Dr Ish Tee Bpo Research

7/27/2019 Dr Ish Tee Bpo Research

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RURAL BPO THROUGH TELECENTERS

(Consulting Contract No. 104119 of IDRC)

Prepared by: Randhir Datta

telecentre.orga collaborative social investment program of:


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Rural BPO through Telecenters Page 2

FOREWORD

Having supported telecentre research for over two decades, the International DevelopmentResearch Centre in collaboration with the Swiss Agency for Development and Cooperation andMicrosoft Corporation has recently launched a telecentre support program called, telecentre.org.As a social investment program, telecentre.org in partnership with local, national andinternational organizations supports convening of telecentre leaders at global, regional, nationaland local levels; helps establishing national level network of telecentre networks; encouragesresource and knowledge sharing; and, more importantly, funds innovative content and servicedevelopment projects aimed at sustaining telecentres and their networks.

Business Process Outsourcing as a business model has stimulated IT establishments in Asiaattracting several corporations in the North as their prime clients, thus turning a part of theirbusiness into service provision. With an avenue of about US$ 230 billion, the BPO industry hasbeen revolutionizing the way the corporate entities manage their business.

The new wave of telecentre networks since the beginning of this Century; popularly known astelecentre 2.0, aim to provide livelihood opportunities to ever increasing educated and computertrained youth in villages. Coupled with efforts undertaken to provide broadband and robustconnectivity to rural areas and internet enabled shared computing efforts, these networks offerpromising opportunities to the rural populace, turning them into service providers rather thanbeing mere service recipients.

This study intended to combine the power of shared computing with BPO opportunities identifiesthe critical factors for establishing rural BPO work in telecentres as skills based employmentoption for rural youth. I am pleased that Drishtee Development & Communication Ltd. (formerlyDrishtee 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. Whilethe 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) toconduct 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) forthe outcomes of this very helpful study while extending my best wishes to Drishtee Foundationthat shall take this research effort to the next course.

Basheerhamad Shadrachtelecentre.org, IDRC

telecentre.orgA collaborative initiative of

IDRC, Microsoft and SDC


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TABLE OF CONTENTS

CONTENTS PAGE NO.

PREFACE 3EXECUTIVE SUMMARY 4CHAPTER 1 : INTRODUCTION

1.0 ICT as an Enabler for Outsourcing Business 71.1 Rural Telecenters 7

1.2 Business Process Outsourcing 81.3 Evolving Business Challenges 81.4 Rural BPO: a viable option? 9

1.5 Global Outsourcing Market 91.6 Evolution of Indian BPO sector 10

1.7 Telecenters Movement in India 121.8 Drishtee Kiosks/Telecenters Among the forgoers 131.9 Project Overview 13

CHAPTER 2 : RESEARCH METHODOLOGY

2.1 Research Methodology 152.2 Research/Survey Brief 162.3 Constraints faced during Survey 192.4 Scope for future work 19

CHAPTER 3 : STUDY & SURVEY FINDINGS

3.1 Bases for Outsourcing: An overview 203.2 Study Findings 213.3 Learnings from Surveys for Rural BPO Feasibility 39

CHAPTER 4 : ANALYSIS AND MODEL DEVELOPMENT

4.1 Rural BPO Business Models 414.2 Type of BPO Activities suitable for Rural BPOs 464.3 Rural BPO Feasibility Parameters 464.4 Role of State Governments to encourage rural BPO 584.5 Rural BPO Cost and Returns: A Break Even analysis 584.6 Application of Viability Evaluation Model on Saurath 614.7 Availability of Clients for Rural BPO 634.8 Comparative Advantages of Rural BPO units over urban 64

4.9 SWOT Analysis 644.10 Challenges in taking up Rural BPO activities 66

CHAPTER 5 : CONCLUSION

5.1 Conclusion 685.2 The Road Ahead 70




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PREFACEServices globalization has turned the world into a global village, enabling the seamless delivery ofIT and Business Processes across time zone. As a result, India has become the most favoreddestination for outsourcing operations and more so due to its skilled manpower, cost advantageand appropriate infrastructure. These ITO/BPO centers are located mostly in urban India and theyepitomize 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 sharingamong community, and others into learning, training, knowledge sharing and commercialservices for rural community.

Today, with urban BPO players looking for alternatives to cut their operations cost to sustainoperations in stiff competition, and on other side with the growing numbers ofeducated/computer literates coming up in rural areas, it provides opportunities to leverage ICTsfor creating BPO jobs at rural level as-well-as business opportunities for rural telecenters; thusenhancing livelihood opportunities for community members and help reversing the trend ofmigration 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 thecurrent research work for International Development Research Centre (IDRC) to study andexplore the feasibility and challengesfor rural ICT telecenters/kiosks, situated in remote Indianvillages, 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 comparativeadvantage of rural BPO over urban BPO. Also the report explores the type of BPO activitiessuitable for rural BPO.

This report, with the feasibility parameters identified and scoped, a viability evaluation modeldeveloped for assessing sustainability of a location, coupled with possible rural BPO businessmodels and type of rural BPO activities that can be taken up involving telecenters - will go a longway to serve as a guideline as-well-as in taking informed decisions by thoseorganizations/entrepreneurs, who wish to commence BPO initiatives in rural locations. The reportalso suggests the future research work that can be taken up on rural BPO services throughtelecenters.

We thank all the participants who took time from their schedules and shared their perspectiveson the industry as-well-as the respondents on their views and valuable inputs, and also theresearch team who persistently worked to bring out this report. We are confident that this reportwill help IDRC and others, who are looking forward for such rural BPO initiatives throughtelecenters - to help enhance income generation and livelihood opportunities for communitymembers and village entrepreneurs as-well-as impact the rural economy and hence well-being ofthe community.

