BPO boom moving to smaller cities

More and more domestic companies are setting up BPO units in district headquarters, tier-III cities and non-IT clusters to save on real estate costs and stem attrition rates.

While Satyam Computer Services and the Jindal Group have already started BPOs in small towns of Andhra Pradesh and Karnataka, respectively, new players are in the early stages of talks in this regard.

Source: Rediff.com

Iron and steel major Jindal Group, which runs a voice- and data-based BPO unit in Torangallu in Bellary district of Karnataka, is expanding to other parts of the state. Informed sources said, with an aim at replicating its success in Bellary, the company had sought the Karnataka government’s support in spreading business to other district headquarters such as Shimoga, Hassan, Raichur and Kolar.

According to sources in the Karnataka IT department, JSoft, Jindal Group’s software unit, is establishing a second BPO unit in Bellary with an investment of Rs 7-8 crore (Rs 70-80 million). It has also finalised plans to establish a third BPO unit in Hubli IT park.

“The attrition rate in major IT clusters is very high. This is forcing the IT companies to look at tertiary cities to tap the manpower. Basically, they are looking for college students, who can execute work after receiving training. The state has received applications seeking space for BPOs in cities such as Tumkur and Kolar,” M N Vidyashankar, Karnataka’s IT secretary, said.

Byrraju Foundation, the NGO outfit of Satyam Computers, is already running a BPO in Jallikakinada village in West Godavari district of Andhra Pradesh. The company is planning to open seven more such BPOs in rural areas of the state.

Similar BPO operations are being carried out in Kuppam in Andhra Pradesh and Kizhanur village in Tamil Nadu by HP and Chida Soft. Bangalore-based SLN Tech Services, which provides e-ticket booking service to a host of private bus operators and resorts in south India, has set up operations near Hebbal, a village on the outskirts of Mysore.

The company has shown interest in taking over e-ticket booking services for Karnataka State Road Transport Corporation. “We are also applying for similar services in Andhra Pradesh. We are planning to open a second BPO unit on the outskirts of Hyderabad,” said SLN Tech Services Director Dinesh Babu.

The North West Karnataka Road Transport Corporation, a Karnataka government undertaking, is planning a BPO unit in Hubli to process the discount passes meant for students and senior citizens.

The approval is pending before the Karnataka state Cabinet.IT firms are not only moving to district headquarters, but are also setting up operations in towns and cities, which do not belong to any of the IT clusters. Bhilwara Scribe, a unit of the textile and power conglomerate LNJ Bhilwara Group, operates a BPO in Bhopal, Madhya Pradesh, providing services in medical transcription, data processing and indexing for 15 hospitals and 10 clinics across the US, Canada and Belgium. It also provides services in business transcription in HR-related companies as well as conferences.

“Though Delhi and Bangalore are the hot destinations for IT and BPO companies, we opted for Bhopal. We had tested and interviewed 500 people in New Delhi and then tested the same number of people in Bhopal. The results showed the quality of manpower was almost at par.

Further, Bhopal had an edge due to low infrastructure cost with potential and untapped manpower. We were the first company to venture into this sector in Madhya Pradesh,” said Rajvind Ahluwalia, CEO, Bhilwara Scribe. Nasscom Vice-President Ameet Nivsarkar said: “It’s a healthy move and is expected to create a lot of employment in the rural areas.

India’s retail boom

The age of consumerism is here. India is currently experiencing a retail boom with various national and international retail players trying to grab their share of the growing Indian middle class.At the India Retail Forum 2007, Vinod Sawhney, president and CEO of Bharti Retail, discussed the importance of retail in a growing economy. He highlighted the rapid rise in India’s foreign exchange to US$ 271 billion in 2007.

Source: agencyfaqThe average household disposable income is growing by a healthy 5.9 per cent and the average individual disposable income is growing by 3.6 per cent each year. At this rate, the average household income in India is expected to triple over the next two decades.

By the end of 2005, the total expenditure on consumer products in India was Rs 17 trillion. Sawhney said that keeping all other factors of growth in mind, this will quadruple in the coming two decades and reach Rs 70 trillion by 2025.

