DR Ish Tee Bpo Research

RURAL BPO THROUGH TELECENTERS
(Consulting Contract No. 104119 of IDRC)
Prepared by: Randhir Datta
telecentre.org a collaborative social investment program of:
Rural BPO through Telecenters
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FOREWORD
Having supported telecentre research for over two decades, the International Development Research Centre in collaboration with the Swiss Agency for Development and Cooperation and Microsoft Corporation has recently launched a telecentre support program called, telecentre.org. As a social investment program, telecentre.org in partnership with local, national and international organizations supports convening of telecentre leaders at global, regional, national and local levels; helps establishing national level network of telecentre networks; encourages resource and knowledge sharing; and, more importantly, funds innovative content and service development projects aimed at sustaining telecentres and their networks. Business Process Outsourcing as a business model has stimulated IT establishments in Asia attracting several corporations in the North as their prime clients, thus turning a part of their business into service provision. With an avenue of about US$ 230 billion, the BPO industry has been revolutionizing the way the corporate entities manage their business. The new wave of telecentre networks since the beginning of this Century; popularly known as telecentre 2.0, aim to provide livelihood opportunities to ever increasing educated and computer trained youth in villages. Coupled with efforts undertaken to provide broadband and robust connectivity to rural areas and internet enabled shared computing efforts, these networks offer promising opportunities to the rural populace, turning them into service providers rather than being mere service recipients. This study intended to combine the power of shared computing with BPO opportunities identifies the critical factors for establishing rural BPO work in telecentres as skills based employment option for rural youth. I am pleased that Drishtee Development & Communication Ltd. (formerly Drishtee Dot Com Ltd.), one of telecentre.orgs first partners has agreed to scope out the socio, economic and institutional feasibility factors for conducting BPO work in rural telecentres. While the results are positive, the identified factors in the study will help telecentre.org and Drishtee Foundation, the philanthropic arm of Drishtee Development & Communication Ltd. (DDCL) to conduct a pilot study to further understand the potentials of BPO work in telecentres. I thank Satyan Mishra and his team at Drishtee Development & Communication Ltd. (DDCL) for the outcomes of this very helpful study while extending my best wishes to Drishtee Foundation that shall take this research effort to the next course.
Basheerhamad Shadrach telecentre.org, IDRC
telecentre.org A collaborative initiative of IDRC, Microsoft and SDC
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TABLE OF CONTENTS CONTENTS PREFACE EXECUTIVE SUMMARY CHAPTER 1 : INTRODUCTION PAGE NO.
3 4 7 7
1.0 1.1
ICT as an Enabler for Outsourcing Business Rural Telecenters
1.2 1.3
1.4
Business Process Outsourcing

Evolving Business Challenges Rural BPO: a viable option? Global Outsourcing Market Evolution of Indian BPO sector Telecenters Movement in India Drishtee Kiosks/Telecenters Among the forgoers Project Overview Research Methodology Research/Survey Brief Constraints faced during Survey Scope for future work Bases for Outsourcing: An overview Study Findings Learnings from Surveys for Rural BPO Feasibility
8 8
9 9 10 12 13 13 15 16 19 19 20 21 39
1.5 1.6 1.7

1.8 1.9
CHAPTER 2 : RESEARCH METHODOLOGY
2.1 2.2 2.3 2.4

3.1 3.2 3.3
CHAPTER 3 : STUDY & SURVEY FINDINGS
CHAPTER 4 : ANALYSIS AND MODEL DEVELOPMENT
4.1 4.2 4.3

4.4 4.5 4.6 4.7 4.8 4.9 4.10 5.1 5.2
Rural BPO Business Models 41 Type of BPO Activities suitable for Rural BPOs 46 Rural BPO Feasibility Parameters 46 Role of State Governments to encourage rural BPO 58 Rural BPO Cost and Returns: A Break Even analysis 58 Application of Viability Evaluation Model on Saurath 61 Availability of Clients for Rural BPO 63 Comparative Advantages of Rural BPO units over urban 64 SWOT Analysis 64 Challenges in taking up Rural BPO activities 66 Conclusion The Road Ahead 68 70
CHAPTER 5 : CONCLUSION
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PREFACE
Services globalization has turned the world into a global village, enabling the seamless delivery of IT and Business Processes across time zone. As a result, India has become the most favored destination for outsourcing operations and more so due to its skilled manpower, cost advantage and appropriate infrastructure. These ITO/BPO centers are located mostly in urban India and they epitomize the best of the four core evaluation criteria that companies look to optimize: cost, control, quality and risk. In rural India, the entrepreneurship scenario is slowly changing. With the penetration of ICTs, networks of Telecenters/ICT Kiosks have started to pop up; some focusing on information sharing among community, and others into learning, training, knowledge sharing and commercial services for rural community. Today, with urban BPO players looking for alternatives to cut their operations cost to sustain operations in stiff competition, and on other side with the growing numbers of educated/computer literates coming up in rural areas, it provides opportunities to leverage ICTs for creating BPO jobs at rural level as-well-as business opportunities for rural telecenters; thus enhancing livelihood opportunities for community members and help reversing the trend of migration to villages. Whether such BPO initiative through telecenters is feasible in rural India? It is in this light that Drishtee Development & Communication Ltd. (DDCL) has taken up the current research work for International Development Research Centre (IDRC) to study and explore the feasibility and challenges for rural ICT telecenters/kiosks, situated in remote Indian villages, for undertaking outsourcing business. The objective of this study is to understand, analyze and scope the feasibility parameters for providing BPO Services through rural telecenters in terms of social, economic and institutional factors, and also to understand the comparative advantage of rural BPO over urban BPO. Also the report explores the type of BPO activities suitable for rural BPO. This report, with the feasibility parameters identified and scoped, a viability evaluation model developed for assessing sustainability of a location, coupled with possible rural BPO business models and type of rural BPO activities that can be taken up involving telecenters - will go a long way to serve as a guideline as-well-as in taking informed decisions by those organizations/entrepreneurs, who wish to commence BPO initiatives in rural locations. The report also suggests the future research work that can be taken up on rural BPO services through telecenters. We thank all the participants who took time from their schedules and shared their perspectives on the industry as-well-as the respondents on their views and valuable inputs, and also the research team who persistently worked to bring out this report. We are confident that this report will help IDRC and others, who are looking forward for such rural BPO initiatives through telecenters - to help enhance income generation and livelihood opportunities for community members and village entrepreneurs as-well-as impact the rural economy and hence well-being of the community. Satyan Mishra
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Managing Director Drishtee Development & Communication Ltd.
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EXECUTIVE SUMMARY
Information and Communications Technologies (ICTs) facilitates global connectivity, providing new ways of creating and delivering products and services on a global scale. However, the real benefits of ICT lie not in the provision of technology per se, but rather in its application to create powerful social and economic networks by improving communication and exchange of information. In fact, it has transformed the world into a global village. ICTs have made it possible to trade, what has long been locked upon within national boundaries: skills, talent, ideas and enterprise. Business Process Outsourcing (BPO) has been a very striking example of new opportunities and a business model that have spun off due to ICT and its offshoots. The need to outsource back-end task to reduce operational costs have led to mushrooming of BPO outfits and Call centers in the developing countries with cheap labour and reasonably good telecom infrastructure. India is not untouched by this wave of business operations. India, with its cost and time differential advantages, backed by an educated workforce, could commit quality of service. India is fast emerging as a preferred destination for outsourcing. Urban India has exploited opportunities originating from cross-border trade in a substantial way and has set-up BPO centers in metros and big cities like Mumbai, Bangalore, Hyderabad, Delhi and Chennai etc. With urban BPO players looking for alternatives to cut their operations cost to sustain operations in stiff competition, and on other side with the growing numbers of educated/computer literates coming up in rural areas, it provides opportunities to leverage ICTs for creating BPO jobs at rural level as-well-as business opportunities for rural telecenters; thus enhancing livelihood opportunities for community members and help reversing the trend of migration to villages. To exploit rural potentials, organizations like Byrraju Foundation, Lason India, Datamation initiated rural BPO ventures way back in 2001. But these rural units are only an extension of their parent urban units in rural areas and supporting them by transferring the low-end jobs that requires low skill-set, which is easily available in rural areas. But the presence of vast network of rural ICT telecenter/kiosks in rural India (of ICT Service Providers like Drishtee, Tarahaat, etc.) have not yet been tapped or involved in the outsourcing business, which can help leverage the cost benefit due to the availability of low-cost talent pool (computer literates and graduates) and cheap real estate/rentals in rural areas as compared to cities. Drishtee Development & Communication Ltd. has taken up the current study for International Development Research Centre (IDRC) to understand, analyze and help scoping the feasibility parameters for providing Rural BPO Services through telecenters in terms of social, economic and institutional factors and also to understand the comparative advantage of rural BPO over urban BPO. As per the scope of the study and taking into consideration the telecenters capabilities in rural India, it needed a detailed study comprising of literature review, comprehensive primary research/survey on urban BPOs, rural Telecenters, village households, skill-set availability at village level, jobs suitable for rural BPOs, challenges and opportunities for
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rural BPO, and on other relevant areas. As per the research methodology drawn, the planned activities were carried out for the above to meet the research objectives defined. Based on the above mentioned survey/research, the findings and learning helped to identify and scope the feasibility parameters for providing BPO services through rural telecenters in terms of social, economic and institutional factors. The feasibility parameters identified for rural BPO were grouped under six broad heads as - rural dynamics, rural talent pool, rural infrastructure, rural telecommunication infrastructure, rural orderliness, and government policies; each parameter head having several sub-parameters under it with suitable weights assigned to each for scoping the feasibility parameters in terms of social, economic and institutional factors (refer chapter-4). These feasibility parameters were further extended to design a Viability Evaluation Model (refer chapter-4), for evaluating the potentiality and business feasibility of any rural location, for initiating rural BPO services through telecenters. The model evaluates the BPO business feasibility for any rural location by segmenting the location into four broad viability categories viz. Unsustainable (not viable without recurring grant support or investment), Sustainable (viable to some extent with initial grant and may require sporadic investments), Viable (viable with initial investment or grant support and can sustain its operating costs) and Profitable (good return on short-term to recover the investments made). The model developed was also applied for Saurath village location, the result showed the village as Sustainable for such rural BPO business start-up; hence such rural BPO initiative can be started there, at a pilot scale, involving the telecenters existing around it. These feasibility factors and viability evaluation model that has been mentioned above serves as a guideline for organizations as-well-as for entrepreneurs, who wish to commence BPO initiative in rural locations. The outcome of viability model in the form of composite index score helps to measure the feasibility and classify the location as unsustainable, sustainable, viable or profitable. Apart from the evaluating the viability for the location, the individual parameters provide a direction about the prevailing socio-economic and infrastructural readiness for any such initiative. Thus using it an informed decision can be taken on the feasibility of such initiatives for the location based on the strength of individual factors and overall model score. The study report also describes the possible rural BPO Business Models to help plan, implement, organize and manage the required operations involving the rural telecenters and/or rural BPO units. The two models suggested are (i) Model-1: Telecenters based Rural BPO and (ii) Model-2: Extension of Urban BPO to Country side. The Model-1 has advantage over the other, as it involves telecenters and provides ownership to its partners that can lead to higher motivation, faster learning, improved work efficiencies, absence of attrition and higher individual earnings. Moreover, Model-1 is flexible, scalable and holds potentiality to enhance income generation opportunities for rural educated youth and village entrepreneurs as-well-as strengthen the telecenters movement in rural India. The study also mentions the type of BPO activities that can be taken up in rural areas involving telecenters. For any new rural location, safe and logical option would be to start with low-end jobs having high-volume and low-value addition; jobs like - data capture,
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data entry, document management, scanning, etc. Infrastructure and education prerequisite for such low-end BPO jobs is bare minimum, which could easily be found in villages. Once all the stakeholders, from both end (entrepreneurs and clients) gains confidence, it would be possible to move on to higher-end jobs, slowly and gradually. The study report has also thrown light on availability of clients for rural BPO business. A SWOT analysis was carried out to understand the respective strengths, weakness, opportunities and threats for such rural BPO initiatives through telecenter based rural BPO units. Vast telecenter network availability, Low investment cost, Sense of business ownership and Absence of attrition are the strengths offered by the telecenters to render BPO activities. If the goal of setting up of Telecenters or Village Information Centers (under India's Mission 2007 programme) is achieved in 100,000 villages, then all these connected telecenters (in villages) will have the potential to become rural BPO units, by just setting-up some Regional BPO Quality and Management Centers at strategic locations to manage and control these networked units. Considering 10 percent of these villages employing 20 people at an average monthly income of Rs.3500, this would add Rs. 8.4 billion to the rural economy per year and create 200,000 jobs in the villages, which otherwise lacks employment opportunities. And the demand for several allied services such as hardware servicing and sales would also grow. The study report will help IDRC to take informative decisions and plan for piloting such BPO initiatives through telecenters in rural India. Such initiatives will have multidimensional impact in rural community and help enhance income generation opportunities, facilitate socio-economic development in rural areas and can reverse the migration trend towards villages. Looking at the potentiality of such rural BPO business opportunities through telecenters in villages coupled with the manpower cost benefit, it is high-time that such initiatives be started that can enhance livelihood opportunities, reverse migration trend and strengthen rural economy.
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CHAPTER - 1
INTRODUCTION
Gartner defines BPO as the delegation of one or more IT-intensive business processes to external provider that, in turn, owns, administrates and manages the selected processes based on defined and measurable performance metrics.
1.0 ICT as an Enabler for Outsourcing Business

Information and Communication Technologies (ICTs) have been recognized as powerful tools for bridging digital divide, empowering rural people and creating livelihood opportunities in various regions across the globe. ICT applications have played an important role and have been instrumental in providing education and training, job and income opportunities, access to markets, information related to economic activities, and a range of citizen services. With ICTs, physical borders decimate and information is transferred through the digital medium that is fast, convenient, commercially viable and less controlled as compared to other existing mass media. ICTs have made it possible to trade, what has long been locked upon within national boundaries: skills, talent, ideas and enterprise. Business Process Outsourcing (BPO), one of the largest growing business segments of the present times emerged out of ICTs and has led to the development of new business models and applications. The connectivity offered by ICTs help outsourcing companies to access talent pool available in any part of the world. This has lead ICTs to become the biggest driver for BPO business. With geographical boundaries dissolving with ICTs, no distance is too big now. This provides opportunities to entrepreneurs or enterprises to grow their delivery centers in any geographical region in the form of a BPO unit.
1.1 Rural Telecenters

The telecenter/information-kiosk is an entrepreneur owned rural service unit rendering variety of services using the convergence of computing, telecom and media. Designing telecenters/kiosks as delivery points using the concept of shared services brings down the cost; telecenter become delivery points for multiple services at a location. At the most basic level, telecenters/kiosks focus on improving the livelihood of individuals. Slowly, networks of telecenters have started to crop up all over the world. Some are focused on information sharing among community, and others into learning, training, knowledge sharing and commercial services for rural community. There are some who have bundled up community services like telemedicine, rural banking, micro-finance, e-governance benefiting community for empowerment and development. This study is an attempt to explore the feasibility, viability and challenges for rural ICT telecenters/kiosks, situated in far remote Indian villages, for undertaking outsourcing business.
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1.2 Business Process Outsourcing

World has become a global market and continued development in ICTs has further reduced the international trade barriers. Organizations across the world are competing against each other for market sharing and improved quality standards. Outsourcing is now considered as a strategic tool that helps companies concentrate on their core competance and delegate other peripheral activities to an external agency that specializes in that task. Delegating responsibilities to people who are specialists or to the region which can do it at a comparitive cost advantage is the logic of outsourcing business. Future seems to be promising as BPOs are not only providing cost advantage to the clients but also offering better quality due to their expertise in outsourced jobs and higher economies of scale. India due to its geographical, infrastructural and skilled manpower availability, is gaining reputation as an ideal outsourcing destination. This has caused profuse proliferation of BPO units in urban areas. To further consolidate the position, Indian players in the outsourcing business are adopting various methods including shifting of their bases to the rural areas. The current research study will look into the feasibility of such BPO initiatives through telecenters. The most often cited reasons for outsourcing has been the cost factor. An organization delegates a job to an outside party who could perform the same job at a lower cost.The gain in cost advantage forms the basis for outsourcing. Beyond cost aspect, other reasons that would play an important role are Better business focus due to the offloading of non-core functions Saving on capital expenditure and reduced operational costs Higher efficiency and access to skilled manpower at lower cost Save on manpower and training costs Improved focus on customer satisfaction Tax incentives at offshore locations Productivity and quality improvement 24x7 production/sales/services Mitigate the business risk to different holders
1.3 Evolving Business Challenges

Business-process outsourcing contributes substantially to India's revenue and drives 30 per cent of growth in its IT exports but the BPO sector is severely facing stringent competition not only by other BPO players in India, but also from BPO units in other countries. Manpower cost and real estate prices in cities have increased further dropping the profit margins for the urban firms. Though India maintains a competitive advantage by having better English speaking people but India need to build up to bank upon and maintain superiority in the worldwide BPO market. Urban BPO players are looking out for new and innovative methodologies to counter the ever-increasing competitive pressure in the Urban BPO sector. Rural BPO is the new buzzword, which holds the promise for viable and cost effective outsourcing business.
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1.4 Rural BPO: a viable option?