Satyan Mishra




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Managing DirectorDrishtee 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 inits application to create powerful social and economic networks by improving communicationand exchange of information. In fact, it has transformed the world into a global village. ICTshave 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 opportunitiesand a business model that have spun off due to ICT and its offshoots. The need to outsourceback-end task to reduce operational costs have led to mushrooming of BPO outfits and Callcenters in the developing countries with cheap labour and reasonably good telecominfrastructure. 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 foroutsourcing. Urban India has exploited opportunities originating from cross-border trade in asubstantial 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 sustainoperations in stiff competition, and on other side with the growing numbers ofeducated/computer literates coming up in rural areas, it provides opportunities to leverageICTs for creating BPO jobs at rural level as-well-as business opportunities for ruraltelecenters; thus enhancing livelihood opportunities for community members and helpreversing the trend of migration to villages.

To exploit rural potentials, organizations like Byrraju Foundation, Lason India, Datamationinitiated rural BPO ventures way back in 2001. But these rural units are only an extension oftheir parent urban units in rural areas and supporting them by transferring the low-end jobsthat requires low skill-set, which is easily available in rural areas. But the presence of vastnetwork 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 canhelp leverage the cost benefit due to the availability of low-cost talent pool (computerliterates and graduates) and cheap real estate/rentals in rural areas as compared to cities.

Drishtee Development & Communication Ltd. has taken up the current study forInternational Development Research Centre (IDRC) to understand, analyze and help scopingthe feasibility parameters for providing Rural BPO Services through telecenters in terms ofsocial, economic and institutional factors and also to understand the comparative advantageof rural BPO over urban BPO.

As per the scope of the study and taking into consideration the telecenters capabilities inrural India, it needed a detailed study comprising of literature review, comprehensiveprimary research/survey on urban BPOs, rural Telecenters, village households, skill-setavailability 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, theplanned 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 identifyand scope the feasibility parameters for providing BPO services through rural telecenters interms of social, economic and institutional factors. The feasibility parameters identified forrural BPO were grouped under six broad heads as - rural dynamics, rural talent pool,rural infrastructure, rural telecommunication infrastructure, rural orderliness, andgovernment policies; each parameter head having several sub-parameters under it withsuitable 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 rurallocation, for initiating rural BPO services through telecenters. The model evaluates the BPObusiness 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 sporadicinvestments), Viable (viable with initial investment or grant support and can sustain itsoperating costs) and Profitable (good return on short-term to recover the investmentsmade). The model developed was also applied for Saurath village location, the result showedthe village as Sustainable for such rural BPO business start-up; hence such rural BPOinitiative 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 aboveserves as a guideline for organizations as-well-as for entrepreneurs, who wish to commenceBPO initiative in rural locations. The outcome of viability model in the form of compositeindex 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 adirection about the prevailing socio-economic and infrastructural readiness for any suchinitiative. Thus using it an informed decision can be taken on the feasibility of such initiativesfor 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 telecentersand/or rural BPO units. The two models suggested are (i) Model-1: Telecenters based RuralBPO and (ii) Model-2: Extension of Urban BPO to Country side. The Model-1 has advantageover the other, as it involves telecenters and provides ownership to its partners that canlead to higher motivation, faster learning, improved work efficiencies, absence of attrition

and higher individual earnings. Moreover, Model-1 is flexible, scalable and holds potentialityto enhance income generation opportunities for rural educated youth and villageentrepreneurs 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 areasinvolving telecenters. For any new rural location, safe and logical option would be to startwith 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 prerequisitefor such low-end BPO jobs is bare minimum, which could easily be found in villages. Once allthe 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. ASWOT analysis was carried out to understand the respective strengths, weakness,opportunities and threats for such rural BPO initiatives through telecenter based rural BPOunits. Vast telecenter network availability, Low investment cost, Sense of businessownership and Absence of attrition are the strengths offered by the telecenters to renderBPO activities.

If the goal of setting up of Telecenters or Village Information Centers (under India's Mission2007 programme) is achieved in 100,000 villages, then all these connected telecenters (invillages) will have the potential to become rural BPO units, by just setting-up some RegionalBPO Quality and Management Centers at strategic locations to manage and control these

networked units. Considering 10 percent of these villages employing 20 people at anaverage monthly income of Rs.3500, this would add Rs. 8.4 billion to the rural economy peryear and create 200,000 jobs in the villages, which otherwise lacks employmentopportunities. And the demand for several allied services such as hardware servicing andsales would also grow.

The study report will help IDRC to take informative decisions and plan for piloting such BPOinitiatives through telecenters in rural India. Such initiatives will have multidimensionalimpact in rural community and help enhance income generation opportunities, facilitatesocio-economic development in rural areas and can reverse the migration trend towardsvillages.

Looking at the potentiality of such rural BPO business opportunities through telecenters invillages coupled with the manpower cost benefit, it is high-time that such initiatives bestarted that can enhance livelihood opportunities, reverse migration trend and strengthenrural economy.




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CHAPTER - 1 INTRODUCTION

Gartner defines BPO as the delegation of one or more IT-intensive business processes to externalprovider that, in turn, owns, administrates and manages the selected processes based on definedand measurable performance metrics.

1.0 ICT as an Enabler for Outsourcing Business

Information and Communication Technologies (ICTs) have been recognized as powerful toolsfor bridging digital divide, empowering rural people and creating livelihood opportunities invarious regions across the globe. ICT applications have played an important role and havebeen instrumental in providing education and training, job and income opportunities, accessto markets, information related to economic activities, and a range of citizen services. WithICTs, physical borders decimate and information is transferred through the digital mediumthat 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 uponwithin national boundaries: skills, talent, ideas and enterprise.

