India’s BPO firms take the WFH route to double Tier-III operations

In the next four years, India’s $38 billion business process outsourcing industry hopes to expand its footprint in the country’s cities, capitalizing on the current pandemic-driven work-from-home boom.

Nasscom and the Ministry of Electronics and Information Technology are developing four operational models under the “work from home town” paradigm and designating 100 locations, 20 of which have already been finalized, according to executives. Firms can overcome the skills shortage by recruiting employees in smaller areas, who can then work there instead of migrating to larger cities, as the industry doubles its income over the next five years.

Officials stated that the industry’s goal is to bring in 10% more employees and 10% more income from 100 towns. Warangal, Siliguri, Salem, Lucknow, Indore, Bhopal, and Visakhapatnam are among the popular destinations. At the moment, the sector employs 1.4 million people, 10% of them are from small towns.

He added that the industry group is in talks with local and state governments to expand these efforts and that work would be attempted in the designated places in the next 6-18 months. However, he continued, the expense of talent and government assistance are critical factors in endeavoring a success.

India’s BPM industry, like the wider IT industry, has benefited from the pandemic-driven push toward digitalization, particularly in industries such as healthcare banking, and financial services. According to Nasscom, the industry association, this revenue base might reach $70 billion by 2026. The government has already provided incentives for the establishment of centers in smaller towns under the North East BPO Promotion Scheme (NEBPS) and India BPO Promotion Scheme (IBPS), respectively.

According to Diwakar Singhal, global business leader at Genpact, “when large corporations set up centers in small locations, it bodes well for the entire ecosystem, helping to increase awareness as well as building a basis for smaller peers to follow suit.” “Large companies get help in terms of real estate, infrastructure, transportation, and connectivity, and smaller businesses can piggyback on that once these resources are in place,” Singhal explained.

As part of the “work from home town” (WFHT) paradigm, Nasscom has proposed four operating models that enterprises might use to make it economically feasible to establish bases in these regions.

They can look at options like setting up smaller centers for existing employees in the region, centers where recruits can work, an outsourced franchise for BPM businesses, or a fully owned and functional delivery center, depending on their budget and size. The last is only practical for huge corporations, but the other three types can be used by entrepreneurs to provide “as-a-service” offerings. Most BPM solutions and some of the simpler IT solutions, according to Nasscom, can be delivered from such locations.

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