Rural BPO carry out BPO services at rural end to add value to the outsourcing business as well as to the community. In order to beat the competition, industry majors are shifting their base to tier II and tier III cities. These cities provide substantial gains on infrastructure, transport and real estate availability. Similarly, on the parallel grounds organizations can extend operational flexibility by relocating the BPO services to rural locations. The setting up of rural BPOs in villages can result in the development of rural infrastructure, employment and livelihood opportunities, increase in standard of living and enhancement of rural economy at the village level. Transfer of BPO units to rural areas make tremendous business sense and has significant social connotations involved with it. The use of ICTs to move BPO jobs to rural areas for the benefit of rural community needs analysis on its feasibility in terms of social, economic and institutional factors, for which the project has been undertaken.
1.5 Global Outsourcing Market

The global BPO market is a rapidly evolving business segment with diversification and new service mix offered on a daily basis. According to market research organisation, Gartner, the global outsourcing market in 2000 was approximately $119 billion and will touch $310 billion by the end of 2008. Distribution of global BPO market based on the industry verticals is shown in the figure below.
Global BPO Market by Industry Vertical
Cons um e r Goods/Se rvices 15% M anufacturng 9% Inform ation Te chnology 43%
16% Com m unication (Te le com )
17%
Financial Se rvice s
Source: Price Water house coopers
Projection by Gartner suggests that BPO market worldwide will be worth $173 billion by 2007, of which the Indian BPO segment has potential to generate $13.8 billion in revenues in 2007 and $17 billion in 20081. Where as Nasscom estimates suggests that the global ITES industry is set to grow at 11 percent and will hit about $680 billion by 2008. As per Gartners estimates on the ITES market size and potential, Indian outsourcing industry verticals will grow tremendously with customer care still stealing the show. Projections of market have been shown below in Table 1.1. Table 1.1: India's BPO Market in 2008
Service Line HR Customer Care Payment Services
1
First Estimate (1999) 5.4 4.1 2.9
Second Estimate (2001) 3.5-4.0 8.0-8.5 3.0-3.5
Nassscom-Mckinsey Study-2002
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Content Development Administration Finance
2.6 1.3 0.7
2.5-3.0 1.5-2.0 2.5-3.0 (figures in $ billion)
India offers a one-stop solution for various IT- enabled services as the best outsourcing destination. The market for traditional BPO services is huge and thus promises immense opportunities. However some of the emerging areas include legal services, engineering design and research and analytics. The Indian domestic market also promises a great opportuinuty and provides better utilisation of their facilities(by using day and night shifts).
1.6 Evolution of Indian BPO sector

The Companies like Dell, GE, American Express, and British Airways were amongst the first to out-source back-office operations to India.2 The spread initiated with the metros (except Calcutta) which housed enough infrastructure to support BPO at the preliminary phases and later on this spread reached to other cities as well.
Phase I
During the early 90s, cities like Delhi, Mumbai, Chennai and Bangalore possessed manpower and city development infrastructure to incubate BPO centers. These were the starting points for Indian BPO industry.
Phase II
Growth in the IT industry and the investment by various state governments for developing strong infrastructures has lead to the emergence of new BPO locations. Around mid 90s various new cities (e.g. Hyderabad, Pune) began competing with phase I locations for setting up BPO industry.
Phase III
After Y2K new guidelines started driving the preferences for BPO locations, the factors like high cost of living driven by high real estate cost and increased manpower costs forced the industry to look for alternatives. Financial factors caused the BPO firms to move to places like Gurgaon, Noida, Chandigarh, Kolkata, Thiruvananthapuram, Trichy, Mysore etc.
http://timesofindia.indiatimes.com/articleshow
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PHASE III Gurgaon , Noida , Chandigarh , Kolkata , Thiruvananthapuram , Trichy , Mysore
PHASE II Hyderabad, Pune
PHASE I Delhi, Mumbai, Chennai, Bangalore
Early 90's
Mid 90's
After Y2K
Figure 1.1 : BPO spread in India
Though the initial influx of the BPO jobs was dominated by the low-end work like data entry, medical transcription, etc. (refer figure 1.2 below), but with the gradual improvement in capabilities of Indian BPO centers over time, more and more offshore firms showed confidence in outsourcing high-end jobs to India. The success of the pioneers led others to follow and set up their back office operations in India. Capabilities of the Indian BPO centers improved and evolved with time and more and more offshore firms showed confidence in outsourcing Evolution of BPO In India Transcription Services Data Entry Call Center Transaction Processing Core
Transaction Processing Non Core
Mid 90s
Late 90s
2000
2005
Figure 1.2: BPO evolution
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1.7 Telecenter Movement in India

Rural Information Kiosks/Telecenters came up as an attempt to reduce the digital divide and apply ICTs for empowerment, development and rural transformation. Information Kiosks/telecenters are rural version of Internet Cafes, with one or more PCs and Internet connection for shared use by village residents. However a rural telecenter/kiosk differ greatly from urban Internet cafes, since the operational challenges and user needs of remote rural villages have taken care of in the service/ product mix offered in a rural telecenter. Gyandoot project pioneered the idea of rural telecenters in India, which involved setting up of 38 kiosks in the Dhar district of the state of Madhya Pradesh, I, in January 2000. The project concept has been replicated by other information and communication technologies (ICT) development initiatives in India. Rural kiosks are setup by various kiosk project agencies, which identify one or more entrepreneurs per gram-panchayat village to act as a kiosk operator. By some estimates, there were as many as 150 projects for setting-up rural information-kiosks across India by 2004 In India several companies provide services to the poor using telecenters as ICT service delivery vehicles. Rural kiosks are one of the fastest growing applications of ICTs in the developing world. There are a number of kiosk projects in India, mainly run by entrepreneurs as part of a franchise. Major players providing telecenter-based services in India are: Drishtee Development & Communications Ltd (DDCL), located in Noida, near Delhi, delivers fee-based community services in villages through entrepreneur-run ICT Kiosks. TARAhaat, also based in Delhi, having a franchise network of ICT centers (TARA kendras) n-Logue (n league with TeNet) is a Chennai based company using wireless technology (corDECT) to bring Internet connectivity to small towns and rural villages through a network of more than 1,300 kiosks. MS Swaminathan Research Foundation (MSSRF), Chennai, sets up Village Resource Centers (VRCs) and linking them to nodal point called Village Knowledge Centers (VKCs), and provides an array of services that are needed for rural people. Rural kiosks help villagers improve their standard of living by expanding livelihood options and empowering them with information, tools, goods, and services (such as computer education and healthcare). In an effort to further strengthen the earning capabilities of the telecenter owners and to share the benefits of ICT to rural population, BPO activities could be taken up at individual telecenters by employing the kiosk owners or the local entrepreneurs to carry out the outsourcing work. In spite of the above challenges at rural areas, some of the organizations have taken initiatives at rural-end in India to set up rural BPOs to execute back office operations. Such efforts try to bring communities avail the optimum benefits of IT revolution. Byrraju Foundation (associated with Satyam), Lason India (a US-based outsourcing firm), and Datamation (a Delhi-based group) are pioneers in this domain. This study has also
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taken a closer look at their business models that they have employed in rural areas for BPO initiatives.
1.8 Drishtee Kiosks/Telecenters (of DDCL): Among the forgoers

Drishtee Development & Communications Ltd. (in short Drishtee) with its vision Connecting India Village by Village is an India-based organizational platform for rural networking that provides IT-enabled services to rural community, based on a tiered franchise and partnership model. Drishtees uniqueness is a blend of commercial focus with social objectives and making services readily accessible amongst the rural communities with variety of connectivity options and easy-to-use portal to avail the services. Drishtees target customers or beneficiaries are the rural community, rural service providers and other rural stakeholders like development agencies. Drishtee has setup more than 1000 ICT Kiosks in remote villages (of 52 districts in 8 states) of Assam, Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Chattisgarh, Orissa and TamilNadu. These deployed kiosks, delivering community services, have multi-dimensional impact on rural community because of its focus on sustainability, scalability and entrepreneurship.
1.9 Project Overview

A study on scoping the feasibility parameters of providing BPO services through telecenters in terms of social, economic and institutional factors and also to understand the comparative advantage of rural BPO over urban BPO, has been taken up by Drishtee Development & Communications Ltd. (DDCL) for International Development Research Centre (IDRC) vide their Consulting Contract No. (104119). The study involves literature review, comprehensive primary and secondary research at urban-end and also at rural-end, analysis on the collected facts and developing viability model for rural BPO initiatives through telecenters. A detailed study report covering the study findings and analysis on feasibility with SWOT analysis is being presented to IDRC through this report. The report will help IDRC to take informative decisions and plan for piloting such rural BPO initiatives through telecenters in rural India.
Research Objective
The main objectives of the study constitute the followings: To scope the feasibility parameters of providing BPO services through telecenters in terms of social, economic and institutional factors. Identification of types of BPO activities that is suitable for Rural Telecenters. To identify and document the competitive and comparative advantage of running Rural BPO service as against urban BPO centers.
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BPO Industry Location in India
Figure 1.3: Comparative spread of Drishtee Telecenters and Urban BPO Industry
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CHAPTER - 2
RESEARCH METHODOLGY
Owing to the large-scale availability of educated-unemployed rural talent, cheap realty/realestate, telecenters/kiosks entrepreneurs in villages and improving telecom infrastructure, rural locations present a very strong case for establishing BPO centers. Though these parameters place a convincing scenario but the absence of adequate faith amongst entrepreneurs to invest in rural India remains the main concern. This has led rural youths large-scale migration to cities for better opportunities, causing substantial brain-drain in the villages. Result the villages have not been able to keep pace with the urban development and continue to remain backward. Drishtee (DDCL) has taken up the current study for International Development Research Center (IDRC) to understand, analyze and help scoping the feasibility parameters for providing Rural BPO Services through tele-centers in terms of social, economic and institutional factors and also to understand the comparative advantage of rural BPO over urban BPO.
2.1 Research Methodology

As per the scope of the study and taking into consideration the telecenters capabilities in rural India, the Rural BPO Research project needed a detailed study comprising of literature review, comprehensive primary and secondary research on BPOs, Rural Telecenters, Village households and statistics, Skill-set availability at village level, Jobs suitable for rural BPOs, challenges and opportunities for rural BPO, and other relevant areas. Following research methodology was adopted for the above study and to meet the research objectives, which consisted of ten major stages. 1) 2) 3) 4) Plan the research/survey activities Schedule the survey activities Design Questionnaire(s) for each survey Execution of research/survey activities (a) Secondary Research (b) Primary Research - Village level Household Survey - Panchayat Survey for village statistics - Telecenter Owners Survey - Urban BPOs Survey (Questionnaires designed for each survey & Administered on target groups using sampling plan to collect responses) Survey Data Entry for analysis Summarize the Findings - for rural BPO through telecenters Analyze the Research/Survey Data - for feasibility parameters Model Development (a) Design Business Models for rural BPO (b) Identify and finalize the feasibility parameters (c) Scope the feasibility parameters (d) Design the Viability Evaluation Model
5) 6) 7) 8)
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9) Apply & Test Check the Model on village-level data 10)Final Report Preparation
2.1.1 Project Plan

For the above study, a strategic plan including detailed project schedule was prepared for timely deployment of necessary resources to complete the study properly. This includes primary research, secondary research, data entry and analysis, model development and scoping the feasibility parameters - for providing rural BPO services through telecenters. Project Duration: 15 November06 to 15 February07 (approx. 13 weeks) Survey Location: (a) For Urban BPOs Delhi, Noida, Bhubaneshwar (on-line), (b) For Village level comprehensive survey (refer 4(b) above) Saurath village (Bihar)
2.2 Research/Survey Brief

A brief on the research/survey activities carried out for the project work is as presented below.
2.2.1 Secondary Research

Secondary research was carried out comprising of profound understanding of the past work done in the field of Business outsourcing to figure out the issues related to BPO. Secondary research sources included various research papers, study reports, periodicals and articles available on the internet and libraries. Though there was hardly any reference to rural BPO feasibility, but the search has helped in generating an overview of the prospective strengths and opportunities in the filed of BPO business, in general, and to identify certain governing factors which promote the BPO activities and the fundamentals of BPO business dynamics. Following are the secondary sources that were referred for the study: Research studies on BPO sector by Nasscom Indian Institute of Management, Ahmedabad ICFAI Gartner Mckinsey For a detailed background on ICT and outsourcing sector reports and data bank of following agencies were referred: UN, UNDP, UNCTAD etc World Bank, ADB International telecommunication union (ITU) In addition to the above following also were referred: Newspaper reports Press releases
Government policy documents telecentre.org A collaborative initiative of IDRC, Microsoft and SDC
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2.2.2 Primary Research

The primary research was carried out for the study purpose in following target segments to collect the desired data and facts, during Dec.06 and Jan07, through trained surveyors who administered the semi-structured questionnaires (designed) on the following target groups, as per the sampling plan that was defined: Rural households Gram Panchayat (Pradhan) Telecenter Owners Urban BPO organizations Table 2.1: Survey details
Survey Urban BPO Village/ GP Telecenter Household survey
Target group Middle and top management executives of Urban BPO Panchayat office/Panchayat members Telecenter Owners Households belonging to different income segments having Computer literate person
Sample Size 5 BPO orgs. 1 GP 5 Telecenters 295 Households
The surveys were aimed for necessary data collection from different groups to understand their perspective and views on rural BPO feasibility and on current status and problems. The surveys were supplemented with the information acquired through personal interviews with the employees of urban BPO units and rural telecenter owners. Data collected was entered into the statistical software for further analysis.
About the surveys:

A brief on the above mentioned four surveys that were conducted for the project (three in rural location and one in urban location) is as follows:-
1) Rural Households survey

Rural household survey was conducted at Saurath Gram Panchayat village, situated in district Madhubani of Bihar (India). It is a typical Indian village in rural Bihar and a backward village. A detail on the Saurath has been provided in next chapter where we have discussed on the findings. The survey helped to collect data/information on followings: Socio-economic status of the GP Economic activity profiles Problems faced by general populace Attitude and perception about BPO Willingness of the local educated youth to take upon the BPO activities Perceived income from such initiative at the village Availability of skilled educated youth, etc.
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Sample size, method and sampling plan Sample size of 295 Households was considered at 95% confidence level and 5% confidence interval (refer Table 2.2). Surveyed households were selected through stratified sampling technique with ample representation of households from various income segments. Sampling plan has been given below: Table 2.2: Sampling Plan (Household survey)
Target group Survey Period Location Sample size

2) Gram Panchayat survey
Rural household belonging to different income groups 18th Dec 06 to 04th Jan 07 Saurath village (in rural Bihar) 295 Households (at 95% confidence level and 5% confidence interval)
The survey on Gram Panchayat (GP- primary unit of local self governance) was aimed at understanding the overall framework of the GP. Survey instrument was subjected to gram pradhan (village head) and members of various government departments like electricity and telecom, to collect data/information on: IT penetration in the village Business & investment climate Availability of educational and financial institutes in the GP and surrounding Basic social and physical infrastructure availability for setting up rural BPOs (electricity, telecom, schools/institutions, road, transport, etc)
3) Rural Telecenter survey