Business Process Outsourcing (BPO), one of the largest growing business segments of thepresent times emerged out of ICTs and has led to the development of new business modelsand applications. The connectivity offered by ICTs help outsourcing companies to accesstalent pool available in any part of the world. This has lead ICTs to become the biggestdriver for BPO business. With geographical boundaries dissolving with ICTs, no distance istoo big now. This provides opportunities to entrepreneurs or enterprises to grow theirdelivery centers in any geographicalregion in the form of a BPO unit.

1.1 Rural Telecenters

The telecenter/information-kiosk is an entrepreneur owned rural service unit renderingvariety of services using the convergence of computing, telecom and media. Designingtelecenters/kiosks as delivery points using the concept of shared services brings down thecost; telecenter become delivery points for multiple services at a location. At the most basiclevel, telecenters/kiosks focus on improving the livelihood of individuals.

Slowly, networks of telecenters have started to crop up all over the world. Some are focusedon information sharing among community, and others into learning, training, knowledgesharing and commercial services for rural community. There are some who have bundled upcommunity 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 ICTtelecenters/kiosks, situated in far remote Indian villages, for undertaking outsourcingbusiness.




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1.2 Business Process Outsourcing

World has become a global market and continued development in ICTs has further reducedthe international trade barriers. Organizations across the world are competing against each

other for market sharing and improved quality standards. Outsourcing is now considered asa strategic tool that helps companies concentrate on their core competance and delegateother peripheral activities to an external agency that specializes in that task. Delegatingresponsibilities to people who are specialists or to the region which can do it at acomparitive cost advantage is the logic of outsourcing business.

Future seems to be promising as BPOs are not only providing cost advantage to the clientsbut also offering better quality due to their expertise in outsourced jobs and highereconomies of scale. India due to its geographical, infrastructural and skilled manpoweravailability, is gaining reputation as an ideal outsourcing destination. This has causedprofuse proliferation of BPO units in urban areas. To further consolidate the position, Indianplayers in the outsourcing business are adopting various methods including shifting of theirbases to the rural areas. The current research study will look into the feasibility of such BPOinitiatives through telecenters.

The most often cited reasons for outsourcing has been the cost factor. An organizationdelegates a job to an outside party who could perform the same job at a lower cost.Thegain in cost advantage forms the basis for outsourcing. Beyond cost aspect, other reasonsthat 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 percent of growth in its IT exports but the BPO sector is severely facing stringent competitionnot only by other BPO players in India, but also from BPO units in other countries. Manpowercost and real estate prices in cities have increased further dropping the profit margins forthe urban firms. Though India maintains a competitive advantage by having better Englishspeaking 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 innovativemethodologies 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 effectiveoutsourcing 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 aswell 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 canextend operational flexibility by relocating the BPO services to rural locations. The setting upof rural BPOs in villages can result in the development of rural infrastructure, employmentand livelihood opportunities, increase in standard of living and enhancement of ruraleconomy at the village level. Transfer of BPO units to rural areas make tremendous businesssense and has significant social connotations involved with it. The use of ICTs to move BPOjobs to rural areas for the benefit of rural community needs analysis on its feasibility interms of social, economic and institutional factors, for which the project has beenundertaken.

1.5 Global Outsourcing Market

The global BPO market is a rapidly evolving business segment with diversification and newservice mix offered on a daily basis. According to market research organisation, Gartner, theglobal outsourcing market in 2000 was approximately $119 billion and will touch $310 billionby the end of 2008. Distribution of global BPO market based on the industry verticals isshown in the figure below.

Projection by Gartner suggests that BPO market worldwide will be worth $173 billion by2007, of which the Indian BPO segment has potential to generate $13.8 billion in revenuesin 2007 and $17 billion in 20081. Where as Nasscom estimates suggests that the globalITES 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 First Estimate (1999) Second Estimate (2001)

HR 5.4 3.5-4.0

Customer Care 4.1 8.0-8.5

Payment Services 2.9 3.0-3.5

1 Nassscom-Mckinsey Study-2002



Global BPO Market by Industry Vertical

17%

16%

15%

9%

43%

Inform ation

Technology

Financial

Services

Communication

(Telecom)

Consumer

Goods/Services

Manufacturng

Source: Price Water house

coopers


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Content Development 2.6 2.5-3.0

Administration 1.3 1.5-2.0

Finance 0.7 2.5-3.0

(figures in $ billion)

India offers a one-stop solution for various IT- enabled services as the best outsourcingdestination. The market for traditional BPO services is huge and thus promises immenseopportunities. However some of the emerging areas include legal services, engineeringdesign and research and analytics. The Indian domestic market also promises a greatopportuinuty 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 firstto out-source back-office operations to India.2 The spread initiated with the metros (exceptCalcutta) which housed enough infrastructure to support BPO at the preliminary phases and

later on this spread reached to other cities as well.

Phase IDuring the early 90s, cities like Delhi, Mumbai, Chennai and Bangalore possessed manpowerand city development infrastructure to incubate BPO centers. These were the starting points

for Indian BPO industry.

Phase IIGrowth in the IT industry and the investment by various state governments for developingstrong infrastructures has lead to the emergence of new BPO locations. Around mid 90svarious new cities (e.g. Hyderabad, Pune) began competing with phase I locations forsetting up BPO industry.

Phase IIIAfter Y2K new guidelines started driving the preferences for BPO locations, the factors likehigh cost of living driven by high real estate cost and increased manpower costs forced theindustry to look for alternatives. Financial factors caused the BPO firms to move to placeslike Gurgaon, Noida, Chandigarh, Kolkata, Thiruvananthapuram, Trichy, Mysore etc.

