Infrastructure woes pulling BPOs back from Tier-III cities

Balaji Narasimhan Bangalore | Updated on June 25, 2012 Published on July 30, 2011

The IT Park which is gradually attracting IT and ITES companies to Hubli.

Low attrition is one advantage

Thanks to over-clogging of major cities, IT majors have started moving to Tier-II or in some cases, even Tier-III cities, but the latter are posing some difficulties for companies, especially from the infrastructure perspective.

While cost is one of the reasons why companies move to a Tier-III city, Mr Nimish Soni, Executive Director, Offshore Services – Asia, Xchanging, one of the first companies to try out a Tier-III push with Shimoga, said an advantage of a Tier-III city is that one faces lesser attrition there. But infrastructure is a problem there. “We have 550 people working out of temporary offices. You don't get big office buildings in Shimoga. We are actually using a marriage hall as a temporary office,” he said.

But this has not deterred BPOs from trying. Mr Manish Dugar, Senior Vice-President and Global Head, Wipro BPO, said his company was trying a pilot project at a place called Manjakudi, which is around a 90-minute drive from Chennai. “For this pilot, which we have started this month, we have around 60 people, but we can scale it to over 300,” he said. Pointing out that Tier-IIIs like Manjakudi, which are closer to big cities, have a better chance of making it.

He said attrition in such places will hopefully be low, but infrastructure was still a problem. “People who want to develop infrastructure want to partner with us,” he added.

Partnership model

The partnership model is something that Infosys is also adopting. Mr Vaitheeswaran S, Vice-President and Business Head, India Business Unit, Infosys BPO, said, “In some of the rural BPOs, we are partnering with entrepreneurs. For example, we have a tie-up with Rural Shores in Pulla in West Godavari, Andhra Pradesh, and with Desi in rural Karnataka near Hosakote.”

But infrastructure is just one of the problems that BPOs face in Tier-III cities. While attrition is low, clever people tend to migrate to metros, leaving only people of lower calibre in Tier III cities. Ms Sangeeta Lala, Co-Founder & Vice-President, TeamLease Services, said, “Any outstanding candidate will want to move out. So, the quality of employees available in a Tier-III will at best be average until some volumes kick in.” Ms Lala said that growth is a factor not only of the infrastructure that the BPO company has, but of the infrastructure of the town itself, such as malls, and retail outlets. “Tier-II cities are already on the growth path. It will take Tier-III cities another four to five years to develop the infrastructure.”

But this does not mean that BPO companies cannot setup operations in Tier-III cities today. Mr Raghavendra K, Vice-President and Head - HR, Infosys BPO, said that Tier-II and Tier-III cities anyway contribute to the talent pool, so it makes sense to setup offices there. “Even in the metros, around 70 per cent of the BPO employees come from Tier-II and Tier-III cities,” he pointed out, and added that many tasks don't require a high amount of intelligence and so can be handled from a Tier-III city. “Some tasks are basic, like handling calls, processing vouchers, etc, and so people can start in a Tier-III, move to a metro and then move back,” he said.

Published on July 30, 2011
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