Contrast

Posted here are four photos taken in the past few days in the village of Surat – two from the BPO center on Mamaji’s property and two in the village only a few minutes away by foot. (Click to enlarge)

While manning call centers and transcribing European history textbooks are almost surely ho-hum jobs in the developed world, the same cannot be said for this village in Bihar. A vSat Internet connection, a bamboo gasifier for power, inexpensive computers & software, and people’s willingness to experiment have created opportunities in this village previously unthinkable. Case in point, most of the BPO pilot’s staff here did not conceptually grasp what BPO was their first days on the job.

Drishtee’s rural BPO pilot here cannot purport to bring First World living standards to this village, and it faces more hurdles and uncertainty day-to-day than any ho-hum back office operation in US and the UK – or urban India for that matter. Nonetheless, the significance of the project here in Surat cannot be discounted. Just see for yourself.

What a Week!

Since our last update our project has reached a new status, where we've gained confidence in what our specialization in BPO would be – digitization – and are now refining a strategy for scaling and achieving financial sustainability. The week began in the Delhi/Noida region in central India with sight visit and two energizing meetings and has ended in the eastern state of Bihar where the Drishtee BPO pilot is currently operating.

Kutupour served as our first journey into the field and first insight into rural India. Though only two and a half hours from Noida (at least in the early morning before rush hour begins), Kutupour had never received Western visitors prior to us. The result was a somewhat frustrating experience where we spent only forty-five minutes interviewing two kiosk operators and the rest of the time taking photos with every teacher and extended family member of our hosts. The cultural hurdles to conveying what BPO is and level of professionalism necessary to work in one seemed daunting in light of the day. But our tour of the current BPO operation has effectively cast aside these doubts – read two paragraphs down for details.

With a clear view of what we had to work with and what industry was most promising, we presented a mid-internship report of our findings to the directors of Drishtee and Quiver. The presentation quickly evolved into a platform for further action. The resulting new deliverables included creating job descriptions for the management that would scale the current BPO pilot as well as a How-To guide for that management based on what we would observe at the pilot later in the week.

With our new action-oriented agenda we entered a meeting that afternoon the Delhi-based mentor of Digital Divide Data, who helped the Cambodian-based NGO launch in 2001. The interview was highly informative and encouraging, except that the feedback on the proposed decentralized model proved somewhat disappointing; our interviewee believed that only 5% or so of a BPO operation's work could ultimately be decentralized because the lack of management oversight would naturally hinder communication and slow down the turn-around time. This certainly presented a key issue for investigation for the rural journey we began the next day.

* * *

Saraat, Bihar is a 27 hour journey from Noida, with a 24 hour train ride to Darbanga and two hour car ride from there to Saraat. The initial surprise of being greeted by a Hummer-like vehicle after stepping off the sleeper train quickly subsided when we saw what we faced. Take the aggressive driving strategy of any Noida or Kutupour driver and now add the dimension of roads hit by monsoons and government neglect, and there you have the average driving situation in Bihar. We dodged foot deep potholes full of muddy water, sped across one-lane bridges crumbling at the sides but still managed to hit 90 km/hour for the smooth stretches. And the Drishtee employees we rode with didn't even turn a hair.

The BPO Center is impressive on many counts. Firstly, the villagers working in the center had no computer exposure or concept of what BPO is prior to taking this job, although almost all are university educated. Their steady progress with their current digitization project bodes well for the expansion of the BPO project into other low-skill villages in the Drishtee network. While only six full time employees man the twenty computers right now, a dozen more are in training, or which two to three will be recruited for full time employment. The limiting factor to the BPO's growth right now is not a limit labor pool so much as creating a steady supply of work and continuing to build the capacity of the workers. They are motivated, but English is still a challenge, and most of the digitization work is in English.