2 http://timesofindia.indiatimes.com/articleshow




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PHASE I

Delhi, Mumbai, Chennai,Bangalore

PHASE III

Gurgaon , Noida , Chandigarh ,

Kolkata, Thiruvananthapuram ,Trichy, Mysore

PHASE IIHyderabad, Pune

Early 90's After Y2KMid 90's

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 incapabilities of Indian BPO centers over time, more and more offshore firms showedconfidence 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 moreoffshore firms showed confidence in outsourcing

Figure 1.2: BPO evolution



Mid 90s Late 90s 2000 2005

Data Entry

TranscriptionServices

CallCenter

TransactionProcessing Non Core

TransactionProcessing

Core

Evolution of BPOIn India


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1.7 Telecenter Movement in India

Rural Information Kiosks/Telecenters came up as an attempt to reduce the digital divide andapply ICTs for empowerment, development and rural transformation. Information

Kiosks/telecenters are rural version of Internet Cafes, with one or more PCs and Internetconnection for shared use by village residents. However a rural telecenter/kiosk differgreatly from urban Internet cafes, since the operational challenges and user needs ofremote rural villages have taken care of in the service/ product mix offered in a ruraltelecenter.

Gyandoot project pioneered the idea of rural telecenters in India, which involved setting upof 38 kiosks in the Dhar district of the state of Madhya Pradesh, I, in January 2000. Theproject 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 moreentrepreneurs 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 by2004

In India several companies provide services to the poor using telecenters as ICT servicedelivery vehicles. Rural kiosks are one of the fastest growing applications of ICTs in thedeveloping world. There are a number of kiosk projects in India, mainly run byentrepreneurs as part of a franchise. Major players providing telecenter-based services inIndia are:

Drishtee Development & Communications Ltd (DDCL), located in Noida, nearDelhi, delivers fee-based community services in villages through entrepreneur-run ICTKiosks.

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 anetwork of more than 1,300 kiosks.

MS Swaminathan Research Foundation (MSSRF), Chennai, sets up VillageResource Centers (VRCs) and linking them to nodal point called Village KnowledgeCenters (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 optionsand empowering them with information, tools, goods, and services (such as computereducation and healthcare). In an effort to further strengthen the earning capabilities of thetelecenter owners and to share the benefits of ICT to rural population, BPO activities couldbe 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 takeninitiatives at rural-end in India to set up rural BPOs to execute back office operations. Suchefforts try to bring communities avail the optimum benefits of IT revolution. ByrrajuFoundation (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 BPOinitiatives.1.8 Drishtee Kiosks/Telecenters (of DDCL): Among the forgoers

Drishtee Development & Communications Ltd. (in short Drishtee) with its visionConnecting India Village by Village is an India-based organizational platform for ruralnetworking that provides IT-enabled services to rural community, based on a tieredfranchise and partnership model.

Drishtees uniqueness is a blend of commercial focus with social objectives andmaking services readily accessible amongstthe rural communities with variety ofconnectivity options and easy-to-use portalto avail the services. Drishtees targetcustomers or beneficiaries are the ruralcommunity, rural service providers andother rural stakeholders like developmentagencies.

Drishteehas setup more than 1000 ICT Kiosks in remote villages (of52 districts in 8states) ofAssam, Bihar, Uttar Pradesh, Haryana, Madhya Pradesh, Chattisgarh, Orissa andTamilNadu. These deployed kiosks, delivering community services, have multi-dimensionalimpact on rural community because of its focus on sustainability, scalability andentrepreneurship.

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 comparativeadvantage of rural BPO over urban BPO, has been taken up by Drishtee Development &Communications Ltd. (DDCL) for International Development Research Centre (IDRC) videtheir Consulting Contract No. (104119).

The study involves literature review, comprehensive primary and secondary research aturban-end and also at rural-end, analysis on the collected facts and developing viabilitymodel for rural BPO initiatives through telecenters. A detailed study report covering thestudy findings and analysis on feasibility with SWOT analysis is being presented to IDRCthrough this report. The report will help IDRC to take informative decisions and plan forpiloting 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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Figure 1.3:Comparative spread of Drishtee Telecenters and Urban BPO Industry



BPO Industry

Location in India


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CHAPTER - 2 RESEARCH METHODOLGY

Owing to the large-scale availability of educated-unemployed rural talent, cheap realty/real-estate, telecenters/kiosks entrepreneurs in villages and improving telecom infrastructure,rural locations present a very strong case for establishing BPO centers. Though theseparameters place a convincing scenario but the absence of adequate faith amongstentrepreneurs to invest in rural India remains the main concern. This has led rural youthslarge-scale migration to cities for better opportunities, causing substantial brain-drain in thevillages. Result the villages have not been able to keep pace with the urban developmentand continue to remain backward.

Drishtee (DDCL) has taken up the current study for International Development ResearchCenter (IDRC) to understand, analyze and help scoping the feasibility parameters forproviding Rural BPO Services through tele-centers in terms of social, economic andinstitutional 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 inrural India, the Rural BPO Research project needed a detailed study comprising of literaturereview, comprehensive primary and secondary research on BPOs, Rural Telecenters, Villagehouseholds 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 researchobjectives, which consisted of ten major stages.

1) Plan the research/survey activities2) Schedule the survey activities3) Design Questionnaire(s) for each survey4) 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 groupsusing sampling plan to collect responses)

5) Survey Data Entry for analysis6) Summarize the Findings - for rural BPO through telecenters7) Analyze the Research/Survey Data - for feasibility parameters8) 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




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9) Apply & Test Check the Model on village-level data10)Final Report Preparation

2.1.1 Project Plan

For the above study, a strategic plan including detailed project schedule was prepared fortimely deployment of necessary resources to complete the study properly. This includesprimary research, secondary research, data entry and analysis, model development andscoping 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 presentedbelow.