Five rural telecenters located in the vicinity of 20km from Saurath and networked to the Drishtees telecenter network were randomly selected for the study. Survey questionnaires were administered on telecenter owners for understanding: Their willingness quotient to become part of telecenter based rural BPO chain Their present level of business Availability of Hardware and Software Problems faced in dispensing telecenter services
4) Urban BPO survey

Urban BPO questionnaire was targeted at 5 BPO organizations, randomly selected with different employee capacity for the following purpose: To map the BPO jobs and related activities/processes To understand the overall BPO business dynamics BPO jobs and Skills-set/Training requirements To identify the problem areas and challenges in running BPO Opinion/views on rural BPO and challenges
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2.3 Constraints faced during Survey

1) During field survey period (at Saurath) the Survey Team had to face the following major challenges. The hurdles faced, to some extent, did contribute in time over-run of our survey period that was scheduled. Some major constraints/obstacles that were faced have been mentioned below: Bad Weather condition. Poor Road conditions, broken road/bridge links Transportation problem faced to reach distant village and telecenters. Took time to locate/contact the computer literates for their valuable responses. 2) During the survey period for urban BPOs, the survey team had to wait for days to get their permission and also to interview/discuss with the concerned person(s), based on the designed questionnaire. However, once the contact was established it helped the team on valuable inputs for the research. Due to above problems the survey period got extended to some extent, but it did not affect much on other dependent activities which had to be rescheduled to complete the project almost on time.
2.4 Scope for future work

The outcome of this report is in the form of feasibility parameters, rural business models and viability evaluation model translating the viability of any rural BPO initiative. Identified feasibility parameters act as indicators to guide the decision-making in numerous ways. These help in assimilation of the physical and social knowledge about the location and community, converting them into absorbable units of information, which could aid decisionmaking process. Parameters also provide an early indication of business feasibility before an entrepreneur can make an investment commitment. The present study is unique in many ways. This research is the first of its kind pertaining to the business feasibility of rural BPOs. Fast changing technology, state policy priorities and international market scenario dictates the modern day business dynamics, this make it essential for us to state that the present study would be relevant for the short term and at the most for a medium term. Therefore it is imperative that future studies must keep accommodating new indicators and upgrades the current list of feasibility parameters.
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CHAPTER - 3
STUDY & SURVEY FINDINGS
This chapter contains the outcome of literature reviews and the findings of the surveys carried out. The findings are based on discussions with people in the BPO industry, an appraisal of research studies on the BPO sector and the results of a primary survey conducted at Saurath, a gram-panchayat village in rural Bihar. From the efforts made to understand the BPO activities and business dynamics, in urban BPOs, an attempt is made to identify BPO jobs that match the skill-sets of rural manpower. The study also deals with the problems and challenges faced by urban BPOs as well as the availability of infrastructure at village telecenters and the employability of rural youth for BPO work. The study has helped to identify the feasibility parameters for scoping, which is discussed in next chapter.
3.1 Bases for Outsourcing: An overview

Outsourcing helps the organizations to concentrate their efforts and resources to efficiently carry out the processes, which represent their core competency. The operational challenges that force organizations to shift their production/service base and the benefits that could be derived through outsourcing is described below through flow-chart diagram (Figure 3.1 below).
Figure 3.1: Flow diagram showing cause and effect of outsourcing business
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The organizations in the US and Europe were first to realize the advantages offered by outsourcing in terms of cost savings, productivity and quality improvement, therefore they began outsourcing onshore, within the geographical limits. With the advent and spread of cost effective technologies, organizations started looking for avenues around the world having lower manpower costs. By late 1990s several countries have jumped on to the foray and successfully grabbed their share of worldwide BPO business.
India as an outsourcing destination

India has attracted a good share of the global BPO business pie. The reasons, which transpired India to a BPO business hub, included its tremendous cost effective labor force, infrastructural developments, improved telecom facilities and its geographical location which provides it strategic edge over other outsourcing locations.
3.2 Study Findings

The findings based on secondary research on BPO sector and primary surveys conducted at Saurath (GP, households & telecenters) and on urban BPOs have been summarized below. It starts with the research findings based on literature reviews followed by findings from primary surveys. At the end of the chapter, the knowledge and information gathered from above sources is employed to identify the feasibility parameters controlling rural BPO business viability.
3.2.1 Why India has an edge?

India has emerged as a strong contender as most favored location for setting up of BPO business. There are various drivers, which favor India and help achieve the top position on worldwide BPO platform. The major drivers for BPO business have been summarized and presented below.
Talent Pool
India houses a large pool of talented people; more than 2 million graduates, 0.3 million postgraduates and 100,000 engineers produced every year which can act as talent pool for BPO centers. India has highest population with English speaking capabilities and computer skills. Outsourcing to India is driven by the cost competitiveness offered by the low cost talent pool and infrastructure.
Infrastructure and Policies
The infrastructure and telecom facilities offered in many cities are comparative to global standards. Centre and various states have rolled out ITES/BPO friendly policies to fuel the spread of IT based service providers.
Geographical location
The geographical location of India allows it to provide 24x7 services due to time zone differential. Geographical location helps an Indian BPO unit to work for US clients while they sleep.
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Linguistic advantage
India hosts a large pool of skilled workers who are proficient in English language. Language proficiency is one of the factors that attract MNCs for outsourcing their business activities/operations to Indian BPOs and IT companies.
Social advantage
India has presented a stable democracy political institute for long with no major civil unrest. Being the largest democracy, India is now amongst the top ten most promising economies. The economy of India is the fourth largest in the world as measured by purchasing power parity. Benefits offered by India, as mentioned above, has led to the mushrooming of BPO units in big cities and metros, various processes and sub processes have been included into the range of activities offered by Indian BPO. The market size distribution of various industry segments is shown at Table 3.1 below. Table 3.1: Sector-wise Analysis of BPO/ITES in India
Sector-wise Analysis of BPO/ITES in India Industry Contribution (%) Banking, Financial Services and 35 Insurance (BFSI) Telecom 12 Retail 4 Telecom service provider 3 Health Care 3 HR 3 Hospitality 2 Utility 2 Transportation 1 Government 1 Others 22
Source: Nasscom.org The Fig-3.2 below illustrates the Indias position on the global map of outsourcing destinations, based on location and people attractiveness parameters. India is the only country, which offers both geographical and manpower advantages of the highest order.
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Figure 3.2: Comparative location of India on global BPO map
The BPO business is based on following key inputs: Infrastructure Manpower Technology Investment All these inputs influence the outsourcing business in their own capacity. In order to further estimate the impact of each driver on the business dynamics, discussions were carried out with industry people and extensive secondary research and surveys were undertaken for urban BPO and rural location having telecenter units.
3.2.2 Urban BPO Scenario

The urban BPO centers get a host of outsourced jobs from overseas which offers considerable savings for the outsourcing companies. A comparative analysis based on year 2003 data demonstrates that Indian BPO operations costs (cost per full time employee) only 20% of the cost incurred at U.S.
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Table 3.2: Comparison of BPO operating costs. India Vs US

US$ Cost per FTE United States India India as % of US costs (Full Time Employee) Personnel 42,927 6,179 14% G&A (General and 8,571 1,000 12% Administrative )Expense Telecom 1,500 2,328 155% Property Rentals 2,600 847 33% Depreciation 3,000 1,500 50% TOTAL EXPENSES 58,598 11,854 20% Source: Industry Sources, Merill Lynch 2003 (From the Nasscom Strategic Review 2003)
In an endeavor to understand the urban BPO business dynamics, 5 urban BPO units were randomly selected for survey. Semi structured questionnaire were used and interview/discussions held with key persons of middle or top management. Brief on the findings from surveyed BPOs is presented below at Table 3.3. Table 3.3: Facts about Urban BPOs surveyed
Area of operation Number of BPO surveyed in this category Average Number of employees Clients location Attrition Rate (%) Location BPO segment (Catered) Type of calls handled Basis skills required at entry level 1 150 Domestic 20-25 NCR Human Resource Services Non Graduate with good computational, English comprehension and computer skills Non voice based BPO operations 2 750 Domestic & overseas 30-35 NCR Call center Inbound and outbound only Graduate (undergraduate in some cases), neutral accent and no mother tongue influence. Good spoken English
(NCR: National Capital Region)

Voice based BPO operations Both Voice and non voice based BPO operations 2 1125 Overseas 25-35 NCR Customer care and back office operations Inbound only Same as other two segments
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3.2.3 BPO Process Hierarchy

The skill requirements for BPO jobs define the level of BPO activities in the hierarchy. The values, risk and margins increase with increase in the hierarchy level (refer Figure-3.3).
BPO Hierarchy of Services High skill services Knowledge based services Client interface: Language and culture Decision making and problem solving processes Specific ruled based processes High Value High Risk High margins
Data entry, transfer and conversion tasks
Low skill services
Low Value Low Risk Low margins
Figure 3.3: BPO Hierarchy of services, E-Commerce and Development Report 2003
Low-end BPO jobs include - data entry, scanning, simple translations, data conversion tasks (such as moving data from a document or database to a general ledger), billing services based on pre-defined rules, etc.. These tasks require basic clerical and language skills and can usually be fully accomplished offsite. BPO business is not limited to outsourcing the low end jobs only, clients are looking for strategic partners who can move beyond transaction processing and solutions to various cross functional business activities. The hierarchical development increases the skill and knowledge requirements, which means higher employee cost for providing these services aswell-as improved profit margins. It is only in the last two to three years that high-end jobs (like data analytics, market research, IP-related jobs) have started coming to India, and BPOs have started advancing to the next level to the higher end of the value chain, knowledge process outsourcing (KPOs). Major BPO players are looking for developing new niche processes in the BPO hierarchy ladder so as to increase profit-abilities and to handle ever-increasing competition.
3.2.4 Organizational Structure

The survey of the 5 BPO firms helped us understand the organizational setup as well as the hierarchy. Organizational makeup of the outsourcing firms include following departments: (Organisation structure mentioned below is based on the survey only and may vary from organisation to organisation)
1) Business development team (BDT): The role of the BDT is similar to the
marketing team in any other organisation. The key responsibilities include business expansion, bringing new assignments and to look for clients.
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2) Transformation/Migration team: This department is responsible for replicating

the process flow for a new BPO activity similar to the way it was done at clients end. Teams responsibility is to understand the entire process. To replicate the process at BPO center end, a team comprising of training head, process head and trainer visit the client place. conjugation as many of the HR professionals themselves work as trainers.
3) HR and Training: These two departments are separate entities but always work in 4) Operations: This department is ultimately responsible for execution of the work 5) Quality Control: The name of the department spells out the activity it takes care
and ensuring quality for deliverables.
3.2.5 Training & Skill Development

The quality of service depends on the type of training the employee receives and subsequently how he implements his knowledge while working. Training is the integral part of the BPO organizations. Following are the salient findings related to BPO training. Most of the big companies have training department as a part of the human resource department and onsite training is preferred than sending their agents to an external center. Some companies prefer to outsource training to coaching/training companies. Outsourced training is conducted in two ways: o Outsourced-onsite Training: In this the trainers are provided by the training companies but the training sessions are conducted within the premises of the call center. o Complete Outsourcing: Outsourcing training completely means that a training agency is hired and either the recruited agents would be sent to the agency for further grooming or the agency trains and then company hires the candidates. The nature and kind of training depends on the BPO activities undertaken by the organisation. For example the training given by voice based BPO units is different from the training imparted by non-voice outsourcing unit. During survey it was observed that call center training could be divided into two types. a) Pre process training --- Induction ---Voice accent --- Culture training --- Mother tongue neutralization b) On process training --- Theoretical knowledge of the process and product --- Mock calls
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These trainings are followed by nesting period, where the person works on the process but the process is monitored closely.
3.2.6 Defining Processes for new job at BPO unit

After the business development department signs the deal with client, the migration and training team is provided with task to understand the new business process. Migration/transformation team consists of training head, process head, trainers and members from technical divisions who visit the client location to understand the process flow, quality, training and resource requirements. Sometimes training for the new process is provided at the BPO center by the client itself. Software and hardware requirements are analyzed during the migration phase. Process specific software/s may be provided by the client to the outsourcing unit based on the level of technology required. Once the new process has been completely understood, the IT department takes care of the software and h/ware related issues including networking and connectivity. After the software platform is ready then training and quality department performs the test run to check for system consistency. Once the operational requirements are met, HR department is notified about the manpower requirements. The recruitment of first batch involves multiple rounds beginning with HR at first followed by interviews taken by training deptt. and project Head. The first batch is called pilot batch. Before the pilot batch hits the floor it is trained off-job and on-job to ensure the required quality parameters.
3.2.7 Cost break up

The key elements that affect the total cost structure of a remote processing facility are the manpower cost, general and administration expenses, telecom cost, rental and depreciation. Manpower cost makes the largest part of the BPO organisation expenditure. The approximate distribution of costs on different heads has been shown below in figure 3.4 and is indicative only.
Break-up of Costs for BPO
13% 11% Personnel G&A Expense Telecom Property Rentals Depreciation
45% 22% 9%
Figure 3.4: Break-up of Costs for BPO
As evident from the figure, the cost on personnel is the major cost head, constituting around 46%. The manpower cost and manpower productivity are the major areas that affects the total cost and hence sustainability/profitability.
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3.2.8 Challenges faced by the BPO units (surveyed)

Following are the challenges that are being experienced by the surveyed BPO organizations and are the possible threats for the outsourcing industry. Attrition Client retention Increasing competition Emerging overseas competitors Increasing cost Attrition: The biggest challenge For urban BPOs, attrition is one of the biggest challenge that the organization faces. Discussions revealed that most of the people join the organisation after being lured by the privileges offered for the BPO employees. Still people leave; the main reasons being
Increased competition in metros. Some of the people join BPO sector to earn quick money and hence work for short time The shift timings and time intensive jobs at BPO The BPO industry do not offer much promotion opportunities vertically
Startegies to counter attrition Survey suggested that oganisations are thinking out of the box methodologies to counter the growing rate of attrition. Graph shown below (refer Figure 3.5) depicts the techniques adopted by the surveyed BPO organizations to check/control attrition. The adopted strategies include: Methodologies Adopted by Organisations to Control Attrition
Nos of respondets
Offering better pay Moving to B and C grade cities Tieup with institutes Hiring mature talent Better design of recruitment tests
5 4 3 2 1 0
Non-voice BPO Voice Based BPO Both voice & non Voice Offering Better Pay 5 4 4 Moving to B and C Grade Cities 2 1 2 Looking Beyond Graduates 3 2 2 Better Tie Up with H iring m ature designing of Institutes talent recruitment 0 0 0 3 4 5 1 0 3
Methodologies
Figure 3.5: Mythologies adopted to control attrition
Amongst the mentioned strategies adopted by outsourcing units; offering fat salaries and hiring mature talent (people in their thirties and having past work experience in BPO sector) are the most replicated by the surveyed urban BPO organizations.
3.2.9 BPO Jobs currently undertaken in India

Today, BPO firms in India are building specialist skills in the industry verticals that promise high and sustained returns in the future. The prime driver to get these jobs done here, as mentioned earlier, is due to cost advantage and availability of suitable manpower in large numbers. The various BPO activities that are being taken up by these BPO firms can be broadly classified as below:
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1. Back Office Operations, Revenue Accounting, and other ancillary operations

With digitization, large numbers of organizations convert their hardcopy data into coded form. Also, banks, insurance and aviation sector have large-scale data entry and revenue accounting work. For such back office accounting operations, paper documents / raw data are sent to remote locations, which are used for data entry and necessary reconciliation. The prime criterion for such projects is quality of organizational processes, availability of abundant manpower and ability to dedicate resources to client needs. Back office services include the following: Data processing and digitization: converting text & images to electronic form, creating text from other forms, simple data entry Finance and Accounting: book-keeping, billing & receivables, payables, claims processing. Healthcare: transcription, claims & collections, verification, scheduling Insurance: applications processing, verification, claims processing Legal: transcription, deposition typing, data processing, research, collections Pre-publishing: layout, typing, proofing, printer-ready copies. Credit card processing Internet surfing and searching
2. Insurance Claims Processing

