BPOs look to scale up operations in tier-II, -III cities as Covid bites

Venkatesh Ganesh Mumbai August 10 | Updated on August 10, 2020 Published on August 10, 2020

BPOs are seeing business demand coming from these towns, which is a change from the past

Move will reduce business costs, increase talent pool from smaller cities

BPO companies are looking to move to tier-II and tier-III cities to reduce their business costs and also as majority of their workforce is hesitant to come back, in the wake of the Covid-19 pandemic.

NYSE-listed Startek (formerly Aegis BPO) is looking to scale up operations in tier II and III cities such as Bhopal, Lucknow and Chindwada. “We are looking to scale up our operations to around 20-30 per cent in these regions,” Rajiv Ahuja, President at Startek, told BusinessLine. Currently, Startek has 3,000 employees in these locations. It employs 48,000 people across 13 countries.

Recently, Tiger Tyagarajan, Genpact’s President and CEO, told this newpaper that it is also looking at smaller towns, as the bulk of its employees come from these places. In the old business model, talent had to relocate from their hometowns, as large metros were job creation hubs. All this could change now.

“A person does not have to migrate from Jodhpur to Bengaluru to work in a multinational company, with options such as Work From Home (WFH),” he said. Nasscom President Debjani Ghosh tweeted that the decision to extend WFH rules will ensure business continuity, employee safety and also increase talent pool to tier-II and -III cities.

“As part of our overall growth strategy in India, we have decided to go where the talent is, as opposed to the earlier model where we tried to acquire talent from outside city limits. These cities and towns have been relatively less impacted by the outbreak and will therefore provide a good alternative to driving revival of operations. Also, from an attrition point of view and cost of real estate, it makes sense to move to smaller cities, said Ahuja.

This is not the first time that companies have been lured to smaller cities. According to estimates provided by Zinnov, there are 976 MNCs which have set up 1,257 Global In-house Centres (GICs) in India, of which 68 GICs are in tier-II locations.

Growing biz demand

Additionally, BPOs are seeing business demand coming from these towns, which is a change from the past when companies set up operations to merely service global customer requirements. “We are anticipating an increase in business volumes across e-commerce, tech-delivery and other customer-facing businesses,” said Ahuja.

E-commerce and consumer durables are now digitising their supply chain and BPOs are sensing a pickup in demand from semi- urban and rural areas, which will translate into an increase in volumes of customer enquiries, supply chain management and back office services.

So, how will this impact hiring at a time when companies have largely frozen recruitments? “Hiring will move into smaller towns, opening up opportunities for women to come into the workplace, and increase hiring of differently-abled people too,” said Bask Iyer, Global CIO, VMware.

However, from an infrastructure point of view, even as all these locations have SEZs, there could be challenges in broadband connectivity, amongst others. In a 2014 report by the Comptroller and Auditor-General, India’s IT revolution failed to reach tier-II cities as SEZs were established without feasibility studies and Detailed Project Reports (DPRs).

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Published on August 10, 2020
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