Murali Vullaganti still remembers the day he visited the home of some young employees working at the Chennai office of his former employer, the UK-based BPO, Xansa. Vullaganti, now 57, had helped Xansa set up 5,000-seat facility in India between 2003 and 2005 and hired talent from rural areas. During an employee connect programme, he was shocked to see them living in deplorable conditions, with over a dozen young men squeezed into a 600 sq ft apartment. Struggling to adapt to life in the big city, they were not able to save anything from their ₹10,000 stipends to send to their families. Vullaganti then decided to start working part-time and devote his full energy into making a difference in the lives of these marginalised youth.
With a little help from his friends, the-then HDFC chief information officer, CN Ram, and financial consultant, G Srinivasan, Vullaganti started RuralShores in 2008 to help take BPO jobs to rural locations. The transition was further made easy thanks to the support of three other promoters, Vullaganti’s Xansa colleague, V Ranganathan; strategic consultant at Mastek, Sudhakar Ram; and domestic BPO MMC Infotech’s founder, Sujatha Raju.
The six promoters pooled in ₹1.5 crore from their personal savings to pull RuralShores off the ground. As CEO, Vullaganti remains fully involved in RuralShores. The others don’t draw salaries or dividends but collectively hold a 38% stake in the firm. RuralShores also received significant external investment from HDFC Bank and early-stage impact fund, Lok Capital, which hold 22% stake each. Adding former Genpact CFO Vivek Gour’s ₹1 crore to the kitty, RuralShores has managed to raise an impressive ₹20 crore as equity investments.
Bolstered by the infusion, RuralShores opened its first centre in February 2009 at Bagepalli on the outskirts of Bengaluru. There was soon a second one at Ratnagiri, Tamil Nadu, and a third at Bhiloda, Gujarat. All centres are set up at locations close to client businesses and as per their preferences.
The first set of employees was given English language, computer and soft skills training, followed by process training. These demanding modules pale in comparison to the effort taken to convince prospective clients of the talents of their rural employees. “Customers were not convinced about the capability of rural youth with little formal education to complete complex tasks according to the standards set by urban predecessors like Wipro, Infosys and Capgemini.Like our first investors, our first client was also an old friend of mine, the CEO of iMint (now known as Payback). We completed the assigned task dot on time as per his expectations, which helped us get other clients,” says Vullaganti.
Payback had assigned RuralShores the task of answering e-mail queries from its customers, a difficult job for many employees who, till then, had never seen a credit or debit card, didn’t know anything about banking, and didn’t have a good grasp of English. Given the circumstances, it was hard convincing not just clients but also centre managers and process leaders to move to the hinterland and work with a company whose business concept was yet to take off in India.
Today, those hiccups are a thing of the past and RuralShores boasts of 2,000 employees at 17 centres spread across Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat, Rajasthan, Madhya Pradesh and Uttar Pradesh. From an FY09 revenue of ₹1.5 crore, it has grown to ₹31 crore in FY13 and is expected to break even in FY14. It has acquired 40 customers of the likes of Airtel, Genpact, Infosys, Vodafone and Uninor, running 45 processes for them. Vullaganti has set a target of opening 500 RuralShores centres — “One for each district of India,” he says — by 2025, employing 100,000 people.
Chattisgarh resident Chetna Nag has been working as a data processing executive at the RuralShores centre in Kanker for the past two months. The 22-year-old’s ₹6,000 a month salary is the first source of regular income for her family and she is understandably thrilled. “I have learnt to set goals for myself and have picked up several key skills on the job,” Nag says. Not having to move to a city in search of employment is an added bonus.
Indeed, the reason RuralShores stands out among socially-inclined businesses is that it addresses a very important variable in the rural employment sphere — giving rural youth a chance to find gainful employment not far from home, thereby cutting down on the need to migrate to cities in search of work. It spends ₹20,000 on training each employee, conducting programmes on grooming and English-speaking. Diction — usually a deal-breaker when it comes to non-urban BPOs — isn’t an issue, since voice-based processes constitute only 25% of the business and that too only for domestic clients.
Most employees — usually high school pass-outs, though some are graduates as well — live within a 10-km radius of the centre and the company provides transport to women employees, who work only day shifts and comprise 50% of the company’s workforce. Recruitments are usually on the basis of walk-in interviews, but are followed by extensive background checks. While salaries start from ₹6,000 for fresh recruits, they go up all the way to ₹16 lakh a year for hub managers, who oversee the work of four centres. All employees receive PF, health insurance, gratuity, pension, bonuses and performance-based incentives.
Voice support executive Pallavi Tharave considers that a boon. She’s been with RuralShores’ Sausar centre in Chhindwara, Madhya Pradesh, for the past six months and says that a regular salary has really helped her family, till recently dependent on her father’s erratic income as a contract labourer. The 21-year-old struggled initially when dealing with customer calls from irate clients, but says her work has improved greatly with support from the centre manager and her parents.
What is the business model? Like any other BPO, RuralShores offers the low-cost advantage by keeping costs razor-thin and investing in relatively cheaper real estate and equipment. Still, it costs about ₹1 crore to set up a centre, since power backup and investment in technology has to be made regardless of the location. At several centres, it has also partnered with local organisations or professionals from the industry who belong to a particular village or taluka and so understand its customs and sensitivities best. In such cases, the partner runs the centre while RuralShores provides the technical knowhow and support.
For instance, the centre at Ratnagiri in Tamil Nadu is run by a trust that also manages a local school. “RuralShores has mastered the franchisee model, where a local partner funds the brick-and-mortar investment and the company brings the training expertise, ensuring quality of work,” says former Genpact CFO Vivek Gour, who has invested in the business.
Since its launch, the firm has also moved from simple data processing to value-added transactions such as knowledge process outsourcing, insurance processing, networking support, software troubleshooting for end-users and field support services. “We have seen considerable volumes being generated, thanks to our feet-in-street services, especially from clients who have good business in rural pockets,” says Vullaganti.
RuralShores signs three-year contracts with its clients and has not lost a client so far; to scale up to 100 centres in the next three years, though, it will need to add 20 more clients to the current 40. “We have seen considerable growth in volumes in the insurance, banking, telecom, retail and government sectors. With the direct cash transfer scheme put in place by the Centre, banks now have a lot more enrollments. Collectively, these sectors have the potential to create 7 million outsourced jobs. By providing distributed services in these sectors in local languages with geographic reach, our turnaround time shrinks drastically,” says Vullaganti, listing RuralShores’ advantages.
Though RuralShores faces many hurdles such as poor rural infrastructure, frequent power outages, dismal broadband connectivity, the real challenge will be to convince senior management executives from urban India to help partner its mission. India’s IT and ITeS industry was pegged at $50 billion in FY12 by industry watchdog Nasscom. With their gaze fixed on urban locations, industry majors tend to overlook the rural market and the potential for massive job creation. “The government has invested in skill development in rural areas but not employment generation. It needs to incentivise the IT and BPO industries,” asserts Vullaganti. Is the government listening?