The strong family network of Satyan, Drishtee's Managing Director, served as a perfect foundation on which to build the BPO. Our host here at the BPO Center is Mamaji, the uncle of Drishtee's managing director. His reputation far preceded him through the other American interns and employees. Most easily likened to Yoda, he is always positive, chuckling, and spreading his words of wisdom. We began the morning with a long walk through the village and rice fields, where he shared his philosophy, political and economic views, and his thoughts on God. He liked Abraham Lincoln and JFK, believed India and the US had complementary human capital capacities, and shared his passion about supporting development in his villages. In his simple but highly expressive English he explained, "Think high, give high; think low, give low." His attitude has a good effect in the center on the entrepreneurs and development visionaries alike in the office.

Two kiosk visits topped off the afternoon, both of which had an interest and capability in data entry work. The kiosk in the larger of the two towns had a particularly professional presentation with four computers connected to wireless internet. This certainly gives hope for a pilot of the decentralized BPO model in the future.

Progress

Greetings from Noida! The Drishtee BPO Project Team has been in India for two weeks now, settling into the Noida office and beginning work on the BPO project and you, our blog readers, are long overdue for a project update.

Our first day in the office, we met with Drishtee’s Managing Director and Founder, Satyan Mishra, and he outlined the parameters of the business model we are to work with, a model connecting rural Drishtee kiosks to rural BPO quality assurance (QA) centers to a central Drishtee BPO hub. Following our meeting, we initially worked on synthesizing all our findings at that point into a document for him in addition to laying the foundation of a revenue model in Excel. After that, the bulk of these first two weeks (out of six total here in India) was spent in interviews, finishing the low-end BPO market map and building a upon the initial revenue model and accompanying set of projections for the next fourteen quarters. The rest of our time was spent learning about Drishtee and getting acclimated.

An important development transpired this past week in which our work on building a low-end BPO market map led us to effectively choose a process for a Drishtee BPO to specialize in: data digitization, which has already been proven as a viable opportunity by Digital Divide Data (www.digitaldividedata.com) a leading rural BPO operating in Cambodia with offices in New York. The benefits of digitization work include low customer data security needs, longer turn around times, numerous verticals to target, and low human capital requirements. However, the market for digitization services is very competitive, so Drishtee needs to forge some sort competitive edge, be it a technological solution or an edge found in rural India’s low wages and low attrition rates as urban India’s rising wages and high attrition rates are making urban BPO more costly. In light of the digitization opportunity, the Drishtee BPO Project is faced with identifying which verticals present the best opportunities and how Drishtee can create a sustainable competitive advantage in the digitization market.

In a following meeting with Satyan, our deliverables for the last four weeks have been redefined. They now are to…

1) Build a comprehensive revenue model with accompanying projections fourteen quarters out;
2) Understand the digitization market, what verticals to target, how to be competitive;
3) Identify strategies for implementing quality control in a decentralized rural BPO network;
4) Determine how to best build capacity. Partner with NGOs & foundations, hire people into Drishtee with expertise, contract pro bono consultants, form a captive BPO relationship with a customer, etc?
5) Update an investment proposal for IFMR, an Indian Bank interested in investing in a Drishtee BPO operation;
6) Find long-term clients for a Drishtee BPO Project as the biggest challenge currently facing the pilot Drishtee BPO operation in Bihar is finding sustained work.

On a separate note, here is a recap of recent interviews we have had in no particular order:

A. Rajan - The head of operations for HDFC Bank in India. More importantly, A. Rajan is responsible for providing work to Sai Seva, the rural BPO operation detailed in the Hindu Business Line article posted below. Mr. Rajan was very candid and detailed what kind of work he outsourced to Sai Seva along with how the transition to a rural BPO – vs. urban – changed his cost structure. Thankfully, Mr. Rajan noted that the Sai Seva BPO was not more costly than an urban BPO, claiming that lower attrition rates, lower rent and higher levels of productivity mitigated the higher connectivity costs. He was quite optimistic about the future growth of rural BPO!

Pierre D'Silva – the Director of the Byrraju Foundation, an Indian NGO piloting a rural BPO as well. The Byrraju Foundation is attempting to achieve the same goals as Drishtee, but are taking a much more centralized approach, targeting rural areas with universities in close proximity and setting up larger scale operations.