Large insurance companies have large number of claims to settle. With well laid down rules and procedures, such processing can be done anywhere, as long as there is availability of graduates who can read and write English in large numbers, a few doctors and a few accountants. As a result, to save costs, large insurance companies of US are now outsourcing a lot of this work to India.
3. Legal databases
There is a constant need for lawyers to go through relevant laws, rulings and precedents in order to build up their case. Junior lawyers in legal firms usually do this using IT. Many legal firms from developed countries have started to outsource legal work to organizations that have a large English speaking and low-priced workforce of trained lawyers.
4. Call Centers
A typical call center is a service center (for customers), which has adequate telecom facilities, trained counselors, access to wide databases, internet and other on-line information support system. It operates to provide services to customers, round the clock and year round. The dedicated telecommunication links connect a remote call center to the parent organization through voice links and on line computer database access. Amongst others, the service application areas, which may be addressed by call center include: Sales support Lead generation and follow-up Tele-Marketing Complaint handling
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Technical queries Relationship and account management Credit and billing follow ups
5. Content Development
Content development is emerging as one of the fastest growing service segments in the IT services industry. It caters to the needs of web site management, production of content for new media such as compact disk, digital versatile disk and products of convergent technologies such as internet enabled TV. It consists of compilation and development of digital content for intra-organization dissemination, cross-institutional usage, collaborative projects, public domain information programs for public / specialized education, web content development and management and film animation.
3.2.10 Skill Set required for BPO Jobs

Most of the BPO jobs could be efficiently handled by people having educational qualification of graduation and above. Even in some organizations undergraduates are preferred. Apart from the educational qualifications, domain specific skills are required for people who wish to join the BPO. A list of skills for various BPO activities has been given below in table 3.4. Table 3.4: Skill Requirements for BPO jobs
Job SEGMENTS Call center Remote customer interaction Data entry, services. data transcription SKILLS Good communication and language skills, accent understanding team leadership, basic computing skills Language and accent understanding Document management and scanning, expense processing, (e.g. time sheet management, expense claim management, medical billing) Computing, language and analytical skills Country specific HR policies, rules and regulations Technical and engineering design and computing skills Language understanding, basic computing knowledge (word processing) and understanding of various medical terminologies Drawing and creative skills, computer graphic skills International/ country specific accounting rules Understanding statistical sales and marketing concepts
Date search, Integration Human Resource services Engineering and design Translation, Medical transcription and Localization Animation Finance and Accounting Market Research
As shown in the figure-3.6 below, infrastructure and education requirement are higher for high-end jobs. For example the requirements for the low-grade BPO jobs are bare minimum,
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however higher end jobs like legal and advisory services require job specific skills and advanced telecom and internet availability.
Figure 3.6: Infrastructural and Skill prerequisites for BPO jobs
3.2.11 Opportunities and Challenges for Urban BPO

BPOs in India are expected to employ around one million people by 2008, but the challenge is to find and retain quality human resources given the current attrition rate of around 35-40%. Currently it is about 35% in non-voice and 45% in voice call centers. Studies indicate that 60% of the people who leave an organization do not join another BPO organization, but leave the industry as a whole. Attrition has become the biggest challenge, as companies have to incur a large cost on recruiting and training the manpower. Not only the manpower but the expenditure of infrastructure also cost dearly in metros and grade I cities. Development of management talent and motivation and growth opportunities for employees are the other major challenges Nasscom and QAI research identified following key challenges confronting BPO industry: Attracting and retaining people across all management levels Imparting best training practices for improving responsiveness
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Continuous process improvement to meet global standards and counter competition Reduction in the cost of training without compromising quality Client retention and satisfaction Developing new business strategies to increase and expand business across verticals.
3.2.12 Strategies adopted to tackle Challenges

In order to meet the task of reducing profit margins and competition in the global and domestic BPO business, most of the Indian firms face the challenge by moving into high-end jobs and shifting base to cost advantageous locations for their activities, as part of their cost saving strategy. Among the various cost reduction strategies undertaken by city based BPO centers, moving to tier II and tier III cities will be the most replicated in coming years. The charm of low cost manpower is attracting corporate to look for new houses in smaller cities/towns for business expansion. Various new cities like Chandigarh, Bhopal, Trivandrum, Hubli etc. are emerging on the Indian BPO map. Also profit margins are shrinking in the low-end jobs like data entry, transcription, etc. therefore such jobs could be taken up at small towns or at rural end. At a much lower cost on manpower to be incurred as compared to urban center, it is possible to get the outsourcing activities done in a rural business process unit, using the telecenter based model that is explained in the chapter 4.
3.2.13 Rural BPO scenario

The possibilities of shifting low-end jobs to rural locations have already been explored by several organizations by setting up outsourcing units in rural India. Byrajju Foundation, Lason India and Datamation are three prominent organizations who have taken initiatives by setting up rural BPO units in different parts of India. These pioneers had foreseen the business feasibility of rural BPOs and a brief on them is as given below:
3.2.14 Rural BPO Pioneers in India
1) Byrraju Foundation - Gram IT initiative

Byrraju, a not for profit organisation operates in Andhra Pradesh, a state in South India and its rural BPO initiative is known as Gram IT. It provides services in the areas of healthcare, environment, sanitation, primary education, adult literacy and skills development. Satyam Computers outsourced a part of its back office operations, through Gram-IT, helping to generate employment opportunities for the rural educated youth.
Employment capacity: with 50 seat capacity.
100 rural youth, 50 each in two shifts. Two rural BPO units
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Place of operation: Jallikakinada and Ethakota.in Andhra Prasesh (south India). Infrastructure: Telecom and power: 512 kbps connectivity with ISDN back up, sufficient provision for electricity and additional back ups through UPS and power generators. Training: Candidates selected for rural BPO services undergo training in computers, spoken English and soft skills. Employee Earning potential: Rs. 3500 to Rs.4500 per month. Business Development and Marketing: Done at headquarter in Hyderabad. Since it is part of Satyam Computers, whatever low-end contracts are shifted to Gram ITs. Client: Satyam Computers Services Ltd.
2) Datamation Foundation - rural BPO program

Datamation rural BPO centers are run on not for profit philosophy in remote parts of Delhi and Uttar Pradesh. The head office at Delhi co-ordinates with all the BPO locations and provides them jobs which are executed at rural end
Employment capacity: Datamations rural BPO units each has 5 to 6 computers where rural youth can work. Place of operation: East Delhi and villages in UP districts. Infrastructure: telecom and power: Dial up internet as well as broadband, electricity back-up and Solar powered computers at one or two BPOs where electricity supply is very erratic. Training: Training includes exposure to the professional work environment, work ethics, quality standards, quality assurance processes, fundamentals of data conversion & document conversion business Business Development and marketing: Head-office is responsible for business development and client identification activities, and job execution is done at the rural end ensuring quality. Client: Various organizations like banks, educational institutes, exam boards and various government departments.
3) Lason India It is a subsidiary of Lason Inc, a US based BPO Company. Lason India is one of the first BPOs to realize the potential of rural India, which work in southern Indian states of Karnataka and Tamil Nadu.
Employment capacity: Lason has its regional hub with 1,000 employees in Chennai, with 60 smaller centers and seating capacity of 75 to 100, benefiting 5000 rural youth. Place of operation: Tamil Nadu and Karnataka (plans to expand in Andhra Pradesh and Kerala). Infrastructure: telecom and power: Lason does not own the specific centers, but designates them as franchisees, providing the hardware and training, and managing
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the quality of the output, while the local owner provides the physical location. It has also gone for partnership with JSW Steel Ltd., part of the O.P Jindal group; where in JSW Steel would provide the infrastructure and Lason will handle training to ensure quality. Training: Training is being provided by Lason for the computer operations and other BPO processes. Client: Lason Inc, US
3.2.15 Indian Rural Scenario the survey findings

In order to understand the Indian rural scenario for BPO initiatives, a comprehensive village level survey was taken up at Saurath panchayat-village in Madhubani district of Bihar, India. This study was undertaken to achieve complete understanding of the socio-economic and political characteristics of the Panchayat as-well-as for BPO business viability through telecenters.
3.2.16 About Saurath

Saurath is a gram panchayat (GP) of Madhubani District (a backward district consisting of 399 Panchayats and 3 Blocks) in state Bihar, consisting of Saurath and Pokhrauni villages. The GP is located at a distance of 7 Kms from the district head-quarter and just 1 km from the national high way (NH-105). Madhubani is famous for its folk art popularly called as 'Madhubani Paintings' or 'Mithila Paintings' and approximately 85% population of the district is rural.
Makhana Cultivation (in ponds) at Saurath
Some Educated Youths at Saurath
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Fig 3.7: Madhubani map
3.2.17 Survey findings on Saurath:
With a total population of 6162 and 1440 households, Saurath has a population density of 1130 people per square km. It has a total literacy rate of 50.2%, which is appreciable as compared to the State statistics (state literacy rate 47.53%). Unemployment has led to the migration of local youth to the cities in search of jobs. 7% population (mostly male) work outside the village, which constitutes approximately 33% of total earner population of Saurath. 47% of the migrated people are of the age group less than 30 Years. 38% of entire migrated populace belongs to age group of 20 to 30 Years. Agriculture is the main source of income. Wheat, rice sugarcane and makhana are the main agriculture products of Saurath 51.3% of the total surveyed households having agriculture or agri-labour as their prime source of earning.
The land-holding pattern among the sample households shows that only 0.7% households have land more than 10 beeghas and around 42% of the households have below 5 katta of land (1 acre = 22 Kattas). This indicates the presence of few big farmers and landlords.
Land Holding Pattern
2.7% 7.8% 42.0% 0.4% 0.3% 9.9% 0-5 Katta 6-10 Katta 11-15 Katta 16-20 Katta 1-2 Beegha 3-5 Beegha 6-10 Beegha 11-20 Beegha 16.5% 5.0% 5.2% 10.1% More than 20 Beegha Not Applicable
Main Source of MHI

0.2% 2.6% 6.0% 1.3% 3.6% 11.4% 35.3%
Farming Agri Labour Small Business Shop Keeper Business Pvt. Job G ovt. Job Domestic Help Retired/Pension
3.9%
14.3% 0.9% 2.5%
2.1%
16.0%
U nskilled labour (Daily w age labour) Artisan (Karigar) Student (Both w orking and studying) O thers
Figure 3.8: Land holding pattern at Saurath
Figure 3.9: Income source distribution (Saurath)
The income of the households varies from Rs.1000 to more than Rs.10, 000 per month but more than 60% of the sample population has monthly household income less than Rs. 2000. 48% of the total population (590 Households) of the GP is living below poverty line. Although the panchayat is electrified but just 25% households have electricity connections with very poor availability of electricity for just 2-3 hrs per day. Table 3.5: Income-wise Population and Household distribution
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Monthly household income (Rs.) Less than 1000 1001-2000 2001-3000 3001-6000 More than 6000 Not responded
Population 266 655 312 234 121 46
Number of HH 61 120 47 34 18 15
A view of Saurath village school beside lake
The Saurath GP hosts 232 graduates and 54 Postgraduates (data from GP survey) coming from different income segments of society. Data from the panchayat survey suggests that there are 165 computer literates in the GP with 105 males and 60 females.
Education Level in Different Sectors of Society
100% 90% % Population 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 1000 1001-2000 2001-3000 3001-6000 More than 6000
1 0th Class (1 1 th included) Class 1 -9th Literate but didnt w ent to school Illiterate Post Graduate Graduate 1 2th
M onthly Hous e hold Incom e
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Figure 3.10 Income-wise education level distribution
The education level of residents in the sample households is shown in the chart above (refer Figure 3.10) and gender specific education details have been given in the table 3.6 below: Table 3.6: Educational details on surveyed Households
Education Qualification Illiterate Literate but didnt went to school Class 1-9th 10
th
Male (Nos.) Female (Nos.) Male (Nos.) Female (Nos.) Male (Nos.) Female (Nos.)
Less 1000 60 92 12 12 40 26 12 6 6 1
than
10012000 140 205 19 21 119 87 34 19 11 1
20013000 51 82 13 16 57 39 27 15 11 1
30016000 31 51 8 5 40 37 20 16 17 9
More than 6000 5 11 3 7 16 19 18 16 20 5
to 12
th
Male (Nos.) Female (Nos.) and Male (Nos.) Female (Nos.)
Graduate above
6.14%-surveyed households have households have mobile phones.

Less than 1000 4.4 2 5 1 0
landline
telephone
connections
and
5.8%
Table 3.7: Saurath Income Group-wise family size and other details
MHI(Rs) Family Size Electrified Household Nos. HH having Mobile (Nos.) HH having telephone (Nos.) Mean Mode 1001-2000 5.5 4 22 3 1 2001-3000 6.6 5 12 3 4 3001-6000 6.9 7 17 4 6 More than 6000 6.7 4 15 6 9
connection
Of the total households surveyed (295 Nos.), 39 households were observed having computer literates.
The computer literate were surveyed for measuring their expected earnings from the rural BPO business and to calculate the average amount they would like to invest for such entrepreneurial venture. All the 39 HH belonged to various income groups (as shown in the table 3.8 below) which indicate computer literacy amongst all income-groups of society: Table 3.8: Household Income and Computer Literacy
Monthly household income (Rs./month) Less than 1000 10012000 20013000 30016000 More Than 6000
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Nos. of computer literates
Male Female
0 0
3 0
8 0
13 3
10 2
Only two computer literates managed to get employed (1 temporary and 1 permanent job), clearly indicating the low employment opportunities at the village or block level. Computer literates expressed their willingness to invest for income generation opportunities that can help them earn around Rs. 2500-3000 per month. Being an entrepreneurial venture people are also willing to invest amount, anywhere between Rs. 20,000 to Rs. 50,000 for the hardware and other requirement for BPO.
3.2.18 Problems faced by populace of Saurath

The major problems faced by the populace of Saurath is as mentioned below. People complained about the lack of proper roads between city and GP and lack of clean drinking water. Most of the households complained about poor condition of electricity (2-3 hours per day) and some had complaints on telephone connections.
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Young people acknowledge the lack of employment opportunities at the GP or district level as the biggest problem. The migration of males has positively skewed the sex ratio in favor of females (1014 females per 1000 males).
The above issues at Saurath village point towards the need of local employment initiatives, which could prevent the migration of rural people and also improve the local economy.
3.2.19 Telecenters/Kiosk specific information

There are 13 telecenters in a radius of 25 to 30 kms from Saurath, which are run by local entrepreneurs mostly graduates and using Drishtees service delivery mechanism for community services on education, health, information, agri-products, DTP, commercial services, digital photography, etc.
Drishtee ICT Kiosk in Mangrauni South, near Saurath
In order to gain a comprehensive outlook of telecenter business dynamics, 5 telecenters out of the 13 telecenters/kiosks around Saurath were surveyed. The summary findings on Saurath telecenters/kiosks are as mentioned below.
The telecenters are operational from last 4 years however many of them have started their operations a few months ago. Average profit from the telecenters varies from Rs.500 for newly set up kiosks to Rs. 2000 for older telecenters. Each telecenter is equipped with one or two computers (more than two in few telecenters), printer, digital camera and internet connection. Internet connectivity has been maintained by GPRS provided through Airtel service connection providing an average connectivity speed of 35 kbps.
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On being enquired about their future expansion plans, most of the telecenter owners expressed their willingness to expand the business. Amongst the five kiosks, which were surveyed, four are willing to participate in rural BPO initiative.
Parmeshwar Mishra, aged 32, male, Drishtee kiosk owner of Mangrauni South (near to Saurath), is delivering community services from his kiosk. Four years back he started with a single PC and internet connection. Today his kiosk has two PCs, digital camera, scanner and other hardware. His earning has grown to Rs. 6000 per month and is able to support his family very well. During survey, on inquiring about his willingness for rural BPO initiative, he expressed his readiness instantly as he found an opportunity for further raising his income and providing earning opportunities for computer literates at his kiosk.
3.3 Learning from Surveys for Rural BPO Feasibility

