June 30th, 2010 
Kshiti Garg BPO industry has thrived all these years because of its ability to deliver services at a low cost. Increasing infrastructure costs, real estate costs, and salaries have raised the incurred costs significantly and as a result Indian BPOs in Tier-1 cities are looking at Tier-2 and Tier-3 cities for operation.
Movement to low-cost Tier- 2/3 cities seems attractive despite lower employability and higher management overheads. However, industry analysis shows that providers can reduce their total operating costs by nearly 20-30 percent by making this shift within India. This would empower the industry to effectively tap labor pools in several states across India.
Taking a closer look at the industry stats, the picture says that the Indian BPO industry is slated to rise to 220-280 Billion USD by 2012 generating around 2 million direct jobs. This vast opportunity can be capitalized well by the Tier 2/ 3 regions in India. Technology availability would help develop the ecosystem required for BPO industry to flourish.
A successful BPO hub in any Tier 2/ 3 cities demands creation of an enabling physical (international connectivity, mass-transport system, telecom connectivity, power, housing, etc.) as well as social (healthcare, education, shopping and entertainment, security, hotels, etc.) infrastructure.
The current drawbacks for Tier 2/ 3 regions arise from the basic reason of lesser proximity from technologically developed cities. This creates a natural lag in the industry specific skill-set of the available manpower. For a contact center, overcoming language and accent barriers, getting trained supervisors & IT personnel and local support from the solution provider become key challenges.
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