Govt to take a look at poor response to BPO scheme

The Indian BPO promotion scheme has drawn lukewarm response from companies as bids for only about 12,000 seats have been received from 61 companies as against the planned 48,300 seats

Even as the government is looking into the reasons for poor response towards the BPO scheme, it is not likely to relax the clause regarding expansion as Niti Aayog is against such a move.

The Indian BPO promotion scheme (IBPS), which has been approved under Digital India programme to incentivise BPO/ITeS operations in smaller cities and towns, has drawn lukewarm response from companies as bids for only about 12,000 seats have been received from 61 companies as against the planned 48,300 seats.

Although about 100 companies participated in the pre-bid conference and expressed interest in the scheme, the final number of bids that the government got was a meagre 12,000 with none of the big IT companies, barring TCS, showing interest in the scheme.

“Involving corporate sector in social objective is always a difficult proposition. They are apprehensive and keen to get best bargain. We are looking into the reasons that led to withdrawals. Government is keen to give inclusiveness to the growth,” Electronics and IT Minister Ravi Shankar Prasad told Business Standard.

He also said the demand by industry to permit expansion has not found favour with NITI Aayog.

The administrative approval for implementing the scheme was issued on December 28, 2015. As per the scheme, 48,300 seats will be distributed among each state in proportion of state’s population, with financial support of up to Rs 1 lakh per seat in the form of viability gap funding, with an outlay of Rs 493 crore.

Cities including Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR (incl. Delhi, NOIDA, Gurgaon & Faridabad) and Pune have been excluded from the scheme.

A request for proposal (RFP) was issued in April this year for the scheme and companies were required to submit their bids by June 30. The last date was later extended to July 8 and bids were opened on July 11.  

An official in Software Technology Parks of India (STPI), which is the implementing agency for the scheme, said as companies are not allowed to expand, big firms are not very interested in the scheme.

Also the official said many big companies including HCL and Tech Mahindra have sought further clarifications regarding the scheme and STPI is in contact with them.

Another senior official at the Electronics and IT Ministry pointed out that industry is asking for priority in the allocation of work by the government. The official further added that state governments and district authorities will also have to be taken onboard for the scheme and this option can be explored at appropriate time.

Initially, there was very good feedback for the scheme. As many as 78 companies have shown interest to set up BPO operations at 190 locations across the country for about 1,25,000 seats. However, it needs to be ascertained what went wrong after the initial response for the scheme.