The understanding of available literature and discussions with rural BPO players helped us understand that there is no single model which could lead to rural BPO success. Different rural BPO organizations have tried to develop their own business models based on their requirements and ability. Also some have succeeded in rendering outsourcing services by locating in rural suburbs. Therefore it is necessary to have an inspired thinking which could lead to sustainable rural BPO operations. Based on the analysis of the gathered facts/information, two operational models for rural BPO have been proposed in chapter 4. The main four inputs for BPO business have been summarized earlier as; Infrastructure, Manpower, Technology and Investment. The cost of technology (hardware and communication) is not location sensitive; however the availability of technology could be important. The extensive research through secondary sources and in-depth surveys helped us to identify and select key factors which could affect the location suitability for BPO business. A computer with software and Internet connectivity is a sufficient and necessary condition to access and deliver desired services for BPO. But in the context of outsourcing as a business and investment opportunity that would transform rural economy and its possible contribution to long-term growth and development; the factors and variables that are relevant for any other sector would be relevant to outsourcing business in rural India as well. Hence parameters are viewed on a larger context of maximum contribution to rural community, livelihood opportunities, rural economy, institutional factors and in general to rural transformation. After having examined all the possible factors influencing rural BPO feasibility, from the study, the necessary ones were identified for scoping feasibility for providing BPO services involving rural telecenters and have been grouped into six broad parameter heads, as mentioned below.
Rural Dynamics:
Rural Youth Population Literacy Rate Per Capita Income Entrepreneurship in community Telecenters/Cyber-cafes existence
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Existence of Banks and MFI Educational Institutes - Higher Sec. Schools/College - High Schools - Computer Institutes - Professional/Technical Institutes Computer Literates Graduates/Post-graduates Rural Electrification Rural Telephone Connection Electricity Availability Hours Road Condition & Transportation facility Distance from District HQ/ Town Distance from near Railway Station./ Airport No. of Telecom Service Providers Broadband Connectivity Existence of VSAT Connection/STPI Existence of ISDN facility Law & Order Situation in District Bandh/Strike prone Natural Disaster (Type & Severity) ITES sector as Thrust Area in State Incentives and subsidies specific to ITES sector Business savvy Govt.
Rural Talent Pool:
Rural Infrastructure:
Rural Telecommunication Infrastructure:
Rural Orderliness:
Govt. Policies:
In next chapter-4 the above identified parameters have been detailed to scope feasibility parameters for rural BPO initiatives through telecenters/kiosks and also on the comparative advantages of rural BPO on urban BPO.
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CHAPTER - 4
ANALYSIS AND MODEL DEVELOPMENT
The primary objective of the present study, as mentioned in the earlier sections, is to identify and scope the feasibility parameters for providing BPO services through rural telecenters in terms of social, economic and institutional factors as-well-as to understand the comparative advantage of rural BPO over urban BPO. In this chapter, an attempt has been made to design the possible Business/Servicing Models for rural BPO services to help plan, implement, organize and manage the required operations involving the rural telecenters and/or BPO units. Next, the feasibility parameters that were identified during the survey/research have been scoped and extended further to develop a Viability Evaluation Model to gauge feasibility of such BPO business at rural location. The BPO Viability Evaluation model developed was then applied on Saurath village (a rural location in Bihar) to understand its potentiality and viability towards rural BPO business. The chapter ends with a discussion on the SWOT analysis and comparative advantage of rural BPO over urban BPO.
4.1 Rural BPO Business Models

The possible Business Models for rural BPO services have been conceptualized and described below. These business models for rural BPO services will help income generation opportunities for rural educated youth and facilitate socio-economic development in rural areas, which in turn can help reversing the migration trend towards villages.
Model -1: Telecenters based Rural BPO

The Model-1 will comprise of (i) Central BPO Quality & Marketing hub, (ii) Rural BPO Center(s) and (iii) Telecenter based BPO Units in villages (under the control of ICT service providers); all participating willingly on agreeable terms, on entrepreneurship basis and networked in an organized manner for rendering BPO services. Each BPO Center, with state-of-the-art infrastructure setup, will house 15 - 20 BPO entrepreneurs (having their own PC or hiring it from the center), where-as each rural Telecenter will have maximum 2 BPO units/entrepreneurs. The central BPO Quality & Marketing hub will be responsible for marketing, quality assurance, training, accounting, management and control functions to provide BPO services, based on networked rural telecenters. The model-1, Telecenters based rural BPO, is expected to minimize the infrastructural investment and other overheads. The partnership approach and emerging rural entrepreneurial class would help strengthen the network, share the load on entrepreneurial basis, learn and grow faster, gradually move up the process value-chain, minimize risk and help achieve viability and sustainability fast.
Model 2: Extension of Urban BPO to Countryside

Model-2, however, is about setting up of a rural BPO unit by an existing urban BPO Entrepreneur, in semi-urban location or village, employing 30100 local rural employees to carry out low-end jobs. Such rural BPO model is an extension of the urban BPO operations to
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countryside. In fact, the model-2 is an employee based rural BPO Center managed and run by an existing urban BPO, who has the expertise and knowledge on such business. Rural BPO based on this model can support their urban counterparts to reduce their operational cost.
4.1.1 Model-1: Telecenters based Rural BPO

Model-1 offers a scenario based on integrating the nation wide network of existing rural telecenter units with the regional BPO Centers at block/district level to network and carry out BPO operations simultaneously at various locations, with a centralized BPO Quality & Marketing hub to manage and control these networked operating entities. The telecenters/kiosks under the control of various ICT Service Providers, like Drishtee, nLouge, Tarahaat etc., can network on agreeable terms to execute the BPO jobs. Also the rural literate entrepreneurs could become part of the network by taking up the BPO jobs and executing them at their own location or using the telecenters facility. A diagram depicting the Model 1 is shown below at Figure 4.1. Assumptions: There will be 15 - 20 entrepreneurs in one rural BPO Center Five such BPO centers will have one regional BPO Quality Center, which will coordinate the activities in the former The cost of running the regional BPO Quality Center will be the same as that of running one BPO Centre. Thus, each of the five BPO Centers will bear a fifth of the operating cost of the regional BPO Quality Center The skill set of the rural entrepreneur will enable him to earn at least Rs.35/hr on an average, assuming the person will work 8 hours a day and 25 days in a month. BPO Management Center: the hub for rural BPO operations This central BPO Management Center, located at the regional level, will be the hub managing and controlling the networked entities for rendering rural BPO services. The hub will interact with the clients on one side, and with the networked rural telecenters and BPO Entrepreneurial units on the other side, using high speed Broadband, VSAT and ISDN lines. The central unit will be responsible for marketing, quality assurance, training and overall management functions; it will receive jobs from the clients (domestic or overseas), define the process and quality standards, assign jobs to the rural telecenters and BPO center(s) for its execution based on their operational capabilities, deliver the output to clients, monitor and control the entire network for productivity and sustainability. The central BPO Quality Center will be responsible for the function of quality control across five BPO Centers and certain nos. of telecenters, based on total number of entrepreneurs/seats to handle. It will house one Quality Control Manager. The BPO Quality center will co-ordinate with the networked units for quality assurance as per the desired quality standards and timely completion of the jobs distributed. Training is the integral part of the BPO operations and its role becomes even more prominent in the rural scenario. The BPO Quality Center will ascertain the appropriate
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training module for the networked partners so that they deliver optimum quality levels. In addition, the BPO Quality Center may also house a small regional Marketing Team.
Other Telecenter Networks BPO center (Entrepreneur based) BPO Quality Center BPO Marketing BPO center (Entrepreneur based) BPO Management
Tarahaat Telecenter Tarahaat Network
NLogue Telecenter NLogue Network
Drishtee Telecenter BPO center (Entrepreneur based) Drishtee Network
Customer
Figure 4.1: An entrepreneur driven rural BPO Business/Servicing Model
Telecenters: The survey suggests many telecenters have more than one computer. The available hardware at the telecenters could be used to execute BPO jobs either by the kiosk owner or by locally available manpower who could work as entrepreneurs sharing a part of their profits with kiosk owner for utilizing tele-center infrastructure. Connectivity: Ensuring high quality and timely delivery of work from a widely dispersed and remotely located workforce calls for effective management systems and creative use of ICT. As various execution units are sparsely located it requires state of art connectivity to ensure proper co-ordination amongst different units. Central unit should have broadband or ISDN connection and a VSAT back up will ensure connectivity with the remote tele-centers. Telecenter and Entrepreneur run BPO centers should have at least, assured reliable broadband connectivity or internet connection and can operate on store and forward mode. Power back up: Central BPO Quality center should ensure continuous electricity supply. Therefore, generator and alternative power backup/ UPS provision have to be made. The connected tele-centers should also have power backup arrangement at their end. Since rural India do not have good supply of electricity therefore such arrangements are needed. In a longer run,
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organizations could work to employ alternative sources of electricity supply e.g. solar energy, wind energy-powered generators etc. Entrepreneur run BPO centers: The operation of such BPOs will be on the same lines as that of the telecenters. The entrepreneur will invest for hardware and can share the space and connectivity at the center. An entrepreneur will have flexibility to operate from his house also. Such a center will dedicatedly work as pure BPO unit as it will not cater any other services like telecenters do. The operational capability and efficiency of the entrepreneur will spell out his earnings and a fraction of the profit will be shared with the quality center, on certain basis, for utilizing Central hubs services on management, quality control and business development. Quality Assurance: Considering the level of manpower available at villages as well as the lack of common quality control mechanism at individual service execution points of the network, it is necessary that quality is assessed, checked and verified at each level (local BPO units and quality center). Quality standards would be communicated to each partner by Central Management & Quality hub and the acceptable quality levels would be built. Contingency Backup: Since the operational area of the above model has been enormously stretched due to the vast spread of tele-center units (a single tele-center cater to 5 villages approximately), it is difficult to exercise any direct control over the various operational divisions. The model has been built on an entrepreneurial philosophy with individual control; hence all network units may or may not exhibit same level of efficiency for each job assignment every time. Also there could be a possibility of some telecenters partners pulling out at odd times or not able to complete in time. Any such fluctuations of load can be taken care off by the rural BPO Center unit.
4.1.2
Model 2: Extension of Urban BPO to Country side
This model is framed with an assumption of complete investment initiative at village end without involving any existing kiosk/telecenter network. It is a straight forward extension of existing Urban BPO operations to country side for low-end jobs to leverage the benefits of available low-cost talent pool there so as to reduce operational cost (refer Figure 4.2). Such rural BPO startup could be completely funded by some urban BPO firm or any business organisation, which has the expertise in such BPO business. This model could be taken up as CSR (corporate social responsibility) by the corporates. This philosophy is quite similar to the Byrajju Foundation, where Satyam Computer Services Ltd. outsourced some of their back office jobs to the villages. In such model, the overall management, marketing, quality and operational functions of the rural BPO unit will be handled by the urban division. The rural literate youth will get an opportunity for employment at their native place, which will help enhance employment opportunity for rural youths in their villages ultimately leading to improved rural economy. Based on the skill availability factors, such units can undertake high-end outsourced jobs at urban locations and transfer low-end jobs to their rural facility.
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Local Manpower
Customer/Client (Overseas or Domestic)
Urban BPO
Rural BPO
Low End Jobs Transfer to Rural BPO Location High End Jobs In-house Processing
Figure 4.2: Rural BPO model as an extension of urban BPO
4.1.3
Relative advantages of the discussed models
Each model depicted above has its own advantages and disadvantages, but both aiming at finding business opportunities at rural-end and helping enhance income/livelihood opportunities for rural educated youths to facilitate socio-economic development. Model-1 is a business model that involves rural telecenters and large number of entrepreneurs with varying degree of operational capability, whereas the Model-2 is an extension of an urban BPO enterprise. The Model-1 provides ownership to its partners, which leads to higher motivation, faster learning, improved work efficiencies, absence of attrition and higher individual earnings. Moreover, Model-1 is flexible, scalable and holds potential to enhance income generation opportunities for rural educated youth and village entrepreneurs as-well-as strengthen the telecenters movement in rural India. The most prominent advantage offered by the Model-1 is the low cost of investment as the model is based on existing tele-center network. The expansion possibilities are tremendous in the case of network-based entrepreneurial model, whereas business expansion would be relatively costlier in Model-2. Model-2 provides a better option in terms of the regular income to rural employees, where as in model-1 the entrepreneurs income will depend on the jobs offered by the quality center. During the lean business period, model-1 may not be able to generate enough
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revenues for all of its partners. Secondly, management of distant located units from a single centralized location will be a challenge. A break-even analysis for rural BPO Center has been worked out and is presented separately below. The figures quoted are indicative and based on certain assumptions that may vary. However, it would help understand the rural BPO business feasibility, based on data.
4.2 Type of BPO activities suitable for Rural BPOs

For any new rural BPO location, safe and logical option would be to start with low-end jobs having high-volume and low-value addition; jobs like - data capture, data entry, document management, scanning, etc. Infrastructure and education prerequisite for the lowgrade BPO jobs is bare minimum, which could easily be found in villages. Once all the stakeholders, from both end (entrepreneurs and clients) gains confidence, it would be possible to move on to higher-end jobs, slowly and gradually. Educated rural mass does not demonstrate any better employability quotient as per the industry standards therefore rural BPO can start with jobs having low skill requirements. The rural outsourcing units must start at the same point where the initial outsourcing business industry commenced (data conversion and other low end jobs). Once the countryside industry evolves, clients would bestow more faith on the rural BPO capability, additional activities requiring higher skills could also be taken up then. Although, the parameters and factors, as per the current scenario, indicate for low-end jobs processing units only, this study is of the opinion that high-end jobs also can be taken up at a later stage. It is better to initiate with low-end jobs and as the infrastructure and skill availability improves slowly high-end jobs can be pursued . Following are some of the reasons why low-end jobs can be a starting point for rural BPO. Easy availability of manpower at rural end for the low-end jobs, which requires low skill-set Quantity and quality of highly skilled manpower availability is limited in the villages Low manpower cost can help sustain the low end operations easily, though the margins are thin for low-end jobs Low-end jobs are mostly non-critical to outsourcing organizations, thus clients/organizations can transfer them to rural areas. The hardware requirement for low end jobs minimizes the investment cost. Training cost at telecenters/BPO units will be very low for such jobs Availability of high volume data-entry jobs from Govt. departments, like land-records, panchayats/block level data, electricity/water bills or records, essential commodities distribution/employment generation records, etc.; Situated in rural areas provides opportunity for rural BPO units to offer low cost local solutions.
4.3 Rural BPO Feasibility Parameters

For the rural BPO initiatives through telecenters and/or rural BPO Centers, using the Model-1 (telecenters based rural BPO units), it is important to identify and scope the feasibility parameters in terms of social, economic and institutional factors.
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Following section discusses the feasibility parameters in detail (identified during survey/research and mentioned at chapter-3 end) and rationale for selecting those parameters. The parameters are indicative, in the fast changing technology driven world. However, a medium term outlook for the Indian rural scene for sure is not expected to deviate much from the outlined growth trajectory. In the context of outsourcing as a business and investment opportunity that would transform rural economy and its possible contribution to long-term growth and development; the parameters/factors that are relevant for any other sector would be relevant to outsourcing business in rural India as well. Hence parameters are viewed on a larger context of maximum contribution to rural community, livelihood opportunities, rural economy, institutional factors and in general to rural development. In order to measure the contribution of identified parameters in overall business sustainability and their role on the socio-economic development in rural areas as-well-as to assess rural BPO potentiality at a rural location, the key parameters/factors have been extended further to design and develop a BPO Viability Evaluation Model which can quantitatively define the feasibility of the rural BPO business involving telecenters. The governing parameters/factors and variables that were considered in designing the viability model were grouped into six major heads, namely a) Rural Dynamics, b) Rural Talent Pool, c) Rural Infrastructure, d) Rural Telecommunication Infrastructure, e) Rural Orderliness and f) Govt. Policies. These parameter heads were then allotted a suitable weightage (refer Table-4.1) on a total scale of ten. The sub-parameters/factors under each parameter head, along-with its weights assigned, are as mentioned under Viability Evaluation Model (refer Table 4.2). Table- 4.1: Feasibility Parameter Heads and their weightage
Parameter Head Rural Dynamics Rural Talent Pool Rural Infrastructure Rural Telecommunication Infrastructure Rural Orderliness Govt. Policies Total Weight 20% 20% 18% 16% 14% 12% Weight on a scale of 10 2.0 2.0 1.8 1.6 1.4 1.2
Though all the parameter heads are significant, but among them Rural Dynamics, Rural Talent Pool and Rural Infrastructure are the key drivers and contributors towards business viability for rural BPO involving telecenters. Hence more weightages have been assigned to these parameter heads as compared to others. The BPO Viability Evaluation Model, its weighted parameters/sub-parameters and the method calculation along with the scoping of these parameters have been detailed below.
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4.3.1 Viability Evaluation Model for scoping and feasibility analysis

