Things are not good for BPO industry right now; Philippines, Indonesia and China are now becoming hot favorites for Global MNCs when it comes to outsourcing as labor is cheaper than India. Recently NASSCOM lowered their expectation of BPO industry growth from 16% to 14% for the Financial Year 2015-16, which actually indicates that growth has slowed down.
Considering the imminent dangers which Indian BPO industry is currently facing, Modi Government has announced a new ‘BPO Scheme’ to push and reignite the BPO revolution in the country. Telecom & IT Minister Mr. Ravi Shankar Prasad has said that a budget of Rs 498 crore has been allocated for this scheme.
How Will It Work?
Govt. of India has proposed to subsidize creation of 48,000 seats by March, 2017.
A ‘seat’ in the BPO sector means a cubicle or a seat with a workstation and Internet connectivity ; a spot where an employee can login and work. And there are total of 3 shifts in a day (8 hour / shift), wherein a seat can be occupied. Hence, creation of 48,000 new seats means that total of 1.45 lakh people (48,000 * 3) can get jobs in these BPOs.
The Govt. will provide 50% of the capital expenditure or Rs 1 lakh (whichever is less) incurred in the set up of each seat.
As per the statement issued, incentives and subsidy for these new 48,000 seats will be divided across the nation, among every state. Infact, the Govt. will float ‘Expression of Interest’ under this BPO scheme, and then wait for inputs from the State Governments regarding the need for this subsidy. Depending on this data, the spread and distribution of these 48,000 seats or approximately 1.5 lakh jobs would be decided.
Out of Rs 498 crore budget, Rs 10 crore has been earmarked for creating awareness and publicity regarding the scheme.
The Govt. estimates that 48,000 seats will generate 1.5 lakh jobs which will directly or indirectly benefit 5 lakh people.
Tier 1, 2 Cities in Focus
During the meeting with IT Ministry and Principal Secretaries from different states, Minister Prasad acknowledged the fact 60% of the employees working with BPO companies in metros such as Delhi-Gurgaon, Bangalore, Hyderabad and Mumbai are actually from Tier 1 and Tier 2 cities.
Hence, he proposed to set up these new BPOs in these Tier 1 and 2 cities so that the employees need not relocated to metros in order to get the job. If the facilities are set up near their cities, it will reduce the burden on urban locations, and help the companies to pay better as well.
The State Governments have been encouraged to outsource their tasks to these new call centers to promote and encourage this new business model.
BPO – Strong Pillar of Indian Growth Story
BPO or Business Process Outsourcing industry has been one of the strongest pillars of the post-liberalization Indian growth industry. As of now, it contributes 9.5% of the country’s GDP, and accounts for 38% of total exports. More than 35 lakh people work with BPOs in India, and in 2015, the industry added 2.3 lakh new jobs. It is estimates that indirectly, BPO generates more than 1 crore jobs in sectors such as transport, food and beverages, medical, road side vendors etc.
Worth $146 billion (as of 2015), BPO industry has the capability to offer more direct and indirect jobs, considering the strong soft-skills Indians possess, along with strong British styled education with stellar English language skills. But the onslaught of Philippines, Indonesia and China in this sector has created some fresh trouble for the policy makers.
It is expected that the new BPO scheme launched by the Indian Govt. will help and assist the industry to leverage more skilled people and take the industry forward.