In such a scenario, consumption will be driven by certain key locations in the country such as the top 10 cities, including Chandigarh, Goa, Mumbai, Pune, Bangalore, New Delhi and Gurgaon. These cities will facilitate consumption growth in new consumption categories such as jewellery, pharma, fashion, entertainment and services.

Currently, the food and grocery category commands the highest percentage share of household spending. Most Indians still spend 46 per cent of their income on food. According to Sawhney, food and grocery is a very important driver of consumption and will remain so in the coming decades also. But the share of food and grocery in the pie will come down in comparison to other categories such as mobiles, real estate, automobiles, fashion and other entertainment services.

Sawhney says that in a resurgent economic scenario, the retail segment is likely to benefit society 360 degrees. Retail creates 10 per cent of the jobs in the world and contributes 10 per cent to the world share of GDP. In India, retail is likely to create an estimated two million jobs by the end of 2010. The masses will thus benefit with opportunities for employment and franchising.

Consumers will get goods and services at lower prices but better quality. There will be an improvement in the overall shopping experience with wider assortment of and access to goods, which will in turn cater to the diverse populations across the country. Farmers will benefit from the elimination of middlemen and will thus earn higher profits and have access to better markets. Industries will get better infrastructure to sell their goods and services and there will be a radical improvement in the packaging and designing of products.

source: agencyfaqs!

The multiplex boom sweeps India

India’s multiplex bandwagon has gone beyond the metros to redefine entertainment in B and C class towns. “While the first phase (of the multiplex story) saw emergence of multiplexes in metros and now this growth is spreading to Tier 2 and 3 cities like Lucknow, Indore, Nasik, Aurangabad, Kanpur, Amritsar and so on,” says Ajay Bijli, managing director, PVR Cinemas. And PVR is not alone.

Other top multiplex players like Adlabs Films (where Anil Ambani holds a 51% stake), Inox Leisures, Shringar Cinemas (Fame multiplexes), Fun Multiplex (of Essel group) and Cinemax India too have ventured to small towns across the country from Darjeeling to Mangalore to Ghaziabad to Pimpri to Pune to Panipat to Allahabad to Indore to Latur to Agra to Thane to Lucknow to Hyderabad to Nasik to Jaipur to Visakhapatnam.

Projects are under way in places like Kochi, Bhatinda, Coimbatore, Kota, Madurai and Ambala. “Metro or non metro, if a town has a population of more than 10 lakh (1 million) people, we are interested,” says Alok Tandon, chief operating officer, Inox.

“About 38 cities in India would qualify for that,” he adds. “Given that there is little or no means of entertainment in B and C class towns, there is a huge potential for multiplexes,” says Devang Sampat, general manager, marketing, Cinemax.

The rising prominence of smaller towns can be gauged from the fact that movie stars are now touching down at these places to promote their films. If Aamir Khan was in Thane, a suburb of Mumbai, for the release of Rang de Basanti, more recently Amrita Rao was in Nasik for the release of Vivaah.

“After two years, non metros will clearly be the drivers for film exhibition companies,” says a foreign fund manager, who owns and tracks multiplex stocks. “With box office collections from non metros, expected to move up one cannot ignore the smaller towns.”

At present, as much as 65% of the total box office collections in the country come from non metros, says Sampat of Cinemax. “We see this changing to 30:70 metro-non metro in three-to-five years,” he adds.

Look at their plans. PVR, which raised almost Rs 128 crore (Rs 1.28 billion) last December through its initial public offering, has gone for a new brand, PVR Talkies, to foray into smaller places.

PVR Talkies plans to enter 70 cities — including Khanna, Jalandhar, Amritsar and Moradabad — over the next three-to-five years. Adlabs, which says it would invest

Rs 200 crore (Rs 2 billion) over the next three years, is eyeing places like Hyderabad, Delhi and NCR, Agra, Jalandhar, Ludhiana, Indore and Allahabad.

Inox, which has entered into a share swap deal to take over Calcutta Cene Pvt Ltd (CCPL) — known for its multiplex brand 89 Cinema — already has multiplexes in smaller places like Vadodara, Darjeeling, Goa, Indore, Jaipur, Kota, Nagpur and Pune.