The Viability Evaluation Model for assessing rural BPO potentiality through rural telecenters was developed to scope the business feasibility at any rural location. The model evaluates the BPO business feasibility for any rural location by segmenting the location into four broad viability categories viz. Unsustainable (not viable without recurring grant support or investment), Sustainable (viable to some extent with initial grant and may require sporadic investments), Viable (viable with initial investment or grant support and can sustain its operating costs) and Profitable (good return on short-term to recover the investments made). This model when applied on a Gram Panchayat (GP) or a Village evaluates the factors/parameters under the above heads and sums up to generate a Composite Index Value which determines or decides the BPO Viability Segmentation of the village or the rural location into - Unsustainable, Sustainable, Viable or Profitable - for rural BPO business initiatives. The composite Index Value/Score generated by the model determine the locations viability categorization as Unsustainable (if the index value is less than 3), Sustainable (if index value is grater than 3 but less than equal to 6), Viable (if value is greater than 6 but less than equal to 8), and Profitable (if value is greater than 8).
7
Viable
10
Unsustainable
Sustainable
Profitable
Table 4.2: The Viability Evaluation Model parameters with weight assigned
SN Parameters Rural Dynamics (Wt = 2.0) 1 Rural Youth Population (GP) 2 Literacy Rate (GP - Total %) 3 Per Capita Income (GP) 4 Entrepreneurship in community 5 Telecenters/Cyber-cafes existence 6 Existence of Banks and MFI (Block) 7 Rural Talent Pool (Wt = 2.0) Educational Institute (in GP) - Higher Sec. Schools/College - High Schools - Computer Institutes - Professional/Technical Institutes Computer Literates Graduates/Post-graduates Rural Infrastructure (Wt = 1.8) Rural Electrification (GP)
UoM Nos. % Rs. per person Subjective Nos. Nos.
Weightage 0.3 0.4 0.3 0.3 0.4 0.3
8 9 10
Nos./GP Nos./GP Nos./GP Nos./GP Nos./GP Nos./GP % HHs
0.2 0.2 0.3 0.3 0.6 0.4 0.4
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11 12 13 14 15
Rural Telephone Connection (GP) Electricity Availability Hours (GP) Road Condition & Transportation facility Distance from District HQ/ Town Distance from near Rly. Stn./ Airport Rural Telecom Infrastructure (Wt = 1.6) No. of Telecom Service Providers Broadband Connectivity Existence of VSAT Connection/STPI Existence of ISDN facility Rural Orderliness (Wt = 1.4) Law & Order Situation in District Bandh/Strike prone Natural Disaster (Type & Severity) Govt. Policies (Wt = 1.2) ITES sector as Thrust Area in State Incentives and subsidies specific to ITES sector Business savvy Govt.
% HHs Hrs/24 Hrs Subjective Km. Km.
0.3 0.5 0.2 0.2 0.2
16 17 18 19 20 21 22 23 24 25
Nos. Yes/No Yes/No Yes/No Subjective Subjective Subjective Yes/No Yes/No Subjective
0.4 0.6 0.3 0.3 0.5 0.4 0.5 0.4 0.4 0.4
Each of the above feasibility parameters for rural BPO through telecenters have been explained and scoped below, in detail, along-with the method of calculation for arriving at the parameter value/score for the locaton selected. A) Rural Dynamics - total weight assigned = 2/10 Rural dynamics plays a major role as defines the status of rural economy and support available for BPO initiatives. Hence it has been assigned a maximum weight of 20 per cent. Socio-economic factors like literacy rate, population and ICT penetration help in providing employable manpower for BPO business at rural end, and economic factors like per capita income and availability of financial institutions demonstrates the economic potential to support entrepreneurial initiatives.
(i)
Rural Youth Population: It was observed during urban BPO survey that majority of people who join as workforce in the BPO sector are in the age group of 18 to 35 years, therefore this was considered as one of the factors propelling business feasibility. Rural Youth Population of a gram-panchayat (GP) or any rural location indicates the availability of talent pool. A large youth population size means higher chances of large number of employable manpower and entrepreneurs, not just for the outsourcing work but also for future growth requirements.
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Factor Youth Population (in GP)
Wt 0.3
Method of Calculation Below 500 0 501- 1000 0.1 1001-1500 0.2 Above 1500 0.3
(ii)
Literacy Rate: As listed in the chapter-3, people with different education and skill set abilities are required to execute different hierarchy of BPO jobs. Therefore literacy rate is a significant feasibility parameter for a knowledge-based industry such as rural BPO. High literacy rate means greater probability of availability of educated manpower, who can work as entrepreneurs or employees to perform BPO jobs. Literacy level also indicates the sensitiveness and responsiveness of local populace towards availing education and adapting to new developments. Some service like computer literacy is more dependent on the sensitivity of the villagers towards education. Therefore a higher weightage (0.4) is assigned to this sub-parameter and it varies in direct proportion to the literacy rate of that location.
Factor Literacy (in GP)
Wt. 0.4
Method for calculation Literacy percentage *0.4
(iii)
Per-capita income: Per-capita income indicates the ability of people to pay for education, health and other services including ICT; thus adds to the business feasibility. A person who lies in the higher income bracket has higher affordability for education, hence prepares him/her to contribute more for rural BPO services.
Per Capita Income (Rs.)
0.3
<2K 0
2-5 K 0.1
5-7 K 0.2
above 7K 0.3
(iv)
Entrepreneurship in Community: Telecenter based rural BPOs initiatives depends largely on the entrepreneurship quotient in community; a key indicator to business feasibility. Higher the entrepreneur-quotient, higher would be the number of people who would go in for a rural BPO startup. More the business, trade and self-employment initiatives in a rural locality more would be the entrepreneurship in community. Hence a suitable weightage is assigned to this sub-
parameter.
Entrepreneurship 0.3 in community Predominatel y working class 0 Self-employed and Working class 0.1 High entrepreneurial and self-employment initiatives 0.3
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(v)
Telecenters/ Cyber-cafes existence: The foundation of current rural BPO model is the rural telecenters. The presence of telecenters directly contributes to the rural BPO business feasibility. Clientele of telecenters and its survival as a business unit indicates the business feasibility in terms of skilled manpower and basic infrastructure availability for rural BPO. A telecenter is equipped with basic infrastructure like computers, internet connectivity, scanner, printer and other hardware that are required for a rural BPO initiative. The availability of existing infrastructure reduces the overall investment cost and hence it impacts on rural BPO feasibility.
Tele-Centers / Cyber cafs existence (Nos. within 5 Km radius)
0.4
Nos. = 0 0
1 0.2
2 and above 0.4
Existence of Banks/MFIs: Presence of Financial institutions/MFIs provides easy access to credit opportunity for business growth that the rural entrepreneur can avail, and hence directly impact the business feasibility for such rural BPO initiatives. To expand and diversify telecenter business portfolio, entrepreneurs have to invest in hardware, software, furniture and other infrastructural requirements of BPO initiative. Financial institutions, if present, would enable these rural entrepreneurs to avail capital from financial resources, at the prevailing market rate, for business expansion.
Banks/MFIs at block level (Nos. within 10 Km radius / Block level)
0.3 0
No banks/ MFIs
1 or 2 banks/ MFIs 0.2
More than 2 banks/ MFIs 0.3
B) Rural Talent Pool - total weight assigned = 2/10 Educational institutions and availability of rural talent pool plays a key role in the manpower supply dynamics for rural BPO. As this parameter directly impacts the business feasibility for rural BPO, hence it has been assigned a maximum weight of 20 per cent. Among the sub-parameters for educational institutes, computer and professional institutes have been assigned more weights than others, as it can supply required skilled manpower for rural BPO and ITes.
(i)
Higher Secondary Schools/Colleges: More number of higher secondary schools/ colleges in the locality means more educational opportunities for people every year and hence more people taking up jobs or venture for rural BPO, as survey revealed that for rural BPO jobs the minimum qualification required is class 12th pass and/or graduation only.
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Higher Secondary Schools/Colleges (Nos. within 10 Km radius)

(ii)
0.2
0 0
1 0.1
2 or more 0.2
High Schools: High schools provides basic educational foundation to students, who can upgrade their skills on typing proficiency and/or basic computer skills that qualifies them for low-end rural BPO jobs like data entry, data conversion etc. Thus these institutions also can contribute to manpower supply and hence to rural BPO feasibility.
High Schools Nos.
0.2
0 0
1-2 0.1
3-4 or more 0.2
(iii)
Computer Training institutes: Presence of computer training institute or rural telecenters/kiosks delivering computer courses can supply the skilled manpower for rural BPO and hence an important feasibility parameter.
Computer Institutes (Nos. with in 10-15 Km radius)
0.3
No. = 0 0
1 0.2
More than 1 0.3
(iv)
Professional/Technical institutes: Urban BPO survey revealed that most of the outsourcing units prefer to recruit professional people, as they represent better trainable workforce as compared to others. Therefore presence of professional and technical institutes that supply skilled manpower to ICT sector enhances the feasibility of rural BPO business. Availability of institutes such as ITI, polytechnic would provide educational opportunities to rural youth for professional development, which would add to the rural talent and skill set availability for a rural BPO.
Professional/Technical institutes (Nos. with in 10-15 Km radius)
0.3
0 0
1 0.2
More than 1 0.3
(v)
Computer literates: The discussion with industry people helped us understand that computer literates are the most suitable manpower for BPO and ITes services, as BPO services requires certain level of computer skills. Also the training needs for these literates will be less compared to others. Availability of such literates in the area adds higher success rate to business feasibility and hence it is assigned maximum weight (0.6) as compared to other variables under Rural Talent Pool.
Computer literates 0.6 (Nos. with in 10-15 Km radius)
Nos. 0-30 0
31 - 60 0.2
61- 80 0.4
Above 80 0.6
(vi)
Graduates/Post graduates: Graduates and post-graduates with additional trainings can emerge as strong intellect base for expansion of rural BPO
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initiatives, as they can be trained easily for the type of jobs that rural telecenter based BPO units can handle. Hence this factor/variable contributes significantly and has been assigned a moderate weight (0.4), a shade less than computer literates.
Graduates & Postgraduates (Nos. with in 10-15 Km radius)
0.4
Nos. =0 0
1-25 0.1
26-50 0.2
51-75 0.3
76 and above 0.4
C) Rural Infrastructure - total weight assigned = 1.8/10 Rural infrastructure plays a significant role in the development and also towards business initiatives. The sub-parameters considered under this head are the public utilities, like electricity, basic telecom, roads, proximity to town and railways etc., which provides basic support to rural BPO initiatives and helps growth. Better the infrastructure readiness, higher the scope for feasibility on rural BPO initiative. (i) Rural Electrification: Rural electrification in the gram-panchayat village is measured as percentage households with electricity connection. Higher percentage of electrified households indicates better power infrastructure and hence higher chances of BPO business viability. Therefore the factor is assigned a good weight (0.4).
Electrified households (HHs % in GP)

(ii)
0.4
< 20% 0
21-40 0.1
41-60 0.2
61 and above 0.4
Rural Telephone connection: Telephone connectivity governs the ability of a site to handle data/voice transfer. This factor/variable indicates the status of telecom infrastructure at rural location. High tele density provides the opportunity to many households to become part of entrepreneur run BPO initiative, and hence the factor/variable impacts rural BPO feasibility factor.
Rural Telephone connection (HHs % in GP)

(iii)
0.3
0 0
1 to 5 % 0.2
5 and above 0.3
Electricity Hours: The overall electricity availability in the area has direct relation to the sustainability and feasibility of rural BPO unit. Else alternate source is required to support operations and hence additional cost. The telecenters/BPO unit has to run at-least 8 hours (including power back-up) with minimal interruptions to make sizeable revenue, hence the factor/variable carry maximum weight (0.5) amongst all the variables under Rural Infrastructure.
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Electricity availability hours in GP

(iv)
0.5
No electricity 0
4 hrs/day 0.1
5 to 8 hrs/day 0.2
9 to 12 hrs/day 0.4
More than 12 hrs/day 0.5
Road Condition and Transport: BPO officials pointed out that good road are a basic infrastructure requirement for BPO business development. Better roads by all means are strategic to any business feasibility and success, as they specify the accessibility of the location. But Village which is less reachable has higher demand for telecenters/kiosks services and hence the potentiality for its success towards rural BPO also. Therefore the factor is inversely proportional to rural BPO feasibility.
Road condition & Transport
0.2
With Highway link 0
Good 0
Avg. 0.1
Bad 0.2
(v)
Distance from District HQ/Town: Urbanization leads to substantial improvement in the infrastructure. Chances of adequate infrastructural services increases with the proximity to district HQ or town, hence distance of BPO location from town is also inversely proportional to the rural BPO business feasibility; though more away the rural telecenter is better is its services demand.
Distance from district HQ/Town 0.2 Above 25 km 10 25 km Below 10 0 0.1 0.2

