Why Bastar is fast becoming a BPO hub

The movement to tier II and tier III locations is now an exercise in survival for the industry.

 |  4-minute read |   28-04-2018
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Priya Netram is a quiet, unassuming, 20 year old who was raised by an uncle in strife-torn Sukma, having lost her parents in senseless Maoist violence when she was just 10.

Having studied in a porta-cabin school – her school too was burnt down – she grew up with little hope of substantial change in her life.

Call it transformation or a sign of the changing times, she and some of her other friends now solve the problems of customers of the Bank of America and the HDFC Bank – no, not from Bengaluru or Gurugram, but from Dantewada.

Netram and her friends run a 500-seater BPO (business process outsourcing) operation out of a chrome and glass building in Bastar.

Skilled workforce

Inconceivable, one would have thought, even five years ago. The contribution of the Education City in Dantewada and the Livelihood Colleges in every district of Chhattisgarh is evident when you see this pocket of change and the confidence and determination on the faces of young men and women who are writing a new chapter in the history of Bastar.

More recently, re-badged as business process management (BPM), outsourcing may have been pioneered by American Express and General Electric (GE) in the late 80s and early 90s in Gurugram, but soon the floodgates opened as India went from being a relatively closed market economy to becoming a hot outsourcing destination fuelled as much by the liberalisation of 1991 as by the advancements in and the falling costs of communication technologies.

An abundance of English speaking, skilled workforce, labour arbitrage, infrastructure improvements, round-the-clock delivery, proactive governance and favourable business environment put the BPO industry’s growth into overdrive.

At a CAGR of 20 per cent and with BPO revenues up from $1.6b ( Rs 10,000 crore) in FY02 to $26b ( Rs 1.7 lakh crore) in FY17 (expected to reach $54b ( Rs 3.6 lakh crore by FY25), India is a clear leader with around 38 per cent share of global BPO market.

The 30 per cent annual growth rate projected for the domestic e-commerce market in India (set to hit $200b (Rs 13.3 lakh crore) in gross merchandise value by 2026), the projected 730 million internet users by 2020 on the back of growth in mobile phone penetration and the continuous expansion of Indian startup ecosystem presents massive growth opportunities to the domestic BPO industry that currently contributes only about a third of the market size.

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Multiple initiatives

Though this palpable progress of India as one of the fastest growing services industries is exciting, it is not exactly a bed of roses.

In the past, the growth of the industry has been concentrated around key tier I cities like Bengaluru, Delhi–NCR, Mumbai and Chennai barring the ripple effect to contiguous new cities. Bengaluru, as much as the other prominent BPO hubs, is feeling the brunt of fast fading cost advantages and labour arbitrage.

What started as an interim effort around 2007 by the BPO industry to counter the twin effects of rupee appreciation and expiration of the Software Technology Park of India (STPI) scheme, the movement to tier II and tier III locations is now also an exercise in survival.

Fast-rising infrastructure and manpower costs, high attrition rates and intense competition, coupled with higher cost of living, longer commutes and growth opportunities in domestic outsourcing market that operates at much lower margins, have already established the need for the BPM industry to look far beyond these traditionally favoured destinations.

The policy interventions and multiple initiatives by the government and various states, with the explicit aim of creating employment opportunities, are meeting the BPO industry half way to satisfy their essential requisites of profitability, efficiency and scalability.

New norm

The mention of "Bastar" usually conjures up images which are unlikely to attract businesses to set up shop. But efforts by the state government and enterprising district collectors have translated into a successful BPO unit in Bastar, a non-conventional tier III location in Chhattisgarh.

The lower operating costs, plug-n-play infrastructure by the district administration, lower manpower costs, lower attrition rates and policy support have ensured that conventional judgement is challenged.

In the food chain of BPOs, Bastar is starting out at the bottom while the likes of Bengaluru and Gurugram have moved up further. But moving to places like Bastar is no longer a matter of choice and will no longer be an oddity, it will be the norm.

Priya Netam’s heart-warming story is echoed in story after story of the youth of Bastar. Ankesh Nag of Moochnar in Dantewada, Kartik from Ilmidi village in Bijapur, Tamta Diwan from Kamela in Kondagaon and Ramesh Kaka from Awapalli in Bijapur, all represent the grit and determination of the 500 Yuva BPO employees to reject status quo. It is also the story of the silent transformation that Bastar is in the midst of.

(Courtesy of Mail Today)

Also read: Why IPL 2018 is a non-stop game of snakes and ladders

Writer

Aman Singh Aman Singh

The author is the principal secretary for the government of Chhattisgarh.

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