Raman Venkat – the COO of FirstSource, a top five Indian BPO firm according to NASSCOM. Mr. Venkat was helpful in explaining his relationship with data-entry subcontractors. Becoming a lower-value-add data-entry subcontractor for large BPO operations was a route the Drishtee BPO Project was considering, but the idea has since fallen out of favor in light of the strict regulations imposed by large BPO operations.

Jeremy Hockenstein – the founder and CEO of Digitial Divide Data, a pioneering rural BPO operation based in Cambodia and profiled in Thomas Friedman’s The World is Flat. Jeremy was incredibly helpful in the shaping of our revenue model assumptions. He knew what assumptions were realistic and what were not. Jeremy also highlighted the merits and drawbacks of digitization work and put us in touch with a sympathetic BPO CEO in Delhi who was a key mentor to Digital Divide Data in its inception.

Matt Easterlin – a recent Stanford grad working in BPO in Hyderabad who – as hoped – was candid and detailed the processes his BPO specializes in and how his BPO was started.

Narayan Ramasubbu – a professor at Singapore Management University who specializes in outsourcing;

Eugene Kublanov – the COO of neoIT, a Bay Area based outsourcing consultancy firm;

Indy Banjeree – an outsourcing consultant for TPI. In addition to answering our questions, he graciously offered to forward our value proposition to some potential large clients – IBM for example – which is great, but I fear such clients may be a long shot at this stage.

Before this post concludes, here is a snapshot of the Dristhee BPO Project’s agenda for the coming two weeks:

Next Monday, we are taking a day trip to the field to visit a Drishtee kiosk in Uttar Pradesh to assess Drishtee kiosks’ potential as a “node” in a larger Drishtee BPO network. Much uncertainty as well as much potential surrounds Drishtee kiosks’ role in a greater Drishtee BPO operation, so kiosk site visits on our part will be imperative in the coming weeks. On Tuesday, we head to Delhi for the day to speak with a BPO executive who is enthusiastic about the prospects of rural BPO and was key in building Digital Divide Data’s capacity when Jeremy founded it in 2001. Finally, on Wednesday morning we head to the Indira Ghandi National Center for the Arts to observe their digitization project. That afternoon, we will hop on a train in Delhi for the 24 hour journey to Bihar, India, where Drishtee is piloting a rural BPO operation only a few miles from the Nepal border with the aid of a generator and a VSat internet connection. The world is indeed flat, no? Our time in Bihar observing the rural BPO pilot will last five days before returning to Noida around September 6th to process everything we will have learned. There is a chance we will head to Assam from Bihar to see more kiosks, but that remains up in the air.

Thank you for making it to the end of the post! We look forward to keeping you updated in the coming weeks.

Sincerely, The Drishtee BPO Project Team

The Hindu Business Line - Rural BPO Cradles Young Dreams

Below is an interesting article from the Hindu Business Line forwarded to us by FirstSource, a leading Indian BPO company, that helps further legitimize rural BPO.

Rural BPO Cradles Young Dreams
The Hindu Business Line

B. Kiran Kumar, 20, begins his day at his father's hair-dressing saloon in Puttaparthi. Similarly, Mr G. Hari Babu from the nearby hamlet Veeranjenyapalli turns milk-vendor in the mornings. Both these young men, however, nurse bigger ambitions and, in pursuit of their dreams, work for Sai Seva Business Solutions, a rural business process outsourcing (BPO) unit in Puttaparthi. The Hari Babus and Kiran Kumars of rural India are the new faces of the Indian BPO sector. "Sai Seva has given me a new life," says Mr Kumar, barely two months into his BPO job.

"It has not only enhanced my self-confidence, but also given me an opportunity to study further." Mr Kumar, who earlier couldn't continue beyond 12th Std, has now enrolled for Bachelors of Computer Applications at the Tamil Nadu Open University. A year into the job, Mr Babu, who earns Rs 3,500 per month, trains newcomers at Sai Seva while pursuing his MCA at the Indira Gandhi National Open University. Sai Seva (Serve and Inspire Simple Employment for Village Advancement) BPO was started by the management students of Sri Sathya Sai University in May 2006.

