How International Business Outsourcing Helps Rural Development in India

By: Rishabh Kaul
A decade ago, the business world started outsourcing its back end work to the Indian megacities. But for a nation with 70% of its population living in rural settings, a new breed of Business Process Outsourcing companies (BPOs) are emerging which hope to tap into this talent pool. They are taking employment cost differentials to a whole new level. With much lower land rates, compared to their urban counterparts, rural BPOs are able to sustain themselves for as low as $1.50 to $2.00 USD, per hour.

Manoj Vasudevan left a high paying IBM job to start-up a rural BPO called SourcePilani in the university village of Pilani two years ago. Today, Source Pilani offers services such as medical transcription, social media marketing and SEO. Vasudevan feels that for a melting pot such as India (29 languages are spoken by more than a million native speakers), the true potential of rural BPOs can be achieved through voice-based services and not just low end jobs such as data entry.

Employees in Vasudevan’s BPO today earn 5000 Indian Rupees (INR), which is INR 2000 more than what they used to earn a few months ago (an increase of almost 40 USD). He plans to expand his 40-seat facility to a 100 seats soon. For a region where a majority of the population is employed in the informal sector and earn wages on a daily or seasonal (in case of agriculture) basis, this is a golden opportunity.

Another way these BPOs are empowering the rural community is by providing jobs to women, who further bring down attrition and help families generate additional income.

And then there’s the additional advantage of being closer to the customer base. The recent recession prompted many traditional Indian BPOs who would earlier just work with global clients to cater to domestic demands and discover the fortune at the bottom of the pyramid. Proficiency in the local language makes rural BPOs well suited for such a task.

And now the investors are also jumping onto this opportunity. Lok Capital LLC, a Mauritius based VC fund, recently invested an undisclosed amount in Rural Shores (in which HDFC holds a 26% stake), an emerging rural BPO which has in a short time become one of the major players in this industry. Aavishkaar Fund invested an undisclosed amount in B2R Technologies. Both these firms plan to set up over one hundred BPO delivery centers in the next few years.

A lot of these rural BPOs are tying up with local NGOs and microfinance institutions to help run their operations more smoothly. In the not-so-distant future, major urban BPO players may form strategic partnerships with these rural BPOs, thus further cutting down on infrastructure costs.

But one has to take this development with a pinch of salt. “There were close to ten major Rural BPO initiatives last year and less than 2 of them survive this year.” says Vijay Anand, Manager at the Rural Technology Business Incubation at IIT Madras, which houses Desicrew, a rural BPO start-up which has been doing really well over the past 2 years. “This like any other business, you offer a service at a price and hopefully your cost is lower than that. I am seeing a lot of people who have no clue about BPOs wanting to start rural BPOs, and unfortunately those will not even have a fighting chance. Depending on the understanding you have, the way you build your brand, the ability to retain people, the way you structure your clients and workforce, the technology and processes that ensure quality delivery – all of that is what will make a difference.” Anand adds.

Rishabh Kaul is an Economics undergrad at BITS, Pilani where he is also a member of the Center for Entrepreneurial Leadership. He is a staff writer at and runs a youth fellowship program called Grassroutes that sends them on road trips to rural India to awaken their social consciousness.

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