BPOs Move to Smaller Indian Cities to Cut Cost

BPO providers across India are moving their operations to smaller cities, as rising wages undercut their profits.

Affordable real estate, cost-effective ICT infrastructure, and the rising popularity of work-from-home arrangements are the major factors driving the trend.

These smaller cities, such as Lucknow and Bhopal, are said to be 30% cheaper than metro such as Bangalore, Mumbai, and Hyderabad, where a large majority of BPOs are based.

American BPO Startek, for example, has hired more than 2,000 people in lesser-known cities, including Bhopal, Lucknow, and Vijayawada, in the past two years.

Executives of US customer engagement solutions vendor 24/7.ai have told the country’s English language daily The Hindu that they would build microsites in southern cities of Warangal, Guntur, and Mangalore.

Interestingly, even Accenture is talking about going rural. Accenture is building offices in Jaipur, the capital city of Rajasthan, and Coimbatore, a small town in the southern state of Tamil Nadu.

The IT consultant says it has now allowed its employees to choose the location they want to work from.

With many call centers moving to the Philippines, India’s $30 billion BPO industry is increasingly looking small in the face of the larger IT services sector, which includes the likes TCS, Infosys, and HCL Tech.