(vi) Distance from Railway Station/Airport: Proximity of rural BPO location to railway station or airport is strategic for marketing/quality people to reach the location when time demands. As it was observed that most of the BPO hubs in India are located in the cities which provide round the clock connectivity, hence it has been also considered as a sub-parameter for feasibility but with less weight (0.2).
Distance from nearest Railway Station/airport
0.2
Above 100 km 35-75 km 0-34 km 0 0.1 0.2
D) Rural Telecom Infrastructure - total weight assigned = 1.6/10 Rural Telecom Infrastructure also plays a major role in the growth and feasibility of rural BPO initiatives. It helps effective communication link, faster transfer of data/voice and proper co-ordination between remotely located units/quality centers. The broadband connectivity with speed determines throughput and productivity. The sub-parameters considered here are all important and impacts feasibility for rural BPO through its BPO Center(s) and telecenters. Hence this head has been assigned a total weight of 16 percent. Amongst its sub-parameters, broadband connectivity is assigned maximum weight (0.6).
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(i)
Number of Tele-com Service Providers: Tele-infrastructure strength and business potentiality of a location is proportional to the number of telecom service providers. Availability of higher number of service providers ensures business competitiveness amongst them for market share which results in better services to people and hence business growth. This factor influences the rural BPO feasibility.
Number of Tele-com Service Providers (in GP)
0.4
One 0.1
Two 0.2
More than two 0.4
(ii)
Broadband Connectivity: Broadband connection determines speed and seamless flow of data/voice transfer between centralized quality center and remote rural telecenters. The rural BPO Center and the BPO central hub require at least 512 Kbps broadband connection, and at telecenters for rural BPO at-least 256 Kbps. Due to the significance of broadband connectivity in rural BPO business viability, it has been assigned maximum weight (0.6) under the Rural Telecom Infrastructure head.
Broadband Connectivity
0.6
High Speed connectivity 0.6
Low Speed connectivity 0.3
Not Available
0
(iii)
Existence of VSAT Connection: VSAT helps connectivity link via satellite and is useful for heavy data (voice and non voice) transfer between stations. In the absence of reliable connectivity option in rural areas, VSAT can help to provide last mile connectivity between BPO Center(s) and remote tele-centers through wireless, hence it is suggested to have VSAT connection at BPO Center if not for rural telecenters which can store and forward using internet or broadband connectivity. Since connectivity and speed for data transfer is a must for BPO activities, hence VSAT is also considered as an option for business viability and growth for rural BPO; though a good broadband connectivity is sufficient for telecenters. Owing to its significance and to remain connected, a moderate weight (0.3) is assigned for having VSAT connection.
VSAT Connection (if available at BPO Center/ Telecenter)
0.3 0.3
Yes 0
No
(iv)
Existence of ISDN facility: Integrated Services Digital Network (ISDN) is a circuit-switched telephone network system, designed to allow digital transmission of voice and data over ordinary telephone copper wires, resulting in better quality and higher speeds; ISDN technology could act as boon for rural BPO business at BPO Center and/or telecenters. Availability of the ISDN facility at the rural end can ensure increased performance of the communication network. The contribution of ISDN existence at BPO business location has been ranked equally to the VSAT availability and hence it is assigned similar weight of 0.3.
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Existence of ISDN facility
0.3 0.3
Yes 0
No
E) Rural Orderliness - total weight assigned = 1.4/10 Orderliness is defined as the ability of the location for sustained operations and better growth opportunities for business as-well-as for individual; this includes Govt. effectiveness in enforcing law and order, bandhs and strikes, proneness to recurring natural disasters like floods, droughts etc and also existence of organized crime gangs etc. Rural BPO services and business feasibility, involving telecenters/entrepreneurs, at any location can get highly affected by this parameter. Hence Rural Orderliness is considered as an important parameter influencing rural BPO feasibility, and carries a total weight of 14 percent.
(i)
Law & Order Situation in District: Poor governance leads to inefficiency and unhealthy atmosphere both for business and development for any location. This in turn effects the investment decisions also. Owing to the impact of law and order on business initiatives and rural BPO feasibility, it has been considered as one of the governing parameter and is assigned a weight of 0.5.
Law & Order Situation in District
0.5 0
Bad
Avg. 0.2
Good 0.4
Excellent
0.5
(ii)
Bandh/Strike Prone: Proneness to bandh and strike at any location has a negative impact on the manpower availability, productivity and growth of business units. Strikes cost the state dearly in terms of lost business, and unhealthy impact on state economy. Also frequent bandhs and demonstrations disrupt life and hampers business growth. This factor will also have an influence on rural BPO feasibility and thus considered here.
Bandh/Strike in district
0.4 Rare Occurrence Partially prone 0.4 0.2
Highly Prone
0
(iii)
Natural Disaster: Recurrent floods and droughts can disrupt human-activities and play havoc with rural BPO Center/telecenters seasonal viability, as it effects timely delivery to clients and hence business relations. Though it may be for a few weeks/months, but its severity and periodicity will have negative impact on any business viability and same for rural BPO also. Hence the factor/variable has been considered here and assigned maximum weight (0.5).
Natural Disaster in district
0.5 0
Throughout the year
3 months in a year
0.2
Rarely
0.5
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F) Govt. Policies - total weight assigned = 1.2/10 Pro-industry guidelines and state polices help to generate an environment of confidence amongst the investors and hence investment volume in any sector. An integrated and stable set of policies from the respective state governments can go a long way in removing all bottlenecks and help business grow for BPO and ITES industry. Though important, the research found this head as least effectual as others for rural BPO initiatives, and hence assigned it a total weight of 12 percent only.
(i)
ITES sector as Thrust Area in State: A state which promotes the IT enabled sector and has special sops for the investing companies will certainly have more chances for the better sustenance of IT industry. Thrust for IT sector leads to the rise of IT based service units which also encourages local populace to acquire necessary skills for getting employment in them. Also such state and its location attracts clients for business. Karnataka can be cited here as an example. Presence of this factor influences entrepreneurs, clients and hence rural BPO initiatives and its feasibility.
ITES sector as Thrust Area in State
0.4
Yes 0.4
No
0
(ii)
Incentives and subsidies specific to ITES sector: Similarly, incentives and subsidies for setting up IT based industry as-well-as tax sops, reduced import and export duties etc. lays the foundation for business growth in any location. Existence of incentives and subsidies will reduce the capital investment and taxes, which can help the rural entrepreneurs from lower sections of society to take up such ITES and BPO initiatives. The weight assigned to this factor is same like above, i.e. 0.4.
Incentives and subsidies specific to ITES sector
0.4
No IT specific Incentives and subsidies exists 0
Availability of IT specific Incentives

and subsidies 0.4
(iii)
Business Savvy Govt.: The inclination of the Govt. to develop state-wide industry or specialized industrial areas impacts industrial and overall business growth. This encourages entrepreneurs to come forward and gives rise to a business environment, which in-turn leads to rapid development of social and physical infrastructure, encouraging also rural BPO initiatives. The factor is assigned the same weight (0.4) like others in this parameter head.
Business savvy Govt.
0.4 Not inclined 0 0.2
Partially Inclined
Highly Inclined
0.4
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These feasibility factors and viability evaluation model that has been mentioned above serves as a guideline for organizations as-well-as for entrepreneurs, who wish to commence BPO initiative in rural locations. The outcome of viability model in the form of composite index score helps to measure the feasibility and classify the location as unsustainable, sustainable, viable or profitable. Apart from the evaluating the viability for the location, the individual parameters provide a direction about the prevailing socio-economic and infrastructural readiness for any such initiative. Thus it is necessary that an informed decision should be taken on the feasibility of such initiatives for the location, based on the strength of individual factors and overall model score.
4.4 Role of State Governments to encourage Rural BPO

Above mentioned factors are not in the complete control of entrepreneurs, therefore it requires a joint effort of private and public partnership to improve upon the existing scenario which could make the rural BPO as a viable business proposition. The respective local Governments should work in tandem with private institutions to create a conducive atmosphere for the growth of IT industry. Governments should bring out pro IT policies which are transparent and stable. Also they must ensure to promote entrepreneurs by offering special incentives, subsidies and rebates to them. There should be enough rural banks and micro-finance institutions which could offer low interest loan to the entrepreneurs to set up BPO business units. An effort could be made to provide special subsidies on IT hardware and software for low income groups so that they could come forward to take up such jobs and uplift their social and economic status. Electricity and telecom infrastructure should be upgraded in the rural areas to provide constant electric supply. The Govt. departments can engage local NGOs to promote the literacy and IT education so that more number of people could be made available as manpower. Govt. in association with schools and colleges in the region should develop BPO specific programmes and modify curriculum in entry-level educational institutions. Also some Pvt. partners could be roped in to develop BPO industry oriented courses. Most importantly the Government can act as a client to the tele-center based rural BPO initiative by transferring some of its back office jobs to the rural end. Support from local bodies can help the BPO model to attain viability in a short term.
4.5 Rural BPO Cost and Returns: A Break Even Analysis

The rural BPO model should be designed in a manner that it should be able to generate enough revenues for the entrepreneur and thus manage its operational cost. In order to tempt entrepreneurs to shift their bases from the urban locations to rural ones, one must provide the commercial viability of the project. Thus to test the business possibility of a BPO centre a break even analysis was undertaken, considering a 20 heads rural BPO facility involved in low skilled jobs like conversion of content from paper to digital or even pure data entry.
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The initial investment would include cost of hardware, software and other infrastructural cost; Apart from these, there are recurring costs, such as manpower, electricity and telecom. During the analysis it has been assumed that there is sufficient supply of jobs at any point of time. An initial investment of Rs. 550,000 is required to set up the above rural BPO Centre with 20 seats and necessary hardware (refer Table 4.3.A.1 at section end). The calculations featuring operational costs (refer Table 4.3.A.2) shows that total manpower cost for the BPO center would be Rs.89,000 per month, hence the total operational cost would amount to Rs. 1, 07, 812 per month. In order to demonstrate the commercial feasibility, the rural BPO must be able to generate revenues of the order that are at least sufficient for managing the operational cost. Analysis shows that an average income of Rs.27 per employee per hour will make the unit break even and any penny above this will result in profit. Table 4.3: Operational and break even Initial Investment Operational cost/month (Manpower +other cost) Break Even cost (@20 operators x 8hrs/day x 25 days/month ) cost Rs. 550000 Rs. 107812 Rs. 107812/ 25x8x20 = Rs. 26.95/hour/ operator
During the consultation with urban BPO centers involved in low skill jobs like data entry it was observed that trained operators are able to earn anywhere between Rs.30 to Rs.35 per hour and in some cases it goes up to Rs. 45 per hour for the operators who continue working on a single assignment for long duration which leads to improvement in their efficiency.
Break Even Analysis
9000 8000 7000 Rs.(000) 6000 5000 4000 3000 2000 1000 0
0 3 6 9 1 2 1 5 1 8 21 24 27 30 33 36 39 42 45 48 51 54 Cost Revenue at Rs. 30 per hour Revenue at Rs. 35 per hour
Initial Investment
M onth
Figure 4.3: A Break-Even Analysis
Two scenarios have been demonstrated (refer Figure-4.3) with an average income of Rs. 30 and Rs. 35 per operator per hour. Both income flows will result in a pay back period of approximately 45 months and 17 months respectively.
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Table 4.4: Pay back period calculation Revenue per month at earnings of Rs 30 per Hr. per operator Profit per month Time to return the investment Revenue per month at earnings of Rs 35 per Hr. per operator Profit Per month Time to return the investment
Rs. 120000 Rs. 12, 188 38 Months (Approx.) Rs. 140000 Rs. 32, 188 16 months (Approx.)
Based on the above analysis, it is now imperative that revenue of Rs.250 to 300 per day per operator will be enough to meet the operational cost as well as to help repay the initial investment in a short or mid term span.
Reference Tables for Break-Even Analysis Table 4.3.A.1: Initial Investment for rural BPO Centre Particulars Investment Amount (Rs.) Computer 20 Nos. @Rs 20,000 400000 Printer 1 @ Rs. 5000 5000 Server (1 no.) . 40000 UPS 75000 Furniture, fixtures, lights, etc. 30000 Total Fixed cost Rs. 5, 50,000
Table 4.3.A.2: Calculations for Operational Cost Assumptions: A 20 executive BPO facility executing low skilled back office jobs like data entry or other transaction based jobs. (Approx. figures in Rs.) Nos. Rate/month (Rs) Total Salary (Rs) Total Operators : 20 Quality controllers 2 Admin 1 Accountant 1 (a) Total manpower cost per month Electricity Cost for 20 computers: Average consumption per computer Usage hrs/day Usage days/month Kilowatt usage/computer/month Cost/unit of electricity (Rs) (b) Electricity cost for 20 computers 3500 5000 5000 4000 70000 10000 5000 4000 Rs. 89,000
180W 8 25 36 6 4320 Rs/month
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(c) Other electricity consumption per month (d) Other Costs: Rent (550 Sq. Ft.) Connectivity cost Misc.( 5% of manpower cost) Interest on investment @11% p.a. Total Operational Cost per month
2000 Rs/month 2000 Rs/month 1000 Rs/month 4450 Rs/month 5042 Rs/month Rs. 1,07,812
4.6 Application of Viability Evaluation Model on Saurath a case study

The Viability Evaluation Model, being a diagnostic tool, was applied to Saurath GP (using its data) for measuring location feasibility regarding rural BPO initiative. After summing up the total score for individual parameters (refer Table-4.5 below), composite index score was found 5.6 on a scale of 10 which spells Saurath as a Sustainable location. Hence Saurath is a viable BPO business location which will require sporadic investment and support. Table 4.5: Viability evaluation model: An application to Saurath GP
SN Parameters 1 2 3 4 5 6 6 Rural Dynamics (Wt = 20%) Rural Youth Population (GP) Literacy Rate (GP - Total %) Per Capita Income (GP) Entrepreneurship in community Telecenters/Cyber-cafes existence Existence of Banks and MFI (Block) Rural Talent Pool Educational Institute (in GP) - Higher Sec. Schools/College - High Schools - Computer Institutes - Professional/Technical Institutes Computer Literates Graduates/Post-graduates Rural Infrastructure Rural Electrification (GP) Rural Telephone Connection (GP) Electricity Availability Hours (GP) Road Condition & Transportation facility Distance from District HQ/ Town
UoM Nos % Rs. per person Subjective Nos. Nos.
Weight 0.3 0.4 0.3 0.3 0.4 0.3 Sub-total 0.2 0.2 0.3 0.3 0.6 0.4 Sub-total 0.4 0.3 0.5 0.2 0.2
Score for Saurath 0.3 0.2 0.2 0.1 0.2 0.2 1.2 0.1 0.1 0.2 0.2 0.6 0.4 1.6 0.1 0.3 0.1 0.1 0.2
7 8 9 10 11 12 13
Nos./GP Nos./GP Nos./GP Nos./GP Nos./GP Nos./GP % HHs % HHs Hrs/24 Hrs Subjective Km.
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14
Distance from near Rly. Stn./ Airport Rural Telecommunication Infrastructure No. of Telecom Service Providers Broadband Connectivity Existence of VSAT Connection/STPI Existence of ISDN facility Rural Orderliness Law & Order Situation in District Bandh/Strike prone Natural Disaster (Type & Severity) Govt. Policies ITES sector as Thrust Area in State Incentives and subsidies specific to ITES sector Business savvy Govt.
Km.
0.2 Sub-total 0.4 0.6 0.3 0.3 Sub-total 0.5 0.4 0.5 Sub-total 0.4 0.4 0.4 Sub-total
0.2 1.0 0.2 0.6 0 0 0.8 0.2 0.4 0.2 0.8 0 0 0.2 0.2 5.6
15 16 17 18 19 20 21 22 23 24
Nos. Yes/No Yes/No Yes/No Subjective Subjective Subjective Yes/No Yes/No Subjective Total Score*
*Without considering the availability of VSAT Even though all these factors work in tandem to explain the location feasibility and the contribution of each factor is demonstrated by the score obtained by it but we should ensure that individual parameters contribution must should be addressed judiciously. The model shows Saurath as sustainable even it scores miserably on the electricity infrastructure availability and proneness to floods for three months in a year thus it shows that the location has business potential but it must be supplemented with sufficient power supply and alternative telecenter network to carry out the BPO activities for the clients during natural calamities. An analysis was undertaken to identify the individual contribution of parameter heads for final index score.
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100 80% 80
% Contribution
60%
60 40 20 0
Rural Dynamics Rural Talent Pool
55.5%
57.1% 50%
16.7%
Rural Infrastructure
Param e te r He ads
Rural Telecommunication Infrastructure
Rural Orderliness
Govt. Policies
Figure 4.4: Contribution of parameter heads for feasibility Evaluation model assumes that business feasibility is the function of six parameter heads which contribute individually in their own capacity to develop an environment suitable for BPO business success at rural location. Based on the results of the model, Saurath has done well on all parameter heads like Rural Dynamics, Rural Talent Pool, Rural Telecommunication Infrastructure, Rural Infrastructure and Rural Orderliness. As per the analysis of the surveyed data, Saurath has fairly stable prevailing economic conditions, availability of manpower and secure law and order to support entrepreneurial activity such as rural BPO. Even though Saurath has demonstrated BPO business sustainability but there are some operational challenges and risks which needs to be addressed by the management as well as the local administration for long term business viability. Telecommunication network is the back bone for BPO industry and it is must to have broadband and leased line connectivity to support data transfer. Sauraths communication network lack of VSAT or ISDN lines. The telecom infrastructural availability is 50% of the expected standards of evaluation model. To bridge this gap and to put the local tele-infrastructure at par with major cities, the local Government has to team up with private bodies to ensure availability of adequate telecom infrastructure for sustaining such activities. It is must for the entrepreneur model feasibility that quality and marketing center should have VSAT connectivity. Availability of poor infrastructure is another road block in viable BPO business at Saurath. Rural Infrastructure includes geographic dispersion (distance from cities etc.), power and road conditions. Though gram panchayat is electrified and 25 % of the total households have electricity connection but the electricity availabilities have been restricted to only 3-4 hours per day. Govt. has to take sustainable business approach by ensuring sufficient electricity supply at village. Bihar is mainly agricultural products producing state with large and small scale agro based industries. It has been a symbol of sorry state of affairs to attract IT majors to invest in the state due to the complete lack of IT intensive policies. Lack of ITES
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sector as Thrust Area in State and absence of incentives and subsidies specific to ITES sector further makes the rural locations incompetent for BPO industry. Another factor which could hinder the prospect of Saurath as a viable BPO location is the proneness of the GP for seasonal floods. The business management should have a contingency plan to keep the units operational during natural calamities. Partnerships should be extended with other BPO units (urban or rural) to offload the jobs during such conditions.
4.7 Availability of Clients for Rural BPO

There are a number of clients, who wants to outsource works locally. Government of India, for instance, has plans to digitize official records, land records, electoral list etc, as part of egovernance initiative. This would be a mammoth exercise, which would require enormous amount of labor in the rural parts. It would be interesting to see the possible domestic clients: Schools/Education Boards Government departments Hospitals Data entry jobs from financial institutions and businesses In addition there may be other potential clients, national as well as international.
4.8 Comparative Advantages of Rural BPO units over Urban ones

