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BPM seeks out smaller towns to fuel growth

India’s business process management (BPM) industry may see a geographic shift in favour of non-metro or Tier-2 cities and small towns, which hitherto never figured in their location planning.

business Updated: Sep 22, 2014 10:17 IST
Manu P Toms

India’s business process management (BPM) industry may see a geographic shift in favour of non-metro or Tier-2 cities and small towns, which hitherto never figured in their location planning.

The driving force behind such a move includes lower wages, lower rents, lower attrition, good talent availability and better livability quotient.

At present, the cluster of six large metros — Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Pune — houses most of the BPO delivery centres and generate 90% of its over $20-billion (Rs 1.2 lakh crore) revenue.http://www.hindustantimes.com/Images/popup/2014/9/2209pg14a.jpg

However, this trend is changing as Jaipur, Ahmedabad, Indore, Bhubaneswar, Visakhapatanam, Coimbatore and Kochi have become favoured destinations. Infosys, already has two BPO centres in Jaipur.

“For the BPM industry, non-metro centres currently account for around 10% of revenue and 20% of workforce which will double in the short term,” said Rajiv Ahuja, chief operating officer, Asia, Aegis. “We are planning 2-3 centres in tier-2 and tier-3 cities and will announce them in the next 45 days,” he said. Aegis has centres in Srinagar, Vijayawada, Lucknow, Bhopal and Jamshedpur.

Another major player Syntel will soon open its 2,500-seater campus in Tirunelveli, Tamil Nadu.

The non-metro centres largely service domestic market which accounts for 10% of the BPM market. But, according to Sanjay Mehta, MD, Teleperformance India, this would dramatically change within five to 10 years.

“Till 2007, 95% of the domestic market was served from metros which has reduced to 5% now. This would happen in the case of offshore delivery as well,” he said. “About 50% of the current BPO workforce comes from non-metro centres,” he said.

“Many of the Tier-2 and Tier-3 centres do not have SEZs. It can be a dampener to set up export-oriented global delivery centres. However, for the domestic market it is a good proposition,” said Partha De Sarkar, CEO, Hinduja Global Solutions, which has centres in Siliguri, Nagercoil and Durgapore.