India’s federal government has set aside US$78 million for persuading outsourcing firms to expand operations to smaller cities and towns across the country. The plan is to support rural economies and create more than 100,000 jobs over the next few years.
BPO firms will get financial aid for setting up operation and for hiring rural talent. According to some reports, government is going to earmark aid for each job they create in the countryside.
It seems the new government in Delhi is planning to take outsourcing to a new level in the country. According to some analysts, rural BPO centers may serve as back-offices for domestic outsourcing service buyers rather than foreign buyers.
The government’s decision has pleased civic officials in major cities, where the sudden growth in the outsourcing industry has strained the infrastructure, pushing the real estate prices sky high.
Furthermore, a vast majority of people working in the BPO industry come from small towns. Government believes that their return to their native towns will relieve pressure on big cities.
But infrastructure has long been one of the biggest obstacles to doing business in rural areas, with power cuts remaining a common phenomenon in villages. In addition, internet connectivity may often be poor with low speeds making certain services difficult to provide.
Meanwhile, a legislative bill designed to ease the task of acquiring lands for infrastructure and commercial purposes has run into roadblock. But analysts say the lure of incentives and the opportunity to cut costs will tempt outsourcers to go rural.
Studies have shown that BPO companies can cut operating cost by 20 to 30 percent by moving to a low-cost city.