Rural BPOs – More than Business

What is a day in the life of a normal lad living in the villages of our country? It starts by milking cattle and then a visit to the fields. If he’s a student of class 10^th or below (and is lucky) he would probably go to his school; since most boys end up dropping out of school after the 10^th grade. This could also be attributed to the fact that there are very few villages that have schools offering higher secondary education. Ambitious boys from such villages would probably go to the nearest city to pursue their higher education, but the percentage of such students is very less. 

And this is just to talk about villages where people have just about enough money to run their households. This is not always the case, as there are plenty of villages in India where there is abject poverty. Whatever they earn just suffices to pay interest for their loans (taken from local and powerful Zamindars). Please note that the first line talks only about the life of a boy in a village, and not a girl, because people in rural India still think of the girl child as a liability. She has to be married off one day and a hefty dowry needs to be paid. Thus a girl’s life would entail cleaning the house and other such domestic chores.

Reading thus far would have lead you into believing that this article is on the social problems that ail our country, rather than a business article. If you did think that, you are partially right because it is a vicious circle – people do not have enough money hence they are uneducated. This, in turn, means lack of development. Therein exists a great opportunity for big companies to step into the rural sector, and cash upon a ‘first mover’ advantage.

Enter: the rural BPOs. Business Process Outsourcing (BPO) is the delegation of one or more IT-intensive business processes to an external provider that in turn owns, administers and manages the selected process based on defined and measurable performance criteria. The BPO sector in India has been growing at an extremely fast pace as most of the foreign companies find India attractive due to lower labour costs.

But the million dollar question is – why do companies want to enter the rural BPO sector? What is it that has prompted companies such as Tata Sons to enter the Indian rural BPO sector?  The reasons are pretty evident. Cost is a cause of concern for companies and hence cost reduction is one of the major motivations for companies to invest in rural India. Lower labour charges in villages provide an absolute cost advantage. The existing rural BPOs in India pay around Rs. 3,500 to Rs. 4,000 per employee, which is far less compared to what they shell out to an urban BPO centre employee. The second advantage that rural BPOs have is not exactly an absolute advantage; rather, it is only a comparative advantage over urban BPOs. In urban BPOs, the attrition rate is substantially high. People leave the organisation the moment they get a better offer. The employee-organisation relationship is short term. This is not the case in the rural sector – employees continue in their jobs for a considerable period. A rural employee cannot afford to leave jobs often, as he already leads a hand-to-mouth existence. Hence, the company’s efforts and expenditure on training the employees pay off. This may not be, or rather is not, the case with urban BPOs.

This concept of rural BPOs has come as a ray of hope for the rural parts of our country. This can possibly break the vicious circle we dealt with earlier. If you ask any middle-aged man from the village about his vision in life, he would, in all probability, indicate his desire to pay off his loans – the responsibility of which has been handed down over generations, from his great grandfather’s time. He does not want the future generation to live life the hard way, such as himself. If you ask him of his expectations from his son, he would probably express a wish for him to complete his education, but conclude with a hope of seeing his son returning and helping him out. He would be circumspect about sending his son to the city for higher education because he believes, or knows, that chances of him returning are pretty thin.

Establishment of rural BPOs implies that people need not leave their native places in search of work. In fact, it will motivate everyone to study and earn a living. This would, in turn, reflect on the literacy rate and improve the level of employment in our country. This can contribute towards narrowing the gap between rural and urban India, be it in terms of education or standard of living. It can ultimately result in infrastructural development. Liberalization, which began in 1991, has helped connect urban India to the rest of the world. We need to emulate the same to connect rural India to urban India, and narrow the disparity.

This is just not the end of the benefits of BPOs. There are other opportunities that open up, for instance personality development schools, which would ensure that the students from the rural sector are well-groomed as per BPO requirements. It is possible that within five years’ time, things will change significantly, with improved standard of living and infrastructure. Other possible fallouts would include increased number of schools, better developed markets, etc.

Many companies which plan to open such rural BPOs in India promote it as a CSR activity. Well, keeping in mind the benefits that the rural folk may enjoy, calling it a CSR activity is not wrong. But CSR means doing an activity which is helpful for the general public; doing something in which the company only spends and not gains. This is not the case in rural BPOs. As discussed earlier, companies have an absolute cost advantage. A typical CSR activity would be such that the organization invests a part of its gains (from the BPO) in developmental activities in the area, such as infrastructure (e.g. construction of roads) or education (e.g. setting up English medium schools).

If any organisation takes an initiative such as this, I am positive that it would give them better mileage and a better reputation, as well as faster growth. Perhaps many organizations shy away from investing in such rural ventures since the revenues may not seem attractive enough. And so if we want the dream of a substantial change in the state of affairs within five years to be true, organizations need to go beyond their revenues, take initiatives and improve the rural landscape. That would be indeed a CSR activity