2.2.1 Secondary ResearchSecondaryresearch was carried out comprising of profound understanding of the past workdone in the field of Business outsourcing to figure out the issues related to BPO. Secondaryresearch sources included various research papers, study reports, periodicals and articlesavailable on the internet and libraries. Though there was hardly any reference to rural BPOfeasibility, but the search has helped in generating an overview of the prospective strengthsand 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 followingagencies were referred:

UN, UNDP, UNCTAD etc World Bank, ADB International telecommunication union (ITU)

In addition to the above following also were referred:Newspaper reportsPress releases

Government policy documents




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2.2.2 Primary Research

The primary research was carried out for the study purpose in following target segments tocollect 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 detailsSurvey Target group Sample Size

Urban BPO Middle and top management executives of UrbanBPO

5 BPO orgs.

Village/ GP Panchayat office/Panchayat members 1 GP

Telecenter Telecenter Owners 5 TelecentersHousehold survey Households belonging to different income

segments having Computer literate person295 Households

The surveys were aimed for necessary data collection from different groups tounderstand their perspective and views on rural BPO feasibility and on currentstatus and problems.

The surveys were supplemented with the information acquired through personalinterviews 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 inrural location and one in urban location) is as follows:-

1) Rural Households surveyRural household survey was conducted at Saurath Gram Panchayat village, situated indistrict Madhubani of Bihar (India).It is a typical Indian village in rural Bihar and a backward village. A detail on the Saurathhas 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 planSample size of 295 Households was considered at 95% confidence level and 5% confidenceinterval (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 Rural household belonging to different income groups

Survey Period 18th Dec 06 to 04th Jan 07

Location Saurath village (in rural Bihar)

Sample size 295 Households(at 95% confidence level and 5% confidence interval)

2) Gram Panchayat surveyThe 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 grampradhan (village head) and members of various government departments likeelectricity 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 surveyFive rural telecenters located in the vicinity of 20km from Saurath and networked to theDrishtees 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 surveyUrban BPO questionnaire was targeted at 5 BPO organizations, randomly selected withdifferent 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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CHAPTER - 3 STUDY & SURVEY FINDINGS

This chapter contains the outcome of literature reviews and the findings of the surveyscarried out. The findings are based on discussions with people in the BPO industry, anappraisal of research studies on the BPO sector and the results of a primary surveyconducted at Saurath, a gram-panchayat village in rural Bihar. From the efforts made tounderstand the BPO activities and business dynamics, in urban BPOs, an attempt is made toidentify BPO jobs that match the skill-sets of rural manpower. The study also deals with theproblems and challenges faced by urban BPOs as well as the availability of infrastructure atvillage telecenters and the employability of rural youth for BPO work. The study has helpedto 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 challengesthat force organizations to shift their production/service base and the benefits that could bederived through outsourcing is described below through flow-chart diagram (Figure 3.1below).

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 byoutsourcing in terms of cost savings, productivity and quality improvement, therefore theybegan outsourcing onshore, within the geographical limits. With the advent and spread of

cost effective technologies, organizations started looking for avenues around the worldhaving lower manpower costs. By late 1990s several countries have jumped on to the forayand successfully grabbed their share of worldwide BPO business.

India as an outsourcing destinationIndia has attracted a good share of the global BPO business pie. The reasons, whichtranspired India to a BPO business hub, included its tremendous cost effective labor force,infrastructural developments, improved telecom facilities and its geographical location whichprovides 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. Itstarts with the research findings based on literature reviews followed by findings fromprimary surveys. At the end of the chapter, the knowledge and information gathered fromabove 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 BPObusiness. There are various drivers, which favor India and help achieve the top position onworldwide BPO platform. The major drivers for BPO business have been summarized andpresented below.

Talent Pool

India houses a large pool of talented people; more than 2 million graduates, 0.3 millionpostgraduates and 100,000 engineers produced every year which can act as talent pool forBPO centers. India has highest population with English speaking capabilities and computerskills. Outsourcing to India is driven by the cost competitiveness offered by the low costtalent pool and infrastructure.

Infrastructure and Policies

The infrastructure and telecom facilities offered in many cities are comparative to globalstandards. Centre and various states have rolled out ITES/BPO friendly policies to fuel thespread of IT based service providers.

Geographical location

The geographical location of India allows it to provide 24x7 services due to time zonedifferential. Geographical location helps an Indian BPO unit to work for US clients while theysleep.




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Linguistic advantageIndia hosts a large pool of skilled workers who are proficient in English language. Languageproficiency is one of the factors that attract MNCs for outsourcing their businessactivities/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 powerparity.

Benefits offered by India, as mentioned above, has led to the mushrooming of BPO units inbig cities and metros, various processes and sub processes have been included into therange of activities offered by Indian BPO. The market size distribution of various industrysegments 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 andInsurance (BFSI)

35

Telecom 12Retail 4

Telecom service provider 3Health Care 3HR 3Hospitality 2

Utility 2Transportation 1

Government 1Others 22

Source: Nasscom.org

The Fig-3.2 below illustrates the Indias position on the global map of outsourcingdestinations, based on location and people attractiveness parameters. India is the onlycountry, 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 furtherestimate the impact of each driver on the business dynamics, discussions were carried outwith industry people and extensive secondary research and surveys were undertaken forurban 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 offersconsiderable savings for the outsourcing companies. A comparative analysis based on year

2003 data demonstrates that Indian BPO operations costs (cost per full time employee) only20% 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(Full Time Employee) United States India India as % of US costs

Personnel 42,927 6,179 14%G&A (General andAdministrative )Expense

8,571 1,000 12%

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 wererandomly selected for survey. Semi structured questionnaire were used andinterview/discussions held with key persons of middle or top management. Brief on thefindings from surveyed BPOs is presented below at Table 3.3.

