in rural India and usually translates into a 4-5 times step up in family incomes. Furthermore there is a trickle-down effect as these ISSP locations become small economic centers generating indirect jobs in the districts.

2. Changes in Social Trends: The jobs created are responsible for changing social trends such as curbing early marriage, delaying motherhood, mitigating youth migration to cities, and reducing domestic violence. There is also an upward movement in terms of self-perception of an individual and as a member of the community. These are above and beyond the basic improvements of health/nutrition, debt/savings, and access to education.

3. Community Development: With ISSPs investing profits back into the local communities, several community issues like clean water, community libraries, and better education are being addressed. Individuals are engaged in community initiatives, such as governance, as well. Realizing the significance of development of rural India, NASSCOM Foundation is working on initiatives (such as Impact Sourcing) targeted at increasing long-term employment in the BPO sector for those with limited opportunities.

Both NASSCOM and the Foundation are working to study and grow the ecosystem, and are ensuring that growth is profit-driven (Impact Sourcing can reduce costs by as much as 40 per cent compared to urban BPOs and bring down attrition from 40-60 per cent to 8-12 per cent), also promoting the secondary positive social impacts of livelihood creation and community development.

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