NDA Government’s BPO promotion scheme gets a lukewarm response from the industry

Most top and mid-tier IT and business process outsourcing (BPO) companies stayed away from the project with the exception of Tata Consultancy Service (TCS), which has 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.

According to two officials, 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. Large BPO companies such as Genpact, Infosys BPO and Intelenet did not participate in the round.

A second government official acknowledged that there may have been certain issues with the policy that has led to a lacklustre response. “We are planning to reach out to the big companies and relook at the policy if required,” said the official.

The development may have come as a blow to one of the largest employment generation schemes of the government under which it promised a subsidy of almost Rs 1 lakh per seat for setting up BPO operations in small towns that could have led to almost 1.5 lakh new jobs being created. TCS did not comment on the story.

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. For instance, while Genpact has a centre in Jaipur, Infosys has operations in Pune and Jaipur.

“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,” said Bhupender Singh, CEO of Intelenet Global Services. He claimed that 50 per cent of the company’s India business is already delivered from nonmetro centres in places such as Puducherry, Guwahati and Agra.

Business of BPO firms is dependent on the readiness of their customers to be serviced out of particular locations and many firms are not in favour of small towns.

“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,” Mehta said.

The scheme that was flagged off soon after the Modi government came to power had an outlay of almost Rs 500 crore. A government official said almost 60 companies bid in the first round, but the number of big companies was very low. By Agencies,