"Our idea is to help educated rural youth upgrade the quality of their lives without destructing the cultural fabric. We aim to hold back the youth from migrating to cities by providing employment here in villages," said Mr Prashanth R., director of Sai Seva. Sai Seva recently got a major boost when HDFC Bank decided to outsource part of its work on data capture and profiling of new account details. This means that if you happen to open a new account with HDFC Bank, chances are that your profile and personal details will be indexed at Sai Seva BPO in Puttaparthi.

HDFC Bank's head of operations, Mr A. Rajan said his bank would initially outsource about 30,000 applications to Sai Seva and might later scale up to 3 lakh. Currently, the bank's data capturing and indexing of customer details is done in-house by some 1,000 employees spread across Mumbai and Chennai. HDFC, which incurs a data profiling cost of Rs 8-11 per application, does not see any cost advantage to begin with as the gains are offset by increased connectivity costs. "As we scale up outsourcing we may see some cost advantage," Mr Rajan added.

Sai Seva's director, Mr Sai Narain C.D.K. said the rural BPO offered clients a cost advantage of around 40-60 per cent as compared to larger cities. Sai Seva has no night shifts and has not faced attrition so far. "The cash component of the salaries paid is pegged at a moderate level while ensuring all other benefits such as PF, ESI among others. The idea is to make them more responsible," he added. The BPO employs about 50 people living within a radius of 10-15 km from Puttaparthi and counts the Hyderabad-based rural finance firm BASIX, Royal Sundaram and the US-based mortgage firm Reasource among its other clients.

"About 80 per cent of our employees are graduates and the remaining have passed 12th Std. The concept has taken off so well that we have some 250 resumes waiting to be scanned," said Ms R. Sujatha, director, Sai Seva. The BPO provides free computer training for potential employees and sponsors some for higher education. Stating that the workforce was clear about its expectations, Ms Sujatha said, "We have got assurances from the employees that they'll go back and work for parents back home." "There has been tremendous interest in the concept from elsewhere and we are exploring options to open more centres."

Mr Prashanth and Ms Sujatha run their own BPO firm, Trayee, back home in Chennai, while Mr Sai Narain is head of consumer banking at Standard Chartered in Bangalore and Mr Prasad Ayyagari, another director at Sai Seva, is with an IT firm in the US. The Sai Seva directors do not take any payment from the venture and all profits are ploughed back for developmental activities.

Greetings From India!

After wrapping up our work in the US with a few last interviews with BPO service providers we packed up to migrate from one major city to another, New York to Delhi (or Noida to be more exact). The first thing that strikes you as you step into the hazy daylight of Delhi, besides the humidity, is the traffic. Not merely the density of traffic at any given time of day or the general lawlessness of the roads, but the amazingly varied modes of transportation used! From motorized rickshaws to bicycle rickshaws, to independently owned bicycles, motorcycles, and scooters, to cars and buses, all are intermingled, moving bumper to bumper so as not to get cut off by one another. Side mirrors are rarely used, and furious beeping serves as the primary means of communication for buses that choose to barrel through.

The Drishtee office has been a welcoming space, certainly with a lot of advantages over the 28th Street Starbucks and full of kind and helpful employees to answer the simplest questions like how to make a phone call. We also soon discovered that our apartment complex is full of Drishtee's top leadership, which also helps make the city feel a bit smaller. After one-on-two conversations on Monday we heard the new and updated vision for kiosk BPO operations which, to our pleasant surprise is very consistent with the advice of several of the IT consultants and people industry we have spoken with. After delivering a summary of our findings so far and our understanding of the Drishtee BPO model, our next conversation will start putting dates and more specific mile stones to our plan for the next five weeks. Soon we will be off to Bihar, Hariana and Utar Pudesh for field visits to the kiosks.

Our third day here was the 60th Indian Independence Day. Our office had its own flag raising ceremony; when they hoisted it, marigold petals that were wrapped in the center fell and scattered in the wind. Radika, our HR head, passed the microphone around after a poetry and song open mic asking everyone to say something. Given that the whole ceremony was in Hindi and that we are new to the office, it was hard for us to say anything substantive without feeling silly. Of course we couldn't really tell how people identified with the day, whether it was sort of a Fourth of July, relax-and-be-happy-about-our-country sentiment, or if it had deep significance for many people. When several office-mates began singing, "We Shall Overcome," the universality of the kinds of struggles peoples of nations have faced around the world stood clear. The Indian people had a vision for change over 60 years ago, and Drishtee now plays a role in shaping a modern vision for this country. What an honor to play a role in achieving it.