Table 3.3: Facts about Urban BPOs surveyed (NCR: National Capital Region)Area of operation Non voice based

BPO operationsVoice based BPO

operationsBoth Voice and non

voice based BPOoperations

Number of BPO surveyed inthis category

1 2 2

Average Number ofemployees

150 750 1125

Clients location Domestic Domestic & overseas Overseas

Attrition Rate (%) 20-25 30-35 25-35Location NCR NCR NCR

BPO segment (Catered) Human ResourceServices

Call center Customer care andback officeoperations

Type of calls handled Non Inbound andoutbound only

Inbound only

Basis skills required atentry level

Graduate with goodcomputational,Englishcomprehension andcomputer skills

Graduate(undergraduate insome cases), neutralaccent and no mothertongue influence.Good spoken English

Same as other twosegments




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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. Thevalues, risk and margins increase with increase in the hierarchy level (refer Figure-3.3).

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 servicesbased on pre-defined rules, etc.. These tasks require basic clerical and language skills andcan usually be fully accomplished offsite.BPO business is not limited to outsourcing the low end jobs only, clients are looking forstrategic partners who can move beyond transaction processing and solutions to various

cross functional business activities. The hierarchical development increases the skill andknowledge requirements, which means higher employee cost for providing these services as-well-as improved profit margins.It is only in the last two to three years that high-end jobs (like data analytics, marketresearch, IP-related jobs) have started coming to India, and BPOs have started advancing tothe 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 hierarchyladder 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 fromorganisation to organisation)

1) Business development team (BDT): The role of the BDT is similar to themarketing team in any other organisation. The key responsibilities include businessexpansion, bringing new assignments and to look for clients.



Data entry, transfer and conversion tasks

Specific ruled based processes

Decision making and problem

solvin rocesses

Client interface:

Language and culture

Knowledge

based services

Low skillservices

Low ValueLow RiskLow margins

High skillservices

High ValueHigh RiskHigh margins

BPO Hierarchy of Services


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2) Transformation/Migration team: This department is responsible for replicatingthe 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 atBPO center end, a team comprising of training head, process head and trainer visitthe client place.

3) HR and Training: These two departments are separate entities but always work inconjugation as many of the HR professionals themselves work as trainers.

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 careand ensuring quality for deliverables.

3.2.5 Training & Skill DevelopmentThe quality of service depends on the type of training the employee receives andsubsequently how he implements his knowledge while working. Training is the integral partof 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 resourcedepartment and onsite training is preferred than sending their agents to an externalcenter.

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 thepremises of the call center.

o

Complete Outsourcing: Outsourcing training completely means that atraining agency is hired and either the recruited agents would be sent to theagency for further grooming or the agency trains and then company hires thecandidates.

The nature and kind of training depends on the BPO activities undertaken by theorganisation. For example the training given by voice based BPO units is different from thetraining imparted by non-voice outsourcing unit. During survey it was observed that callcenter 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 butthe 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 migrationand training team is provided with task to understand the new business process.

Migration/transformation team consists of training head, process head, trainers andmembers from technical divisions who visit the client location to understand theprocess flow, quality, training and resource requirements.

Sometimes training for the new process is provided at the BPO center by the clientitself.

Software and hardware requirements are analyzed during the migration phase.Process specific software/s may be provided by the client to the outsourcing unitbased on the level of technology required.

Once the new process has been completely understood, the IT department takes careof the software and h/ware related issues including networking and connectivity.After the software platform is ready then training and quality department performsthe test run to check for system consistency.

Once the operational requirements are met, HR department is notified about themanpower requirements. The recruitment of first batch involves multiple roundsbeginning with HR at first followed by interviews taken by training deptt. and projectHead.

The first batch is called pilot batch. Before the pilot batch hits the floor it is trainedoff-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 themanpower cost, general and administration expenses, telecom cost, rental and depreciation.Manpower cost makes the largest part of the BPO organisation expenditure. Theapproximate distribution of costs on different heads has been shown below in figure 3.4 andis indicative only.

Break-up of Costs for BPO

9%

22%

11%

13%

45%

Personnel

G&A Expense

Telecom

Property Rentals

Depreciation

Figure 3.4: Break-up of Costs for BPO

As evident from the figure, the cost on personnel is the major cost head, constituting around46%. The manpower cost and manpower productivity are the major areas that affects thetotal 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 organizationsand are the possible threats for the outsourcing industry.

Attrition Client retention Increasing competition Emerging overseas competitors Increasing cost

Attrition: The biggest challengeFor 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 theprivileges 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 attritionSurvey suggested that oganisations are thinking out of the box methodologies to counter thegrowing rate of attrition. Graph shown below (refer Figure 3.5) depicts the techniquesadopted by the surveyed BPO organizations to check/control attrition.The adopted strategies include:

Offering better pay Moving to B and C grade

cities Tieup with institutes Hiring mature talent Better design of recruitment

tests

Figure 3.5: Mythologies adopted to control attrition

Amongst the mentioned strategies adopted by outsourcing units; offering fat salaries andhiring 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 promisehigh and sustained returns in the future. The prime driver to get these jobs done here, asmentioned earlier, is due to cost advantage and availability of suitable manpower in largenumbers. The various BPO activities that are being taken up by these BPO firms can bebroadly classified as below:



0

1

2

3

4

5

Nosofrespondets

Methodologies

Methodologies Adopted by Organisations to Control Attrition

Non-voice BPO 5 2 3 0 3 1

Voice Based BPO 4 1 2 0 4 0

Bothvoice &nonVoice 4 2 2 0 5 3

Offering

Better Pay

Moving to B

and C Grade

Cities

Looking

Beyond

Graduates

Tie Up with

Institutes

Hiring mature

talent

Better

designing of

recruitment


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1. Back Office Operations, Revenue Accounting, and other ancillary operationsWith digitization, large numbers of organizations convert their hardcopy data into coded

form. Also, banks, insurance and aviation sector have large-scale data entry and revenueaccounting work. For such back office accounting operations, paper documents / raw dataare sent to remote locations, which are used for data entry and necessary reconciliation. Theprime criterion for such projects is quality of organizational processes, availability ofabundant manpower and ability to dedicate resources to client needs. Back office servicesinclude the following:

Data processing and digitization: converting text & images to electronicform, 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 ProcessingLarge insurance companies have large number of claims to settle. With well laid down rulesand procedures, such processing can be done anywhere, as long as there is availability ofgraduates who can read and write English in large numbers, a few doctors and a fewaccountants. As a result, to save costs, large insurance companies of US are nowoutsourcing 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 inorder to build up their case. Junior lawyers in legal firms usually do this using IT. Many legalfirms from developed countries have started to outsource legal work to organizations thathave a large English speaking and low-priced workforce of trained lawyers.

4. Call CentersA typical call center is a service center (for customers), which has adequate telecomfacilities, trained counselors, access to wide databases, internet and other on-lineinformation support system. It operates to provide services to customers, round the clockand year round. The dedicated telecommunication links connect a remote call center to theparent organization through voice links and on line computer database access.

Amongst others, the service application areas, which may be addressed by call centerinclude:

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 ITservices industry. It caters to the needs of web site management, production of content fornew media such as compact disk, digital versatile disk and products of convergenttechnologies such as internet enabled TV. It consists of compilation and development ofdigital content for intra-organization dissemination, cross-institutional usage, collaborativeprojects, public domain information programs for public / specialized education, web contentdevelopment 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 qualificationof graduation and above. Even in some organizations undergraduates are preferred. Apartfrom the educational qualifications, domain specific skills are required for people who wish tojoin 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 SKILLS

Call centerGood communication and language skills, accentunderstanding team leadership, basic computing skills

Remote customer interaction Language and accent understanding

Data entry, data transcription

services.

Document management and scanning, expense

processing, (e.g. time sheet management, expense claimmanagement, medical billing)

Date search, Integration Computing, language and analytical skills

Human Resource services Country specific HR policies, rules and regulations

Engineering and design Technical and engineering design and computing skills

Translation, Medical transcriptionand Localization

Language understanding, basic computing knowledge(word processing) and understanding of various medicalterminologies

Animation Drawing and creative skills, computer graphic skills

Finance and Accounting International/ country specific accounting rules

Market Research Understanding statistical sales and marketing concepts

As shown in the figure-3.6 below, infrastructure and education requirement are higher forhigh-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 andadvanced 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 thechallenge is to find and retain quality human resources given the current attritionrate of around 35-40%. Currently it is about 35% in non-voice and 45% in voice callcenters.

Studies indicate that 60% of the people who leave an organization do not joinanother BPO organization, but leave the industry as a whole. Attrition has becomethe biggest challenge, as companies have to incur a large cost on recruiting andtraining the manpower. Not only the manpower but the expenditure of infrastructurealso cost dearly in metros and grade I cities.

Development of management talent and motivation and growth opportunities foremployees are the other major challenges

Nasscom and QAI research identified following key challenges confronting BPOindustry: 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 countercompetition

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 anddomestic BPO business, most of the Indian firms face the challenge by moving into high-endjobs and shifting base to cost advantageous locations for their activities, as part of their costsaving 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 costmanpower is attracting corporate to look for new houses in smaller cities/towns for businessexpansion. Various new cities like Chandigarh, Bhopal, Trivandrum, Hubli etc. are emergingon 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 coston manpower to be incurred as compared to urban center, it is possible to get theoutsourcing activities done in a rural business process unit, using the telecenter based modelthat 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 byseveral organizations by setting up outsourcing units in rural India. Byrajju Foundation,Lason India and Datamation are three prominent organizations who have taken initiatives bysetting up rural BPO units in different parts of India. These pioneers had foreseen thebusiness feasibility of rural BPOs and a brief on them is asgiven 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. SatyamComputers outsourced a part of its back office operations, through Gram-IT, helping togenerate employment opportunities for the rural educated youth.

Employment capacity: 100 rural youth, 50 each in two shifts. Two rural BPO unitswith 50 seat capacity.




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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 ispart 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 Delhiand Uttar Pradesh. The head office at Delhi co-ordinates with all the BPO locations andprovides them jobs which are executed at rural end

Employment capacity: Datamations rural BPO units each has 5 to 6 computerswhere 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, electricityback-up and Solar powered computers at one or two BPOs where electricity supply isvery 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 ruralend ensuring quality.

Client: Various organizations like banks, educational institutes, exam boards and variousgovernment departments.

3) Lason India

It is a subsidiary of Lason Inc, a US based BPO Company. Lason India is one of the firstBPOs to realize the potential of rural India, which work in southern Indian states ofKarnataka and Tamil Nadu.

Employment capacity: Lason has its regional hub with 1,000 employees inChennai, with 60 smaller centers and seating capacity of 75 to 100, benefiting 5000rural youth.

Place of operation: Tamil Nadu and Karnataka (plans to expand in Andhra Pradeshand Kerala).