The comparative advantage of Rural BPO over the Urban BPO is as summarized below. Achieve cost reductions - The most significant advantage offered by shifting the operations to rural part is cost benefit. BPO operators can directly control costs associated with infrastructure and people, which are much lower in rural areas than urban areas. The cost of real estate and manpower has seen an upswing in the urban locations that could be offset at rural site. This allows firms to reduce their expenditures in providing the physical location substantially due to cheaper land prices and construction costs. Absence of attrition - Employee attrition diminishes as jobs are taken to where the people live. The results of the lower attrition are transpired into lower turnaround and hence, lower training costs. Major reason of the attrition is the increased competition in cities, odd shift timings and high cost of living. The rural tele-center based BPO units provide an opportunity to work at a location, which is near to the house, and the living costs are quite less as compared to cities. Increased overall efficiency Entrepreneurship is the strength of telecenter based rural BPO model where overall ownership is distributed amongst number of partners. Providing the sense of ownership leads to better working environments and improved work efficiency.
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Flexibility: One of the prime advantages offered by tele-center based rural BPO unit is its ability to offer independence to choose the location of working place. The local entrepreneurs could use a part of their home to work for BPO activities, which could ensure even higher work efficiencies as educated English speaking people of the family could help the entrepreneur in their available time.
4.9 SWOT Analysis - on the role of telecenters to render BPO services

Outsourcing is not a one time effort aimed to reduce operational cost and manage shortterm relationships; it is about delegating operational capabilities and management as-wellas to add value and build long-term relationships. India is surely riding the high wave of BPO business, but initiatives like rendering outsourcing services through existing telecenter network have been in its latent state. A SWOT analysis has been undertaken to understand the strengths, weakness, opportunities and threats for such rural BPO initiatives through telecenter based rural BPO units. a) Strengths: Vast telecenter network availability: Existence of number of telecenters in different parts of India provides a huge untapped potential to cater BPO services.
Low investment cost: Telecenters are equipped with computers and other related hardware which could be used for executing BPO activities. This reduces the infrastructural investment required to be made for setting up a new business unit. Sense of business ownership: Rendering outsourcing jobs through entrepreneur owned telecenters provides the sense of business ownership to the entrepreneur which leads to higher business gratification. Absence of attrition: Since the telecenter based BPO model takes the jobs to the locations where they belong to and making individuals as business partners, therefore such initiative leads to an atmosphere of increased loyalty toward the initiative.
b) Weakness: Poor infrastructural availability: The rural infrastructure in most of the villages is in poor state which reduces the telecenters operational capabilities to act as BPO units.
Difficult to manage and control: Vast network and reach of telecenter network may pose some difficulty in managing and controlling the remote units. Low business management and marketing capabilities: Though telecenters provide a host of ICT services, but the operators lack the management and marketing capabilities for BPO jobs.
c) Opportunities:
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Low manpower cost: The wages/manpower cost in the rural areas are low as compared to urban region, which provide an edge to telecenters based model. Income generation and employment opportunities: Telecenters providing outsourcing jobs will certainly help in creating job and livelihood prospects for the local entrepreneurs. Enhanced rural economy: Such rural BPOs will help in long run to generate new economic activities.
d) Threats: Increasing global quality standards: The ever rising quality requirements of the clients could be a bottleneck in such outsourcing initiative, as it will require intensive training for the sparsely spread telecenter owners/entrepreneurs.
Data security: Due to the lack of direct control on the operations of telecenters; providing and ensuring data security for the clients data and information, at the telecenter-end, could be a uphill task Policy and bureaucratic apathy for rural development: The success of any business depends on the overall development of the location which is guided by the policies and strategies intensively made to promote the business. Lack of rural development oriental policies leads to the skeptism amongst investors.
If appropriate management and quality support is provided to the telecenter owners/entrepreneurs, then the strengths and opportunities offered by the telecenter based model will certainly over-ride the weaknesses and threats.
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Object 4
Figure 4.5: SWOT analysis
Such model can offer local employment opportunities not only to the men, but also to the literate rural women who dont get opportunities and liberties like males to search jobs outside their villages. It also provides an opportunity to the English-speaking disabled who are unable to take up outside jobs and therefore could work from there homes.
4.10 Challenges in taking up Rural BPO Activities

Telecenter based rural BPOs offers enormous benefits ranging from low cost manpower and low infrastructural investment to improved employment opportunities at villages and help reverse migration. Although the concept has been demonstrated in the previous sections, but scaling up such model on a number of villages can pose certain constraints.
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As Indias rural population is primarily engaged in agriculture based activities therefore transition of the rural population from a village-centric agricultural-based economy to a city-centric non-agricultural economy is a major challenge. The training efforts required to be put in a rural BPO are more intense than the urban counterparts, for the same nature of activities. This is due to the fact that although a large number of students pass out of schools and colleges in rural areas every year; but their employability is questionable as per the industry standards. The lower education standards in rural domain ask for improved efforts for skill enhancement before they could be absorbed into the work force. As mentioned earlier BPO jobs are extremely quality and time intensive. The delivery of work from a scarcely and remotely located telecenters requires efficient management and high level connectivity, which could dent the models cost competitiveness. One of the most crippling problems faced in rural parts of India includes frequent power disruptions. Since the model relies on the operational capabilities of number of Telecenters, this would call for individual power backup to ensure continuity of business operations. Creating confidence amongst the clients in urban areas and abroad to engage with rural areas is the biggest challenges offered by shifting BPO operations to rural locations. Managers who will have to be hired from urban areas to manage the total BPO operations could show reluctance to live in the rural locations for a long period.
The returns or salaries offered by the rural outsourcing units will not be at par with the urban centers, therefore there is a possibility of people getting attracted to the higher salaried jobs elsewhere.
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CHAPTER - 5
5.1 Conclusion
CONCLUSION
Business Process Outsourcing (BPO) is a large, growing business, which has utilized ICT as an enabler to transform the business operations. ICT has moved the business processes to onshore and offshore destinations. India is fast emerging as a preferred destination for outsourcing. Urban India has exploited opportunities originating from cross-border trade in a substantial way and has set-up BPO centres in metros and big cities like Mumbai, Bangalore, Hyderabad, Delhi and Chennai etc. With urban BPO players looking for alternatives to cut their operations cost to sustain operations and on other side with the growing numbers of educated/computer literates coming up in rural areas, it provides opportunities to leverage ICTs for creating BPO jobs at rural level as-well-as business opportunities for rural telecenters; this can enhance livelihood opportunities for community members and help reverse the trend of migration to villages. There are efforts by the state as well as non-governmental sector and private players to improve the status of social infrastructure at rural end in terms of its quantity and quality. For instance, telecenters/kiosks are offering educational programs targeted at rural youth, especially in computers, IT and English language. This would enable them to develop skills that are required at IT enabled industry and make them employable. There are several initiatives to showcase the transforming Indian rural scenario. One of such effort to improve rural economy was discussed in this report. A rural BPO is not a philanthropic or charity action program however it provides a win-win situation for rural landscape as well as for the enterprises that will transfer their business activities to countryside. Two operational models were discussed during study viz. Model-1: a telecenter based BPO model and Model-2: Rural BPO as an extension of urban BPO. The Model-1 is flexible, scalable and holds potentiality to enhance income generation opportunities for rural educated youth and village entrepreneurs as well as strengthen the telecenters movement in rural India. The challenges are huge; it can be viewed as an evolving business model and not really straight jacketed with the rigidity of the old economy companies. As like the urban BPO business it also calls for high levels of innovation. So who ever adopts the model and takes a lead for a greater cause, requires a complete commitment to delivery and high levels of professional maturity. Model 2 is a BPO set up for an existing urban outsourcing player in the rural site with total management and control functions executed from the urban location. This model provides employment opportunities to rural youths on a regular basis, but requires higher investment as compared to Model-1. Although model-1 provides numerous advantages over model-2 but the feasibility of any such initiative is governed by various socio-economic and institutional factors and thus needs to be evaluated. The important feasibility parameters for rendering BPO services through telecenters were identified and grouped under broad parameter heads as - rural dynamics, rural talent pool, rural infrastructure, rural telecommunication infrastructure, rural
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orderliness, and government policies. In order to further scope these feasibility factors and also to evaluate the potentiality of a rural location for BPO business feasibility, a diagnostic tool Viability Evaluation Model was designed to measure the feasibility of the business by defining the extent of contribution of each parameter in viability. The Viability Evaluation Model was tested at Saurath GP as a location for rural BPO startup and found that a sustainable outsourcing business could be set up there involving telecenters. The demographic and socio-economic conditions of Saurath were evaluated through survey and it was found that it has no better socio-economic conditions than other common Indian villages; therefore if any BPO initiative thrives at such a rural location then it could survive in any other rural location. For such rural BPO services through telecenters, the safe and logical option would be to start with low-end jobs having high-volume and low-value addition; jobs like - data capture, data entry, document management, scanning, etc. Infrastructure and education prerequisite for such low-end BPO jobs is bare minimum, which could easily be found in villages. Once all the stakeholders, from both end (entrepreneurs and clients) gains confidence, it would be possible to move on to higher-end jobs, slowly and gradually. A SWOT analysis was carried out to understand the respective strengths, weakness, opportunities and threats for such rural BPO initiatives through telecenter based rural BPO units. Vast telecenter network availability, Low investment cost, Sense of business ownership and absence of attrition are the strengths offered by the telecenters to render BPO activities A rural BPO initiative in India is still at its inception stage; only a few organizations have initiated such initiatives in certain parts of rural India. These rural BPO units are mainly as an extension of their existing urban operations and not involving telecenters as proposed in the model-1. The socio-economic impact of rural BPO initiatives can possibly be in the following direction: Rural BPOs will help in narrowing the digital divide between urban and rural India; Create income/employment opportunities for rural populace and also expose them to a hi-tech industry where they can eventually grow and build careers; Training and capacity building of rural talent pool will help overall development in community. With growth in income opportunities, supplementary business avenues will also grow leading to enhancement in rural economy. Open up employment/entrepreneurship opportunities for educated rural women, who are unable to take up jobs outside due to family commitments. This would not only provide self-sufficiency to rural women and support family, but also motivate others for higher education and computer literacy. Growth in employment opportunities for rural populace will help raise their standard of living enhance purchasing power, increase demand for goods and services, leading to further employment opportunities in rural community.
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A rural BPO would transform the rural map and can act as boon to the rural-village economy. The migration of rural educated youth to urban industrial centers could scale down and help reverse present migration trend. The urban migrants, with their experience, might come back and take the new avenues to further heights.
Challenges and roadblocks were discussed and for major infrastructural related constraints it needs governments attention. Following are the issues that are to be addressed: Building basic infrastructure such as roads, power, telecommunication infrastructure and addressing connectivity bottlenecks in those villages where it is weak. Investing for social infrastructure, and setting up appropriate rural market institutions including addressing rural credit accessibility and availability. Develop IT culture in the States through IT literacy programmes. ITES sector as a thrust area in the states where it is absent Improving the law and order situation, where it demands
It could safely be concluded that viability of the rural BPO will require comprehensive efforts from the institutes and organizations promoting such business efforts as well as government to generate cohesive environment to support such programs. Also such efforts should be designed in a manner that would guaranty self-sustenance. In view of above, a piloting initiative in some villages can be taken up. Cluster of villages with the presence of higher numbers of telecenters have higher potential to initiate the rural BPO business through telecenters. Saurath GP can be a starting point for such rural BPO initiative, involving telecenters and using business model-1, as it showed sustainability on applying the viability model for the location.
5.2 The Road Ahead

In continuation to this study, the areas that can be taken up for future research work on rural BPO services through telecenters are as suggested below. Manpower Capacity Building 1) Detail the outsourcing services (rural BPO and others) with skill-set requirement vis-vis its availability in rural India.
2) Document the Training Needs and its course contents for the village
entrepreneurs/telecenters owners on above identified outsourcing services.
3) Explore the role of local agencies (College/IT Institutes) in imparting the training at low cost. Readiness for rural BPO 4) Categorize the rural locations state-wise (considering cluster of villages with telecenters) for their readiness on BPO initiatives, in terms of infrastructure, telecenters concentration, conducive environment, etc.), using the viability evaluation model.
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This categorization for readiness will help to identify the potential locations at district level, on rural India map, showing the level of readiness and sustainability issues that can help phased implementation of rural BPO through telecenters. Further business opportunity 5) Explore the role of rural telecenters to facilitate rural e-Commerce for accessing better markets for the local produce (agri, handloom, artisan, etc.) The above are some of the areas that can be taken up as further research work for outsourcing services through telecenters and involving local resources.
Pilot Test the Business Model

It is imperative to test and challenge the hypothesis of the Viability Evaluation Model and the proposed Business Model-1 through a piloting, so as to fine-tune the models and help develop a sustainable business model that is scalable and replicable in other parts. Saurath is an ideal rural location (in Bihar) for piloting such rural BPO initiative on account of followings:-
1) Showing sustainability on applying the viability model for the location 2) Presence of larger number of Drishtee telecenter/kiosks (13 nos.) within a radius of
30 Kms 3) Suitable infrastructure base available to telecenters for rural BPO services 4) Availability of sufficient educated (graduates/post-graduates) unemployed youth in the area 5) Suitable computer literacy level observed in the target talent pool 6) Willingness of educated youths and telecenter owners to participate in piloting 7) Required physical facilities existing to start the piloting. The objective of the rural BPO piloting at Saurath will be
(i) (ii) (iii) (iv) (v)

(vi)
(vii) (viii)
(ix)
Validation and refinement of the feasibility parameters and the model developed through research Analysis and corrections, if any, to the parameters and models to make it universal Identifying problem areas and bottlenecks in implementation, management of rural BPO unit, and networking with partners Suggesting solution to problem areas and improvement in processes Documenting the processes and start-up plan for rural BPO Understanding the type of rural BPO activities and quality parameters Evolution of Sustainable Services/Business Model for scalability and reproducibility Creating job opportunities for rural educated youths and help develop their potentiality for better earning and sustained livelihood Understanding the contribution to socio-economic development in rural areas.
The above research coupled with piloting at rural location will help to understand the rural scenario better for initiating such outsourcing services through telecenters, in order to
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enhance income generation and livelihood opportunities for rural community as-well-as to impact the rural economy. ________________

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RURAL BPO THROUGH TELECENTERS

(Consulting Contract No. 104119 of IDRC)

Prepared by: Randhir Datta

telecentre.org a collaborative social investment program of:

Rural BPO through Telecenters

Basheerhamad Shadrach telecentre.org, IDRC

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

ICT as an Enabler for Outsourcing Business Rural Telecenters

Business Process Outsourcing

1.5 1.6 1.7

CHAPTER 2 : RESEARCH METHODOLOGY

2.1 2.2 2.3 2.4

CHAPTER 3 : STUDY & SURVEY FINDINGS

CHAPTER 4 : ANALYSIS AND MODEL DEVELOPMENT

4.1 4.2 4.3

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

Managing Director Drishtee Development & Communication Ltd.

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

1.0 ICT as an Enabler for Outsourcing Business

1.1 Rural Telecenters

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

1.2 Business Process Outsourcing

1.3 Evolving Business Challenges

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

1.4 Rural BPO: a viable option?

1.5 Global Outsourcing Market

16% Com m unication (Te le com )

Source: Price Water house coopers

First Estimate (1999) 5.4 4.1 2.9

Second Estimate (2001) 3.5-4.0 8.0-8.5 3.0-3.5

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

Content Development Administration Finance

2.6 1.3 0.7

2.5-3.0 1.5-2.0 2.5-3.0 (figures in $ billion)

1.6 Evolution of Indian BPO sector

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

PHASE III Gurgaon , Noida , Chandigarh , Kolkata , Thiruvananthapuram , Trichy , Mysore

PHASE II Hyderabad, Pune

PHASE I Delhi, Mumbai, Chennai, Bangalore

Figure 1.1 : BPO spread in India

Transaction Processing Non Core

Figure 1.2: BPO evolution

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

1.7 Telecenter Movement in India

telecentre.org A collaborative initiative of IDRC, Microsoft and SDC

Rural BPO through Telecenters

1.8 Drishtee Kiosks/Telecenters (of DDCL): Among the forgoers