- The Drishtee BPO Project Team

Quick Update

Good afternoon Drishtee BPO Project Blog readers! This post is going to be a brief account of what is going on this week just to keep everyone up to date.

After speaking with Nitin on Sunday, we decided to work on a market mapping project this week for the low-end, low-skill set segment of the BPO market in the U.S. - a key piece of the greater puzzle. It has been a challenge aggregating all this information for a specific niche while being confident our analysis is comprehensive. Nonetheless, we will hopefully have a sufficently complete picture come Friday.

This morning we interviewed Noshir Kaka a McKinsey & Co. principal in Mumbai who authored three McKinsey Quarterly articles on the current state of the BPO industry in India. We are very grateful he took the time to speak with us. Mr. Kaka was helpful in putting a Drishtee BPO operation in the greater context of the BPO industry trends. Some important points we touched upon were that the BPO industry is an incredibly supply constrained space right now (i.e. the Wall Street Journal article in the Blog Docs Box.net widget) and that Drishtee should not worry at all about there not being enough work. There is demand for $300 billion of BPO work but only roughly $30 billion of that can be served at the moment. The lesson for Drishtee: worry about overcoming infrastructural and human capital limitations, not whether there will be work or not. Along similar lines, Mr. Kaka said that because the industry is so supply constrained, we should not stress about low human capital, low priced competitors in Eastern Europe of China.

The most encouraging revelation in our conversation with Mr. Kaka was that this idea - rural BPO in India - is not new. Current BPO operations, namely Satyam, are subcontracting work out to rural BPO operations on a non-profit and for-profit basis. We were encouraged to get in touch with them. Despite the apparent enthusiasm for rural BPO, Mr. Kaka noted that education and infrastructure limitations have kept rural BPO from taking off. Can Drishtee gain a new edge with their network/infrastructure of 1600 kiosks? Let us hope! Lastly, when prompted with a question about establishing and maintaining credibility as a decentralized organization - unable to offer walkthroughs for clients and directly connect them to rural BPO operators - Mr. Kaka focused less on our ideas to create a main office/liaison that can be held accountable or create an open online customer evaluation log; he emphasized that we should worry less about how we structure our interaction with the client and instead focus on building robust quality control capabilities.

That covers the highlights of our interview with Mr. Kaka. We have lined up a few more notable interviews for the next two plus weeks. Tomorrow we will talk with Matt Easterlin, a recent Stanford grad working in BPO in India. Hopefully, he will be more forthright than most BPO operators. Christina has encountered muted hostility in a conversation or two with current BPO businesses who - unfairly - perceive Drishtee as a potential threat. Other interviews lined up include one with Eugene Kublanov the COO of San Ramon based BPO operator NeoIT; the NASSCOM foundation; and lastly, Vivek Kulkarni, the founder of Brickwork India, an India BPO operation, as well as the former IT Secretary for the state of Bangalore and a member of Thomas L. Friedman's cast of charaters in The World is Flat.

Lastly, on the right side of the blog we posted some links for your reading pleasure to The Economist, BusinessWeek and International Herald Tribune articles on Drishtee as well as Acumen's involvement with Drishtee.

Thank you for checking in!

Sincerely, The Drishtee BPO Project Team

Representing Rural India in NYC

Calling the 28th & Park Ave. Starbucks, an apartment in Harlem and another in the Upper East Side our office amidst steam pipe explosions and the furry of lightening-fast walkers, we begun rolling the Drishtee BPO Project ball this past week in New York City. In the first of the project’s ten weeks, we read pertinent literature – case studies, academic literature, press clippings – and interviewed academics and people in industry to gain insight into the BPO industry. Our goal in the first week was to begin building a framework, arming ourselves with proper tools to analyze the BPO industry and how Drishtee can forge a niche. In the coming three weeks before we head to India, we will shift from building this framework to identifying the best BPO market for Drishtee to pursue. Then once in India, we will examine Drishtee and the infrastructure and human capital on the ground, drafting a final business plan and strategic vision for Drishtee’s BPO operations.

