Friedman on rural outsourcing

Posted on October 31, 2007  /  9 Comments

If I.T. Merged With E.T. – New York Times

To appreciate that potential, look at how much is being done with just car batteries, backup diesel generators and India’s creaky rural electricity grid. I traveled to a cluster of villages with a team from the Byrraju Foundation — a truly impressive nonprofit set up by B. Ramalinga Raju and his family. Raju and his brother Rama are co-founders of one of India’s leading outsourcing companies, Satyam Computer Services. The Hyderabad-based brothers wanted to give back to their country, but they wanted it to be a hand up, not a hand out.

So besides funding health clinics and computer-filled primary schools in villages in their home state of Andhra Pradesh, they tried something new: outsourcing their outsourcing to villages.

Here in Ethakota, amid the banana and palm groves, 120 college-educated villagers, trained in computers and English by Satyam and connected to the world by wireless networks, are processing data for a British publisher and selling services for an Indian phone company. They run two eight-hour shifts, but could run three — if only the electricity didn’t go off for six hours a day!

Powered by ScribeFire.


  1. Thanks Prof Samarajiva for adding this post. This is an inspiring story for those who are skeptical about Sri Lanka’s rural BPOs. We in Mahavilachchiya have the same problem with electricity fluctuations and now we are trying to find a donor for a back up generator. But I don’t think such barriers (electricity, etc.) should discourage the village youth. A problem comes with an answer. In Sri Lanka even cities get blackouts which last for few hours sometimes. This is why most of the companies rely on backup generators.

  2. ‘Electricity for all’ is not an easily achievable goal in South Asia. National grids (or state grids India) can’t supply for all. Unless there is control and distribution transformers at the right points, the voltage the end customer’s is much less than 230 V. (In some Indian villages this is as low as 180 V) It also incorporates a huge transmission loss, not to mention brownouts and blackouts resulting from over-demand.

    In many rural setups the demand is less than what financially viable. (where the houses are far and household demand is low) These villages too are supplied power from the national grid, with significant impact to the grid and other consumers, because it is a sure way to win votes.

    A more sensible approach is to use other local solutions (micro hydro, wind power etc) for village areas without burdening the national grid. The difficulty is the relatively higher cost of a unit when the generation is low. So whether anyone likes it or not over-burdening national grid will continue.

    This explains why electricity still remains a state monopoly in many South Asian countries that have liberalized the telecom sectors. The markets at the BOP are too low and the costs are too high for private alternative power generators to enter. So I guess effective rural electrification will remain a dream for some more time to come.

  3. one of the pioneers in communication revolution in bangladesh, iqbal quadir has teamed up with dean kamen, inventor of segway & insulin pump to bring clean micro-level energy generation to rural villages via the stirling engine. although it seems such an improbable solution now [the generators even run on cow-dung and the trial engines cost $100,000]; but given the track record of them both, we can hope for a successful implementation of the project. this would go a long way in bringing the rural economy to the lime light.

  4. “In many rural setups the demand is less than what financially viable.”

    We all know that the government isn’t really worried about what’s financially viable or not. Is the war financially viable? Are the Nanasela’s financially viable?

    It’s not about the financial viability. It’s more in the lines of inefficiency of the government sector and the short-term vote insecurities of politicians.

    Remember what happened to the norrachchale power plant?

    The Upper kotmale hydro powerplant is worse. According to the project engineer at Upper kotmale;

    “It was capable of generating 528 GWh (Giga Watt Hours) or Million units of electricity per annum with 5 other tributary diversions namely Devon Oya, St. Andrew’s Oya, Pundalu Oya, Puna Oya and Ramboda Oya along with the main intake of Kotmala Oya.
    Now only Kotmala Oya is diverted and all other diversions are cancelled thanks to the ill advised and ill informed lobbying by interested parties .Now the generation capability per year has dropped to 409 GWh – that is the sacrifice we had to do at enormous economic cost.”

    And why do you think Nuclear Power (which is supposed to be “greener” than all other power sources) isn’t even thought of?

  5. Electricity is important in BPO industries, in the Philippines we don’t have that much shortages.

  6. I am a student pursuing my MBA from ICFAI, Hyderabad. As a part of my internship i am studying the business model of rural BPO.Currently i am a project trainee at Byrraju Foundation.If somebody has more information about Rural Bpos in India please help.

  7. Dear Bhawa,

    If you are interested in shifting your focus to the first rural BPO in Sri Lanka, maybe we can assist you. Please visit

    Please email me at

  8. Outsourcing is an exceptional way to capitalize in on your core concerns in today’s business world. :d With the ever growing unsuitability of our economy. :o One must come to the conclusion and determine if business process outsourcing is for their business or not. :-?

    What if it was your only option? The banks have been given a financial bailout, however what about the rest of the suffering business economy in general? Literally a year worth of downward upside down stock portfolio’s. Trillions of $$ Dollars were lost and sure not a result of outsourcing.

    I think we need to diversify ourselves and become pioneers of the future together rather than continuing to be adverse!

  9. Will India have the same edge in BPO work with the world recession. Did Friedman foresee this type of a recession?