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Home > Business > Business Headline > Report


BPO boom moves to smaller Indian cities

Bibhu Ranjan Mishra & Aravind Gowda in Bangalore | July 13, 2007 13:31 IST

More and more domestic companies are setting up business process outsourcing units in district headquarters, tier-III cities and non-IT clusters to save on real estate costs and stem attrition rates.

While Satyam Computer Services [Get Quote] and the Jindal Group have already started BPOs in small towns of Andhra Pradesh and Karnataka, respectively, new players are in the early stages of talks in this regard.

Iron and steel major Jindal Group, which runs a voice- and data-based BPO unit in Torangallu in Bellary district of Karnataka, is expanding to other parts of the state. Informed sources said, with an aim at replicating its success in Bellary, the company had sought the Karnataka government's support in spreading business to other district headquarters such as Shimoga, Hassan, Raichur and Kolar.

According to sources in the Karnataka IT department, JSoft, Jindal Group's software unit, is establishing a second BPO unit in Bellary with an investment of Rs 7-8 crore (Rs 70-80 million). It has also finalised plans to establish a third BPO unit in Hubli IT park.

"The attrition rate in major IT clusters is very high. This is forcing the IT companies to look at tertiary cities to tap the manpower. Basically, they are looking for college students, who can execute work after receiving training. The state has received applications seeking space for BPOs in cities such as Tumkur and Kolar," M N Vidyashankar, Karnataka's IT secretary, said.

Byrraju Foundation, the NGO outfit of Satyam Computers, is already running a BPO in Jallikakinada village in West Godavari district of Andhra Pradesh. The company is planning to open seven more such BPOs in rural areas of the state.

Similar BPO operations are being carried out in Kuppam in Andhra Pradesh and Kizhanur village in Tamil Nadu by HP and Chida Soft. Bangalore-based SLN Tech Services, which provides e-ticket booking service to a host of private bus operators and resorts in south India, has set up operations near Hebbal, a village on the outskirts of Mysore.

The company has shown interest in taking over e-ticket booking services for Karnataka State Road Transport Corporation. "We are also applying for similar services in Andhra Pradesh. We are planning to open a second BPO unit on the outskirts of Hyderabad," said SLN Tech Services Director Dinesh Babu.

The North West Karnataka Road Transport Corporation, a Karnataka government undertaking, is planning a BPO unit in Hubli to process the discount passes meant for students and senior citizens.

The approval is pending before the Karnataka state Cabinet.IT firms are not only moving to district headquarters, but are also setting up operations in towns and cities, which do not belong to any of the IT clusters. Bhilwara Scribe, a unit of the textile and power conglomerate LNJ Bhilwara Group, operates a BPO in Bhopal, Madhya Pradesh, providing services in medical transcription, data processing and indexing for 15 hospitals and 10 clinics across the US, Canada and Belgium. It also provides services in business transcription in HR-related companies as well as conferences.

"Though Delhi and Bangalore are the hot destinations for IT and BPO companies, we opted for Bhopal. We had tested and interviewed 500 people in New Delhi and then tested the same number of people in Bhopal. The results showed the quality of manpower was almost at par.

Further, Bhopal had an edge due to low infrastructure cost with potential and untapped manpower. We were the first company to venture into this sector in Madhya Pradesh," said Rajvind Ahluwalia, CEO, Bhilwara Scribe. Nasscom Vice-President Ameet Nivsarkar said: "It's a healthy move and is expected to create a lot of employment in the rural areas.


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