Highlights of the past week include interviews with Professor John Roberts at the Stanford GSB, Professor Martin Kenney at UC Davis, Professor Sunil Kumar at the Stanford GSB and Leila Chirayath from Katzenbach Partners who will be pursuing her own BPO-focused social enterprise called MarketforChange.org. Out of these conversations came numerous ideas. Professor Kenney urged us to find value to add beyond simple cost-savings as China will increasingly offer equal or greater cost savings for the same little-value-added services. He also noted that unless we can conveniently offer sight visits for Western customers, we will have to find other mechanisms to establish and sustain credibility. Most importantly, Professor Kenney urged us to look to current BPO behemoths (i.e. Infosys) for work because they will be more receptive to Drishtee’s vision than western clients and potentially easier to interface with. Both Profesor Kumar and Leila Chirayath were receptive to this notion. Furthermore, Leila shared here insight that Drishtee will unload the tricky job of brokering western clients if it works through current – and ever more sophisticated – BPO players like Infosys. When asked about how to best systematically pursue potential markets and opportunities – hoping for a panacea solution – Leila confirmed that at the end of the day finding the best opportunities comes down to being creative, networking and keeping one’s ear to the ground.

Another significant development unfolded last night when we met Ann Rogan, a current young American Drishtee employee in the US for a few weeks, and our Drishtee liaison/mentor David Lehr, who had just returned to New York to debrief with the Acumen Fund, in Union Square for dinner. We peppered them with question after question about India, Drishtee and BPO. They graciously answered our questions, filling the void of knowledge in our head about Indian culture, Drishtee, etc. In conversation, we may have stumbled upon a promising BPO service that has a high value-added to skill set required ratio! We ought to keep the details under wraps for the time being but will let you know if the idea survives further analysis.

Shifting our focus, we now hope to target potential BPO clients in the US for interviews to better understand the needs we may need to serve. Things for the Drishtee BPO Project to look forward to in the coming week are a potential interview with Rafiq Dossani Ph.D. at the Stanford South Asia Inititive who is the leading expert on the use of information communication technology (ICT) in rural India and is cited in a recent Wall Street Journal article on outsourcing (downloadable from the “Blog Docs” Box.net widget on the right along with Dr. Dossani’s executive summary of his 2005 study on ICT in rural India); an interview with Noshir Kaka, a McKinsey & Co. principal in Mumbai and author of three of the McKinsey Quarterly articles recommended by David Lehr and Professor Roberts; conversations with current BPO providers to gain insight in the industry – granted they will be sufficiently forthright with us, an unexpected challenge we have encountered thus far; and finally, the drafting of a skeleton business plan.

Thank you for checking in! Expect to hear more from us in the near future.

- The Drishtee BPO Project Team

McKinsey Quarterly Pieces

Hello Drishtee BPO Project supporters! Last week David Lehr at Acumen and Professor John Roberts at the Stanford Graduate School of Business emailed us a few articles from the McKinsey Quarterly on the business process outsourcing (BPO) industry that might help put the Drishtee BPO Project into the context of where the BPO industry is heading in India – and globally. The article titles and authors are below and can be downloaded from the included Box.net widget:

- “Benchmarking India’s Business Process Outsourcers” by Noshir F. Kaka, Shailesh S. Kekre, and Saipriya Saragan
- “Ensuring India’s Offshoring Future” by Diana Farrel, Noshir Kaka and Sascha Stürze
- “The Untapped Market for Offshore Services” by Chakrabarty, Prashant Gandhi and Noshir Kaka
- “Offshoring and Beyond” by Vivek Agrawal, Diana Farrel, and Jaana K. Remes
- “Running a Customer Service Center in India: An Interview with the Head of Operations for Dell in India” featuring Romi Malhorta



In this post, we want to summarize some the articles’ key findings and communicate what implications we think these findings have for the Drishtee BPO project. Clearly, the significance of these studies from Drishtee’s point of view is open to interpretation; so feel free to let us know if you think these articles present different implications for the Drishtee BPO Project than we draw in this post!

