Business process outsourcing (BPO) is an industry that people relate with the operation of outsourcing business mostly based in tier-1 and -2 cities of the country. However this thought has been rendered as a mythical view in the recent times.

Rural BPO is not a new phenomenon anymore. From Bihar to Karnataka to Tamil Nadu, we are having enough examples of rural outsourcing initiatives run by different companies and authorities in India now. A growing number of outsourcing companies are shifting simple typing, data mining, or documentation kind of jobs from metros and tech hubs to poor rural areas. This move is creating many jobs at a fraction of the cost of running a business in a big city.

RuralShores, Tata Business Support Services, DesiCrew Solutions, Chida Soft, and Comat Technologies are already operating in different parts of the country to name a few. Some of the organizations that get services from such centers include HDFC Bank, Kotak Mahindra Bank, Axis Bank, and many telecom players.

Recent example of another honcho to enter this domain is Wipro BPO. They recently inaugurated their first rural BPO center at Manjakkudi Village in Tamil Nadu. The Manjakkudi center has a capacity of 120 seats and will open with a 50-seat pilot project for an international client in the retail sector.

Conceptualized on the ‘Back Office to the Back Office’ (BOBO) outsourcing model, the focus of the center is to capitalize on the literate talent pool available in the region and in doing so create employment opportunities in the village and its surrounding areas.

Manjakkudi was selected due to the relatively high levels of investment in education in the region. It benefits from more than 46 colleges within 40 km radius where more than 13,000 students graduate from these colleges annually, thus providing a large talent pool.

Wipro plans to expand its rural BPO operations to 500 seats by March 2013 in Tamil Nadu and to replicate this BPO model across other states in India, in the near future.

Rural BPOs have lower real estate and labor costs along with less attrition rate, resulting in costs savings of nearly 40% over their urban counterparts.

Realizing the employment opportunity that rural BPOs can offer, some state governments too have started providing incentives.

The initiative provided by the Karnataka government, for instance, has led to the setting up of 16 rural BPOs in the state.

The Tamil Nadu Government is in the process of devising a ‘restructured rural BPO policy’ to attract more entrepreneurs from urban areas to invest in rural areas. Under this scheme, around 2,500 students will be trained in 2011-12 at the cost of `5 crore.

This way people in remote villages get jobs and the promise of a better life, and companies can gain hugely in terms of cost advantage.

Source:http://voicendata.ciol.com/content/news/111102101.asp

Lok Capital venture fund on Thursday said it has invested $3 million (Rs.1.44 crore) in RuralShores Business Services Ltd, a rural business process outsourcing (BPO) firm.

“RuralShores will use the second round of funding to expand its operations in the rural BPO space for business development,” Lok Capital partner Ganesh Rengaswamy said in a statement here.

With 10 back office centres across the country, including three in Karnataka, two in Tamil Nadu and one each in Andhra Pradesh, Gujarat, Maharashtra, Madhya Pradesh and Rajasthan, the company is set to open 10 more centres by March 2012.

“Besides adding one more facility in each of the states where we are operating, we will open one centre each in Bihar, Punjab and Sikkim in this fiscal with the venture fund,” RurulShores chief executive Murali Vullaganti told IANS here.

Post-expansion, the three-year-old company’s headcount will double to 2,000 from about 1,000 currently, with the ratio of young men and women being employed at 50:50.

“As we have opened the centres in tier-three cities, our attrition rate at five-seven percent is the lowest in the industry, especially in the back office segment. Majority of our employees hail from surrounding towns and villages who are unwilling to migrate to big cities for personal and economic factors,” Vullaganti asserted.

HDFC Bank participated in the first round of funding for 30 percent of the equity while Lok Capital invested an unspecified sum for 11 percent stake.

After the second round of funding, promoters still hold majority stake (51 percent).

“Validation of the RuralShores business model and leadership position in the category with big ticket clientele are the factors behind our decision to re-invest in the BPO firm. We believe this model can make a difference to the fortunes of rural India by providing employment opportunities and powering our rural economies,” Rengaswamy said.

The back office has about 20 clients, mainly from the banking services, finance and insurance (BFSI) and telecom sectors.

“In addition, major BPO firms have outsourced a part of their work to us. Two US-based firms in logistics and publishing are availing our back officer services,” Vullaganti pointed out.

Set up on the social objective of generating jobs in villages through back offices, RuralShores is the market leader in the nascent rural BPO category.

“We not only enhance skill sets and employability of the rural youth, but also check migration from villages to cities, promoting economic and social inclusion,” Vullaganti noted.

Being privately-funded, the company is yet to make public revenues generated during the last two fiscal years though its chief executive claimed that it had been growing at a whopping 300 percent on annualised basis.

The Gurgaon-based Lok Capital is focused on investments in social enterprises that empower lower income and the bottom of the pyramid communities.

Source:http://economictimes.indiatimes.com/news/news-by-company/corporate-announcement/lok-capital-invests-3-million-in-rural-bpo/articleshow/9998641.cms