Infrastructure: telecom and power: Lason does not own the specific centers, butdesignates 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 hasalso gone for partnership with JSW Steel Ltd., part of the O.P Jindal group; where inJSW 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 villagelevel 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 andpolitical characteristics of the Panchayat as-well-as for BPO business viability throughtelecenters.

3.2.16 About Saurath

Saurath is a gram panchayat (GP) of Madhubani District (a backward district consisting of399 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 fromthe 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 districtis 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 populationdensity of1130 people per square km.

It has a total literacy rate of50.2%, which is appreciable as compared to the Statestatistics (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 theirprime source of earning.

The land-holding pattern among the sample households shows that only 0.7% householdshave land more than 10 beeghas and around 42% of the households have below 5 katta ofland (1 acre = 22 Kattas). This indicates the presence of few big farmers and landlords.

Land Holding Pattern

10.1%5.2%

5.0%

7.8%

16.5%

9.9%

42.0%

2.7%0.4% 0.3% 0-5 Katta

6-10 Katta

11-15 Katta

16-20 Katta

1-2 Beegha

3-5 Beegha

6-10 Beegha

11-20 Beegha

More than 20 Beegha

Not Applicable

`

Main Source of MHI

16.0%2.1%0.9%

.0%

2.6%

14.3%

35.3%

2.5%

3.6%

0.2% 11.4% Farming

Agri Labour

Small Business

Shop Keeper

Business

Pvt. Job

Govt. Job

Domestic Help

Retired/Pension

Unskilled labour (Daily wage labour)

Artisan (Karigar)

Student (Both working and studying)

Others

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 permonth but more than 60% of the sample population has monthly household incomeless 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 electricityconnections 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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Education Level in Different Sectors of Society

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Less than

1000

1001-2000 2001-3000 3001-6000 More than

6000Monthly Househo ld Income

%P

opulation

Post Graduate

Graduate

12th

10th Class (11th

included)

Class 1-9th

Literate but didnt

went to school

Illiterate


Monthly household income (Rs.) Population Number of HH

Less than 1000 266 61

1001-2000 655 120

2001-3000 312 473001-6000 234 34

More than 6000 121 18

Not responded 46 15

A view of Saurath village school beside lake

The Saurath GP hosts 232 graduates and 54 Postgraduates (data from GPsurvey) coming from different income segments of society.

Data from the panchayat survey suggests that there are 165 computer literates inthe GP with 105 males and 60 females.




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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 (referFigure 3.10) and gender specific education details have been given in the table 3.6below:

Table 3.6: Educational details on surveyed HouseholdsEducationQualification

Less than1000

1001-2000

2001-3000

3001-6000

More than6000

Illiterate Male (Nos.) 60 140 51 31 5

Female (Nos.) 92 205 82 51 11

Literate but didntwent to school

Male (Nos.) 12 19 13 8 3

Female (Nos.) 12 21 16 5 7

Class 1-9th

Male (Nos.) 40 119 57 40 16Female (Nos.) 26 87 39 37 19

10th to 12th Male (Nos.) 12 34 27 20 18

Female (Nos.) 6 19 15 16 16

Graduate andabove

Male (Nos.) 6 11 11 17 20

Female (Nos.) 1 1 1 9 5

6.14%-surveyed households have landline telephone connections and 5.8%households have mobile phones.

Table 3.7: Saurath Income Group-wise family size and other details

MHI(Rs) Less than 1000 1001-2000 2001-3000 3001-6000 More than 600Family Size Mean 4.4 5.5 6.6 6.9 6.7

Mode 2 4 5 7 4

Electrified Household Nos. 5 22 12 17 15

HH having Mobile (Nos.) 1 3 3 4 6

HH having telephone connection(Nos.)

0 1 4 6 9

Of the total households surveyed (295 Nos.), 39 households were observed havingcomputer literates.

The computer literate were surveyed for measuring their expected earnings from the ruralBPO business and to calculate the average amount they would like to invest for suchentrepreneurial 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 LiteracyMonthly household income

(Rs./month)Less than1000

1001-2000

2001-3000

3001-6000

More Than6000




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Nos. of computerliterates

Male 0 3 8 13 10Female 0 0 0 3 2

Only two computer literates managed to get employed (1 temporary and 1permanent job), clearly indicating the low employment opportunities at the village orblock level.

Computer literates expressed their willingness to invest for income generationopportunities that can help them earn around Rs. 2500-3000 per month.

Being an entrepreneurial venture people are also willing to invest amount, anywherebetween 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 ofclean drinking water.

Most of the households complained about poor condition of electricity (2-3 hours perday) and some had complaints on telephone connections.




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Young people acknowledge the lack of employment opportunities at the GP or districtlevel as the biggest problem.

The migration of males has positively skewed the sex ratio in favor of females (1014females 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 bylocal entrepreneurs mostly graduates and using Drishtees service delivery mechanism forcommunity services on education, health, information, agri-products, DTP, commercialservices, digital photography, etc.

ADrishtee ICT Kiosk in Mangrauni South, near Saurath

In order to gain a comprehensive outlook of telecenter business dynamics, 5 telecenters outof the 13 telecenters/kiosks around Saurath were surveyed. The summary findings onSaurath 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 tele-

centers), 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 ownersexpressed 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), isdelivering community services from his kiosk. Four years back he started with a single PC and internetconnection. Today his kiosk has two PCs, digital camera, scanner and other hardware. His earning hasgrown to Rs. 6000 per month and is able to support his family very well. During survey, on inquiringabout his willingness for rural BPO initiative, he expressed his readiness instantly as he found anop

Dr Ish Tee Bpo Research

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