Although each article investigated a different facet of the BPO industry, a universal conclusion across every piece declared that the business process industry has tremendous potential for growth in the future as only a fraction of the addressable market is currently served. The authors of “The Untapped Market for Offshore Services” find that…

- The global market for offshored IT services and business processes has nearly tripled since 2001. However, service providers have so far captured only 10% of a $300 billion opportunity.
- Banking and Insurance account for nearly half of the addressable BPO market, but companies have captured less than 10 percent of it this far, and that in the next five years, the lion’s share of growth is likely to come from these two industries
- 35% of the work that could be offshored will be by 2010.

Lastly, the authors of “Offshoring and Beyond” find that…

- Business process outsourcing is still a nascent industry.
- In 2002 it was worth $32 billion to $35 billion, just 1% of the $3 trillion worth of business functions that could be performed remotely.
- Because of the significant benefits already being realized through offshoring, the market is projected to grow by 30 to 40 percent annually over the next five years.

The $300 billion estimate given for the potential size of the addressable services and BPO market by the authors of “The Untapped Market for Offshore Services” seems like an optimistic number in light that the authors of “Benchmarking India’s Business Process Outsourcers” suggest that the addressable opportunity is a “staggering” $122 billion to $154 billion. However, $300 billion looks puny when compared to the $3 trillion estimate placed on the “worth of business functions that could be performed remotely” by the authors of “Offshoring and Beyond.” In short, the lesson to be learned here is that while the full potential of the BPO industry is unknown, there is certainly room for significant growth, and that is good news for Drishtee. Case in point: If the industry only achieved two thirds of the more conservative 30% annual growth estimate, a 20% annual growth rate presents significant room for Drishtee to forge a niche in a growing market.

Yet, a not inconsequential caveat to these rosy forecasts is that of the four BPO processes examined in “Benchmarking India’s Business Process Outsourcers” – basic data, basic voice, specialized voice & knowledge services – the growth will largely be focused in the higher value added services, and Drishtee will likely be confined to the lower value added services like data entry because of the limited rural infrastructure and human capital. The silver lining of this caveat is that the lion’s share of growth in the BPO market is projected to come from the insurance and banking industries – two sectors that both Greg Leung at Apple Inc. and Professor Kenney at UC Davis recommended we pursue.

Thankfully, the forecasted growth in the BPO industry is not the only good news for Drishtee in the McKinsey studies. For instance, McKinsey authors deduced that…

In “Ensuring India’s Offshoring Future,”

- The government must invest in infrastructure as well as education in order to remain competitive. Specifically, airport, road and utility infrastructure investment needed beyond private investment. A core Drishtee BPO model that works in the most basic infrastructural settings (i.e. Bihar, India) will ideally be able to operate on the most incremental communication infrastructure built by the government, squeezing the most from any new public investment.
- Policy makers should encourage companies to look for talent in cities that haven't been touched by the offshoring bandwagon, where cheap supply may well exceed demand. India has huge numbers of skilled graduates in disciplines other than engineering. Drishtee may have access to a more skilled workforce in its villages than we currently presume; the above finding implies that a current lack of economic development in various regions does not necessarily signify a lack of skilled human capital.

In “Offshoring and Beyond,”

- Offshore workers can be more motivated than workers in developed countries because of the higher prestige of these jobs in the developing world.

However, every McKinsey conclusion did not paint a rosy picture for Drishtee. Perhaps the most disconcerting realization came from the interview with Romi Malhorta from Dell who noted that the biggest challenge in expanding beyond Bangalore was the talent supply, particularly middle management. Malhorta exclaimed that the reason Dell has three centers in India and not six is not that they don’t have demand; it is because they are talent constrained. While Drishtee may be able to field sufficiently qualified workers at many of their 1500 sites, it appears Drishtee will likely struggle to find the needed BPO middle managers.

