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January 12, 2007
Does Indian village BPO make sense?
Check out my BW story about one of the first experiments with doing BPO in India's villages. I spent a day in the Eastern part of Andhra Pradesh in early December with the Byrraju Foundation's GramIT organization. Byrraju is the non-profit aimed at transforming India's rural economy that was set up in 2001 by Ramalinga Raju, the chairman of Satyam. GramIT is a project aimed at setting up 50-seat BPO operations in villages that Byrraju has adopted. Three are underway, and, eventually, the GramIT people want to have operations running in all 160 villages that Byrraju has adopted. Right now, the young villagers are doing back office work for the foundation, Satyam, and the government of Andhra Pradesh. JK Manivannan, who runs GramIT, hopes to line up more government agencies and Indian corporations, and, eventually, to land some multinational corporations as customers.
The idea here is to provide new job opportunities in the villages, and to help bridge the gap between India's relatively few middle class people and its legions of poor rural people. Also, if villagers can get good jobs close to home, they'll be less likely to migrate to the country's woefully overcrowded cities.
The plan seemed to be working, at least on this small scale. I talked to BPO workers, GramIT administrators, and customers. There are plenty of young people in the villages with 3-year college degrees and enough basic English to get this kind of work done. GramIT is working on improving English skills and developing a business primer course.
But will it scale up? Wipro's Azim Premji dismisses BPO as a suitable economic development engine for India's villages. He says such operations won't be able to offer services that are up to world standards, and they won't be able to scale up enough to be efficient. Rather than focus on BPO, he says, people should focus on training villagers in construction trades and retailing skills.
In fact, GramIT is doing both. It has skills training programs, and distance-information-assistance programs for farmers. (It also runs health, clean water, and childhood education programs) Within that context, I think it makes sense to make BPO part of the mix. It's not a silver bullet for India's villages, but it's a bullet.
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In your related article in the regular Business Week section you mention somebody working in one of these whose lifestyle has totally changed, and who plans to send his child to private school, and then that the pay scale is 800 dollars per year for three-year college graduates.
Eight HUNDRED dollars a YEAR, and he's going to send his son to private school?
Does this sound to you like a sustainable reality?
And if you do think this is a sustainable reality, then how, oh how are Americans supposed to compete with people who can afford to send their kids to private school on a salary of EIGHT HUNDRED dollars a YEAR?
Posted by: A Parent at January 12, 2007 02:46 PM
Steve... you are right in your reference to initiatives like GramIT as "bullets"... Debates of scalability will remain. But I'm sure that the scalability would soon set in... It just requires someone to take one step forward... and this step can come from a person who knows the dynamics and the psyche of rural areas in India (or at least some rural areas, considering the fact that rural India is very atypical in nature and probably cannot be put in one category)... I'm pretty much convinced of such rural initiatives finding ground and contributing to economic development... it is definitely not a silver bullet... but then as you rightly said there is no one thing called a silver bullet that can independently change the fate of the world... The work being done by GramIT for building the "rural skill" will help in scaling up and it is only a matter of time... Your article is good and gives some good "outsider perspective" (this is a very valuable thing coz of the good feedback that flows in)... We look forward to more of such articles... Hope you enjoyed your visit to the village... The more you interact with the guys out there, the more you realise the goodness of their work ethic - focus, hardwork, dedication (these things cannot be quantified except thru some surveys)... Cheers Steve... Thanks for that article
Posted by: Krishna at January 16, 2007 03:10 AM
In answer to A Parent: The private schools in rural villages are better than public schools, but they're not high quality. But I think village BPO, if it gets cranked up, is yet another threat to Americans with low-skill administrative jobs. Hopefully, people in that socio-economic strata are getting the message and will get help from government to shift to more sustainable occupations.
Posted by: Steve Hamm at January 16, 2007 12:19 PM
In the early 20th century, America experimented with an extreme form of unregulated capitalism where businesses can behave however they like and monopolies were allowed to controlling the economy, while the poor and middle class got squashed. Even with the trust busting under Teddy Rosevelt, the American economy continued to grow top-heavy, and highly speculative. What ended up stopping it was the Great Depression that started in 1929. Now, we are seeing a parallel happening before our eyes. Only this time it is in the name of globalization. The government takes a hands-off approach to rampant outsourcing of US jobs in order to create a very temperary, unsustainable prosperity where the rich reaps all the benefits and the poor and middle class are being squeezed out of existance. The housing boom, the retail boom, all look like a replay of the 1920's, but all of these bubbles are going to blow up in our faces. An economic disaster on the US and the world is inevitable if we go to an extreme in the name of any "ism". Economic theories are often too simplistic to describe reality, as we have seen over and over again in the history of the US, the Soviet Union, and Europe. Without sensible, practical government intervension, an economy based on overly simplified theories is nothing but an out-of-control wild horse heading for the cliff.
Posted by: Jordan at January 16, 2007 03:51 PM
I would be interested to hear what you consider the more sustainable occupations to be, other than the obvious: hands on the land, hands good and respectably dirty, or ultra high tech, Mars rover stuff.
I teach part time at the community college level. My students are largely first-generation immigrants, products of dysfunctional inner-city high schools, good hard-working young people of ordinary ability, with their eyes on the prize of a place in the solid, productive, lower middle-class sun.
Is there any good news for people like my students? What do you recommend they do?
Posted by: A Parent at January 16, 2007 04:17 PM
During my two year non-profit stint with Byrraju, I worked to set up and run GramIT.
How is a construction skills job relevant to a young person with college degree in commerce,arts or science.I must disagree with Azim Premji's dismissal of the BPO being not a solution that will work to increase rural employment. GramIT is the relevant solution for educated rural youth.GramIT and the Associates working there are eminently capable of doing transaction processing jobs to exacting service level and productivity standards.
They will learn by serving Indian corporates and some other clients perceievd to be lower in the value chain, but believe me they will be compete for a part of the higher value market in no time.
I have seen these youth who have never worked on a computer keyboard at 35wpm with 98% accuracy in 45 days.
As the current hotspot of BPO activity, urban India moves into a zone of high attrition and rising employee and real estate costs, the leaner competition from BPOs like GramIT will be waiting in the wings to take over.To me it seems a modern day hare and totoise story.
Posted by: Sharath Choudary at February 8, 2007 09:05 AM