Its theatres are coming up at Chennai, Hyderabad, Jodhpur, Raipur, Lucknow, Nagpur, Kharagpur, Borivali, Pune and Vijayawada. Further, the CCPL merger will bring in nine multiplexes in West Bengal and Assam to its fold. Similarly, Shringar — already operating in Kandivali, Surat, Nasik and Pimpri — is taking its Fame to places like Aurangabad and Thane.

Pricing It Right

As in metros, in smaller towns too it is the retail boom that’s mostly driving the multiplex story. Mall developers all over the country are wooing multiplexes to occupy their top floors as anchor tenants who would ensure footfalls.

“The arrival of the mall syndrome has accelerated the growth of cineplexes as multiplexes are the anchor tenants in most of these malls,” says Shravan Shroff, managing director, Shringar Cinemas.

But the game is slightly different here from that in metros. For one, multiplexes are forced to price their tickets lower as affordability levels are lower in smaller cities.

“Customers in these towns would not have the capacity to pay upwards of Rs 100 for a ticket, hence we have entered these towns under a separate brand name of PVR Talkies,” says Ashish Shukla, chief executive officer, PVR Talkies.

Cinemax, for example, has priced its tickets at less than Rs 100 in Nashik, while in its Mumbai property the average ticket price is Rs 150. Also, revenues from food and beverages (F&B) and advertisements are lower in smaller towns.

According to Sampat of Cinemax, F&B revenue constitute 15-20% in non-metros compared to 20-25% in metros. “While ad revenue in metros would be 10%, non metros would yield 5%,” he adds. “Since my margins in food and beverages are as high as 65%, lower F&B revenues from the segment, would delay my break even in B and C class cities,” murmurs a multiplex operator who doesn’t want to be named.

Industry watchers feel this will change. “Over time, F&B and ad revenues from non metros would match the metros,” says Chintan Mewar, analyst at Almondz Securities. Also, the consumer preferences are different. If hotdogs and popcorn are popular in the metros and semi-metros, in smaller towns, people would rather go for the traditional samosas and vada paavs.

To make up for lower revenues, exhibitors are entering the B and C towns without some of the frills they offer in metros. For example, while Cinemax offers reclining chairs in Versova, Mumbai the chairs are simpler in Nashik. PVR has an air-cooled lobby in Latur, while the lobbies in its metro properties are air-conditioned. But they won’t call it cost cutting. “The ambience is adjusted to the local environment,” as per PVR’s Shukla.

Farewell, Single Screen

So what if multiplexes constitute just 1% of the total number of cinema halls, and 4-5% of the 12,900 screens, in India, the industry is talking about the end of single screens. Single screens, with their low quality ambience, would find it tough to survive in the long run, it is felt.

“Over a period of time, theatres will die a natural death,” says Sampat. This because there is a rising demand for quality cinema exhibition infrastructure. Also, before long, digitisation will be the industry standard and exhibitors will have to shift to it.

“Though the propensity to watch movies in India is high, there is a big gap in terms of quality-viewing experience between the metros and the smaller cities,” says Tushar Dhingra, chief operating officer, Adlabs.

In India, there are only 12 screens per million population compared to 117 screens per million in the US and more than 40 screens per million for European countries.

Now, what are the risks involved? Increasing property prices is a big concern, of course. But most multiplex owners have tied up properties for at least the next couple of years. Also, being the anchor tenants in a mall, they are always offered special rates by developers.

“Since we have signed up properties for the next two-to-three years, and get preferred rates as we are anchor tenant, we are not worried about the rise in property prices,” says Tandon of Inox. It’s the same for other top players as well. “One of our key focus areas is also expansion to smaller towns, with populations of up to five lakh (500,000). Property prices in these places have been comparatively stable, which makes us bullish on our plans for these cities,” says Bijli of PVR.

So, at least on the surface, there’s nothing much to stop the multiplex boom.

The coming of age of direct-to-home services like movie-on-demand and live gaming are unlikely to make the millions of Prabhus across a country of fanatic fans (have you heard of the temple named after South Indian actress Khushboo or about the guy who offered his pocket knife to an unarmed Amitabh Bachchan surrounded by villains and tore apart the screen in the process?) resist the first day-first show temptation of Bollywood.

Source: Outlook Business