Indian Government’s Rs 500 crore BPO promotion scheme fails to create magic, gets tepid response

When Prime Minister Narendra Modi-led Indian government came to power, it had flagged off a BPO promotion scheme with an outlay of nearly Rs 500 crore and mission to create 1.5 lakh jobs; almost 60 companies bid in the first round.

But, the response has been quite lukewarm as bids coming in from companies formed only one-fourth of the total capacity.

Most of the top order BPO did not take up the scheme as many of them do not have operations in small towns and cities.

"I won't say that the response was bad, but we were expecting more participation," a government official told ET.

ET quoted two officials who said that the ministry of electronics and IT (MEIT) received bids for only 11,500 seats from 60 companies out of the total 48,000 seats on offer in the first round that closed in the first week of July.

An industry executive told ET that despite the attractive government subsidy, the scheme was not lucrative enough since most of them already have operations in tier-II and III towns and the government disallowed expansion under the policy.

"In a way, the government is trying to reward us 10 years later for starting operations in the small towns which we began in 2005," Bhupender Singh, CEO of Intelenet Global Services, told ET, adding “50 per cent of the company's India business is already delivered from non-metro centres in places such as Puducherry, Guwahati and Agra.”

Sanjay Mehta, chairman of the BPO committee of Indo-American Chamber of Commerce, told ET, “The industry makes $25 billion in revenues and almost $2 billion in profits every year, perhaps it doesn't need any freebies. But, what it does need is confidence in clients that they can be serviced well out of these small town centres which the government could have provided through some marketing in the UK and the US, which contribute almost 90 per cent of the industry's revenues.”

Even though some companies stayed away from the project, Tata Consultancy Service (TCS), took up the scheme and had proposed to set up 3,000 seats - 1,000 seats each in Prime Minister Narendra Modi's constituency Varanasi, IT minister Ravi Shankar Prasad's home town Patna, and Nashik.