HDFC BUYS 26% STAKE IN RURALSHORES

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INDIA’S $12-billion BPO industry has now reached Bagepalli, a rural pocket sitting on the margins of the arid Rayalseema belt in Karnataka’s Chickballapur district. And it’s off to Purnia in Bihar as the rapidly expanding telecom and insurance firms seek native language help desks and data processing in the hinterlands, closer to their markets.

In a possible affirmation of its belief in the rural BPO story, HDFC, the country’s largest home finance company, has picked up 26% stake in Bangalore-based RuralShores Business Services, a rural BPO firm floated by six technocrats last year.

The ‘ruralshoring’ start-up aims to link up about 500 locations, with a population below 20,000 to the fabled BPO script over the next seven years. This rather small transaction for HDFC was driven straight from its top echelons implying its significance.

RuralShores—with a promoter list that include former E&Y honcho V V Ranganathan, Mastek MD Sudhakar Ram, former MD of Xansa India Murali Vullaganti and G Srinivas of Dawn Consulting—confirmed HDFC’s entry as a significant minority investor.

Ruralshoring, a push towards shifting less complex BPO work to inexpensive rural locations, is the new buzzword for the knowledge economy, as these hamlets could possibly evolve into the back-office of corporate India. The BPO firms have been moving hinterland - to the semiurban centres - but the final push is in the offing with firms like RuralShores taking downstream work to rural pre-graduates who are employed under daily minimum wage regulations.

BPO firms like Xchanging, which acquired Cambridge Solutions, and Hinduja Global Solutions have ventured into semiurban places like Shimoga in Karnataka and Durgapur in West Bengal. HDFC Bank through a fully-owned arm kicked-off captive operations at Tirupati last year, while Tata Chemicals came up with back-office centres at Barala in Uttar Pradesh and Mithapur in Gujarat.

“We typically look at setting up 80-100 seater centres in towns with a population of 10,000-15,000 with a cluster of villages around it. The work timings are between 6 am to 10 pm in two shifts with each centre employing 150-200 people,” says Murali Vullaganti, CEO of RuralShores. The firm operates two such centres at Bagepalli and Ratnagiri near Vellore in Tamil Nadu where they operate along with the local schools.

Bagepalli, located about 100 km from Bangalore, is one of the most backward regions in Karnataka because of its depleting water table and migrating residents. The employees are mainly pre-graduates, or plus-two passouts, who earn Rs 3,000 per month on an average.

RuralShores is setting up a facility at Purnia in Bihar catering to a telecom client which is looking for native language help desks in Bhojpuri and Mythili dialects. The firm’s expansion roadmap hinges on roping in local entrepreneurs who would invest in technology and physical infrastructure while RuralShores works on service delivery. Estimates suggest that investments in infrastructure building for a small-size rural BPO will be in the range of Rs 40-50 lakh.

Technology entrepreneur Sridhar Mitta believes that a wellscripted business approach is required for rural BPOs to establish a successful model, especially since many of them come with dollops of corporate social responsibility.

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