Trend | Telecom | 02.06.2015
The next wave of growth for the Indian economy is widely expected to come from its rural areas. Today, the consumption in rural India is growing at a faster pace than urban India. This growth is fuelled by a rise in household incomes due to greater non-farm job opportunities and government-initiated employment generation schemes. Moreover, the nature of rural consumption has shifted from necessities to discretionary goods.
The length & breadth of rural India creates challenges in servicing this segment viably and independently. As more organizations look to fulfil the increased demand for products and services in rural areas, service linkages will play a key role as enabler. Companies will need to collaborate within and across industries to consolidate resources.
This model has been successfully implemented in the insurance space, demonstrating the success of shared distribution channels. Several insurance companies have partnered with oil and gas and retail companies to expand rural reach. Another example is of an insurance player that has collaborated with a service provider to make its products available at remote locations in India. The provider will use mobile devices for on-the-spot issuance of insurance policies. The range of services covered by the service provider include insurance policy system administration, policy setup, new business processing, customer care, and claims processing.
Another area of growth would be the rapid adoption of mobile banking. Currently, 55 percent of India's population has access to a bank account, while only 13 percent has debit cards and 2 percent has credit cards. By enabling mobile banking services, more consumers can carry out bill payments and merchant transactions given high mobile penetration of 75 percent. However, this will require multiple mobile operators and financial services providers to come together to develop the mobile money market. Shared platform vendors can play a vital role in enabling services such as deployment of mobile banking platform, service provisioning, transaction clearance and reporting, and support activities through a shared services model. The success of mobile money is already an established fact in African countries, including Kenya, where more than 80 percent of those with a cell phone use mobile money.
The government is also taking steps to drive greater inclusion of the rural population. For example, through the National Optic Fiber Network (NOFN), it plans to connect 2.5 lakh gram panchayats, with the aim of fostering e-services in these panchayats. Service providers can potentially participate in this opportunity by offering IT services, including hardware maintenance and support and application development and maintenance.
The presence of a relatively larger number of SMBs and a need for faster ramp-up to cater to a growing market will create the need for industry utilities. Such an entity would allow companies to manage fixed costs, create economies of scale, and focus on vital areas.
There are several examples in the Indian telecom industry where telecom operators pooled their resources to setup tower companies. These tower companies provide passive infrastructure services to the telecom operators, allowing them to focus on core activities, such as customer acquisition and product development.
On a similar manner, BPO players with domain expertise can help organisations build a strong value proposition around handling processes for several companies within an industry, leveraging expertise and scale benefits. For example, there could be opportunities for order and inventory management solutions across businesses such as restaurants and logistics solutions across e-retailers.