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Are Tier II Cities Getting Really Attractive For The BPO Industry?
Are Tier II Cities Getting Really Attractive For The BPO Industry?
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| BPO companies recognise the need for venturing in Tier II and Tier III towns but they are hesitant because of lack of infrastructure and right manpower.
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Friday, June 15, 2012:
There is a major thrust on development of BPO industry in Tier II and Tier III towns. All the pioneer BPO companies have voiced their opinions on the viability of Tier II and Tier cities in India for the growth of the industry. These discussions have been going on for years but we do not see enough action happening in the Tier II and Tier III towns in India. Cities like Patna and Ahmadabad are yet to see some big names, despite being one of the most developing towns of the country. Domestic BPO industry is definitely flourishing in Tier II and Tier III towns of the country but when it comes to the real game changers, you can find only a handful of names in the business that really focus on these parts of the country.
Kiran Karnik, a prominent figure and guiding force behind Indian outsourcing industry, when asked about the viability of Tier II cities for the BPO industry says, “In general if you ask me, I would say yes. But you have to analyse first as to what do you want. If you are looking at high-end things that are more sophisticated, it will be difficult to get talent in smaller cities. If you are looking for simpler skills, smaller cities are a good choice, but you have to balance that with infrastructure and connectivity.”
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Rohit Kapoor, president and chief executive officer, EXL Services, suggests a balancing act for the companies who want to leverage the advantages of Tier II and Tier II cities without hampering their quality of work. Kapoor says, “I think you got to balance it out. There are certain advantages in terms of a low cost-structure and some disadvantages in terms of availability of talent. The infrastructure certainly becomes a challenge. And then in smaller cities you necessarily find it difficult to find the management talent out there. Asking some of our senior managers to go and live in a smaller city is a challenge. But I think there are a number of Tier II cities which we find really attractive. When we moved into Kochi and we saw a business out there, the city worked well for us, both from a cost-structure stand point, availability of talent and the availability of infrastructure. You really have to look at all the factors in order to make a decision.”
NIIT Technologies, for which BPO business is a small portion of the total revenue, wants to stick to Tier I cities for the near future. Arvind Thakur, CEO, NIIT Technologies, explained, “We deal in some high-end processes. And we do not get as much of relevant talent in the Tier II and Tier III towns. So, for the near future, we are not thinking of venturing in Tier II towns of the country.”
Vipul Doshi, chief executive officer, InterGlobe Technologies, specifies on what kind of processes can be taken to Tier II and Tier III towns. He says, “Tier II and Tier III may be good for some low-end processes but I am not sure if we will be in a position to risk some high-end processes in those areas. As far as IGT goes, we do not see much scope for our kind of business in Tier II towns.”
However, Wipro Technologies is analysing this space meticulously. Partha Sarathi Guha Patra, vice president and head-corporate affairs, Wipro Limited, said, “I think the industry should move into the Tier II and Tier II cities. Wipro has been actively providing inputs and working closely with various ministries to ensure that these cities also come up to a level where we are able to look at them very seriously. We have, in a modest way, started investing in this direction several years ago. We have invested in land in some of these cities. This is one business where there are a lot of dependencies on infrastructure and connectivity. These are some things which need to be there for which we need government support. I think the priority of the government has been to make the growth inclusive. To have an inclusive growth, you have to move to Tier II cities. That's why we have been telling the Ministry of Commerce and some others that why don't we look at the SEZ policy per say to accommodate and be more attractive when it comes to Tier II and Tier III cities. The other cities are becoming so crowded and expensive. I think we must look at Tier II and Tier III cities.”
BPO companies recognise the need for venturing in Tier II and Tier III towns but they are hesitant because of lack of infrastructure and right manpower. Commenting on the need to grow in Tier II and Tier III cities, Mohit Saxena, senior vice president- operations, iQor said, “Tier I cities are reaching to a saturation point. So one really doesn't have a choice but to move to the Tier II and Tier III cities. Moreover, the cost of establishing a facility in Tier I city is getting increasingly high. Many global companies moved to India for outsourcing because of the cost factor. With such increasing costs, the sheer purpose of outsourcing in India will be lost. So, we have no choice but to move to cheaper options, which are the Tier II and Tier III cities.” |
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