BPO policy for small towns sparks huge interest

The government's business process outsourcing (BPO) promotion scheme has generated a lot of interest from companies, with the government receiving 125,000 responses through expression of interest (EoI), against an offering of just 48,300 seats across India excluding the Northeast.

The scheme was launched to promote the Information Technology (IT) and Information Technology Enabled Services (ITes) sector in smaller cities and towns. The government has also launched a similar policy in the Northeast - Northeast BPO Promotion Scheme (NEBPS) - with an outlay of Rs 50 crore for creating 5,000 seats. Though, because of lack of interest in this scheme, the government plans to relax the rules.

The maximum number of EoIs have come from Uttar Pradesh, followed by Rajasthan, Madhya Pradesh and Bihar, according to a senior official in the ministry of communications and information and technology.

These EoIs were submitted by firms in August and the process of request for proposal (RFP) is underway. Open bids would be conducted through RFP and the lowest bidder quoting minimum capital support per BPO seat will be given in-principle approval.

The government plans to offer a subsidy of up to 50 per cent of the capital expenditure or Rs 1 lakh per seat, whichever is lower, for setting up BPO units. Capital support will be offered through viability gap funding.

The scheme has an outlay of about Rs 500 crore and the subsidy will be available up to March 2017. The scheme is expected to create employment opportunities for about 144,900 people, the official added.

 

Special incentives (percentage of eligible capital support) will also be given to companies for employing women and differently-abled persons, apart from capital support.

If a firm's payroll has 50 per cent or 75 per cent of women, it will be eligible for five per cent and 7.5 per cent special incentive, respectively. If four per cent of a firm's employees are differently-abled, it will be eligible for a special incentive of two per cent.

According to a Nasscom report, Ahmedabad, Kochi, Kolkata and Jaipur along with Bhubaneswar, Visakhapatnam, Thiruvananthapuram, Chandigarh and Indore are emerging as new destinations for business process management (BPM), a synonym for BPO. "These cities have made their way to the BPM sector map owing to their excellent infrastructure, including cheaper real estate, cost competitiveness, availability of talent and conducive business environment," it said.

Also, the BPM sector is now worth $23.3 billion (Rs 1,55,614 lakh crore) from $3.2 billion a decade ago. It employs 956,000 people, of whom around 186,000 have been added in the past four years, according to Nasscom.