Finally, the articles offer some food for thought with respect to better understanding the BPO industry dynamics and BPO strategy. Some of these key insights state that…

- Operational processes can be classified into five categories: costs, quality, speed and flexibility, productivity and innovation, and risk management.
- The pace of BPO adoption will be shaped by the interplay of three forces: supply (the capacity and quality of offshore locations), demand (the rate at which companies adopt offshoring), and the actions of industry players.
- In a low-wage country, the capital infrastructure – including office space, telecommunication lines, and computer hardware and software – should be used as intensively as possible. Companies can boost their capital productivity in low-wage environments in three ways: a greater number of shifts, cheaper capital equipment, and reduced automation
- A mistake made in Dell’s early years in India was growing too fast without a well-structured plan, adding unnecessary complexity to their operations – a lesson Drishtee should take to heart.

If you made it through this post, thank you for taking the time. And again, if anything grabs your attention in the articles or our own conclusions, please let us know!

Sincerely, The Drishtee BPO Project Team

Hello World

Welcome to the Drishtee BPO Project Blog! This is the first post in a journal by two Stanford students, Jon Casto and Christina Ward, who – with the support of very insightful and patient people – will spend summer 2007 in United States and India striving to answer one question: How can today’s flat world empower rural India? An innovative Indian enterprise named Drishtee (after the Hindi word for “vision”) has been asking itself that question since its inception. As the fastest growing high technology start-up in India, Drishtee currently offers goods and services in rural India never before seen in Indian villages like Internet access for example. However, Drishtee seeks to move beyond simply offering goods and services, striving now to create employment opportunities as well, and it has graciously welcomed two fairly naïve – but very enthusiastic – students to help in this endeavor.

One of the biggest challenges in rural India today is the lack of income earning opportunities for rural residents. In many of India’s 630,000 villages, most of the productive and educated villagers (generally men in their early 20s or 30s) are leaving for cities to find work. They often marry and have children first before leaving, radically changing the dynamics of typical family life. Without new opportunities, the exodus of wage earners will only worsen in the villages and place an ever-increasing burden on rapidly urbanizing Indian cities as migrant populations increase.

To help mitigate this unsustainable trend, Drishtee is developing Business Process Outsourcing (BPO) opportunities – an industry wildly successful in urban India – that will provide higher paying jobs in rural villages, slow the migration trend, and ultimately provide positive revenue for Drishtee. We, Christina and Jon, will spend the summer crafting a business plan that will cover where BPO work will come from, what the potential customer requirements are, how to price this offering, and how Drishtee should build a model for ‘delivering BPO jobs’ to rural India, scaling BPO operations within Drishtee’s current organization.

We report to Nitin Gachhayat, Drishtee’s co-founder, as well as David Lehr, an Acumen Fund Fellow currently working with Drishtee in India. While in New York, NY for four weeks in July and early August, we will research the BPO industry, interviewing academics and industry leaders, compiling weekly summaries of our findings, hoping to comprehensively understand the needs a Drishtee BPO operation must fulfill. For six weeks beginning in mid-August, we will travel to Noida, India, a Delhi suburb, to learn about Drishtee’s current operations and the numerous constraints on the ground. Another important segment of our time in India will be spent in Bihar, one of the least developed regions of India, where Drishtee currently operates a pilot BPO operation, which will provide tremendous insight - and challenges - with respect to rural BPO.

This project will surely have its various successes and failures, and we intend to keep our supporters informed on everything that unfolds, so please check in weekly. Who knows what will happen? In the end, we may find that the world isn’t quite flat enough – yet. Though, we find encouragement in a simple mantra: nothing ventured, nothing gained. If all goes well, we will help Drishtee create an entirely new business model and further empower rural India.

Lastly, we want to extend our gratitude to those who have already helped us, namely David Lehr and Nitin Gachhayat at Drishtee, Andi Kleissner at FUSION, Greg Leung at Apple and those at the Stanford GSB’s center for social innovation.

We hope you will check in often, and if you have anything to share with us, please feel free to contact us at DrishteeBPO@gmail.com!

Sincerely, The Drishtee BPO Project Team