How to start a Rural BPO
There are a lot of people who keep mailing us asking help in setting up Rural BPOs in their village as they intend to give back to the society in that way. I hope this post will help them and also caution guys who are not well prepared for the task ahead. Like any other BPO a Rural BPO also has its own challenges and things that need to be well thought of before someone decides to start off. Here are my 2 cents :
The two main things which people need to take into consideration while starting a BPO are:
- Human Resource Capability
- Strong Business Development Capability
Human Resource Capability:
It is very important to understand that the most valuable asset for a service oriented company or a BPO is its human capital. Thus it is even more critical to evaluate the kind of human capital that is available in the village where you are setting up the BPO. So my first question, how would you identify the ‘right village’? The answer is not a simple one it is dependent on what sort of BPO activities you want to take to the Rural Hinterlands? Here is my classification:
|Low skill Jobs (LSJ)||Medium Skill Jobs (MSJ)||High Skill Jobs (HSJ)|
|Digitalization/Data Entry||Transcription||Content Generation|
|Transaction Processing||Translation||Social Media Monitoring|
|Email Support /Live Chat support||Secondary Research|
|Vernacular Call Center||Local English Call Center|
So while selecting the village you are more or less containing yourself to the kind of verticals you would be entering into. The below classification would make things further clear
|Village Description||Any village||Any village which has English medium schools and where you have at least 500 unemployed adults||Any big village /small town with good educational infrastructure (high school/colleges)|
|Training Time||2 Months (basic clerical skills)||2-3 months (English/soft skills/clerical skills)||1-3 months (job specific training/English/soft-skills)|
|Avg Revenue per seat||10,000||12000||15000|
|Scale for financial sustainability||50 seats||35 seats||25 seats|
As per the above table the lower the skill sets the lesser the revenues and hence the greater the number of seats required to sustain operationally i.e a 50 seats unit with LSJs would just cover costs, to make profits you need more number of seats. So on an average to make profits and recover investment with any kind of jobs you would need a 60 seat fully functional unit.
Once you set up the BPO and recruit people the next most important thing is to train them and hire the right middle management team (project managers / TLs) to ensure high quality deliverable. Sometimes it’s tough to find them in villages hence some Rural BPOs have offices in cities where quality analysts assess the work done by the unit and then prepare the client deliverable.
Strong Business Development Capability
Check out my latest post on where rural BPOs can look for business?
This might sound very obvious that any business needs a strong BD team. It is not such a big issue to get projects and start off work, but the onus is to get scale. By reaching out to SMEs you would get work for 2-5 seats at the max. It is always essential to have a big client who would give you work at a sustainable scale. For example: a National Bank or a telecom provider. You would get annuity projects from them and once you stabilize these 50 seats you needn’t worry about financial sustainability, the BPO unit will be generating enough money to cover all your sales expenses and would further help in getting you more new clients.
So people who are looking to start a Rural BPO:
- Before you even setup your BPO first start looking for clients, you will have 3-5 months to identify the village, setup the BPO and train ideal number of resources. So utilize these 3-5 months to procure clients. Based on how the BD activity is going on you can train people with relevant skills.
- It is a great model if there is sustainable work. Please don’t generally jump into it and later regret the step. I know a lot of Rural BPOs which are struggling and even we struggled in 2009 to sustain. Think of strategy to scale it up quickly invest heavily in capability building (people/processes) and sales.
- Be persistent look for strategic parternerships with big companies /BPOs which would help you gain the much important process capability and also help you achieve scale. Diversify client base to mitigate risk and look at multiple verticals, you never know when there would be a financial crisis!!
I was reading a HBR article today morning and I came up with this rule which aptly applies to every social enterprise which intends to be successful. ‘The 3M rule’ Manoeuvre (strategize) –Multiply (Scale) –Monitor. So all of you strategize well to achieve scale and succeed.
PS: Hope this helps people in understanding the market better and prevent them from blindly setting up BPO centres and then worry about these important issues. I have not covered many other issues here I would be more than happy to help, just drop in a comment.