Rural India catches fancy of IT vendors

Boosted by economic growth, Indian rural market sees income growth and higher purchasing power, offering plethora of opportunities for IT and telecom players, and financial services providers.
Written by Swati Prasad, Contributor

Indian villages are finding favor from a host of companies including business process outsourcing (BPO) and healthcare services providers, IT vendors and telcos, that have launched products and services tailor-made for the rural customer.

With 70 percent of the population living in villages, India's rural market is significant. Companies were skeptical about monetizing this market segment, due to the lower purchasing power of consumers. However, with the country's high economic growth, this market is witnessing income growth and now offers a plethora of opportunities for companies in the IT, ITES (IT-enabled services) and telecom industries.

Inclusive growth is increasingly viewed as a critical enabler for India's growth.

"Today, IT is being successfully implemented in diverse areas to narrow the rural-urban divide and bring about a positive change," Raju Bhatnagar, vice president of Nasscom, told ZDNet Asia in an e-mail.

This segment has for long been underserved but things are significantly different now. "Areas like education, financial services, e-government and healthcare hold a lot of promise," Kamlesh Bhatia, principal research analyst at Gartner, said in a phone interview. However, he noted that this is not a market that can generate huge revenues in the short-term. "Revenue generation will take place only in the medium- to long-term," Bhatia added.

The government, through its e-government initiatives, is emerging as a major driver for IT adoption. As part of its National E-Governance Plan project, the government has collaborated with IT companies to establish the National Information Infrastructure, where State-Wide Area Networks, Common Service Centers and State Data Centers are being established to provide connectivity and technology access throughout the country.

"These initiatives would open up rural India as a large, untapped market for IT solutions," Bhatnagar said.

According to Bhatia, so far, initiatives such as e-government have seen more significant impact in the rural markets. "What the rural population also needs are solutions in 'pull areas', such as mobile TV and other content-driven applications," he said.

Interestingly, most applications developed for the rural buyer are not pan-India in nature. "They are localized to suit the needs of a particular region," he added.

BPO for rural, ERP for agriculture
IT-BPO companies today are moving toward rural areas. "Banking and financial services as well as telecom are key growth drivers, as mobile penetration and mobile banking services increase in rural India, and companies are also able to leverage their local language capabilities," Bhatnagar said.

Rural BPO helps create job opportunities for the youth in rural and suburban areas, and provides an attractive alternative for the local population to work in their native areas--and remain closer to their families. This then discourages migration to cities.

In 2009, Infosys signed an agreement with the rural development department of the Andhra Pradesh government to set up 22 rural BPO centers in the state. HOV Services also partnered academia to offer a BPO module to final-year graduate students, while the Karnataka state's IT department committed US$88.2 million (INR 400 million) to start 100 rural BPO centers. Rural BPO companies such as HarVa have also stepped up to train women in various skills such as data entry and software testing.

ERP (enterprise resource planning) players are also reaching out to Indian villages. SAP Solutions, for instance, localized its products for agri-business to suit Indian agricultural conditions. "These solutions help organizations move from a de-centralized to a centralized model of working, with real-time access to information across the organization," said Atul Bhandari, vice president of value engineering and industries, SAP Indian subcontinent.

Agri-business organizations deploy SAP software to integrate their suppliers and customers and facilitate real-time sharing of information and decision-making. For example, Godrej Agrovet integrated and automated the process of procuring feed from farmers for their oil plantation business. Farmers are provided RFID cards that contain all critical farm produce-related information, helping in the analysis of farm productivity.

SAP's host of agri-business clients include Ruchi Soya, Godrej Agrovet, Amul, Mother Dairy and Adani Wilmar.

Hotbed for innovation
New products and services are also emerging in healthcare, education and finance.

Bhatnagar added: "The use of IT in telemedicine and remote diagnosis for rural areas is an area of emerging interest." For instance, a Kolkata-based hospital uses telemedicine to assist doctors in rural areas, where they can consult with their peers in a hospital--via voice and data connection. This allows patients to be treated by both a local doctor and hospital specialist.

Bhatnagar noted that, to date, about 10 million smartcards have been issued under the health insurance scheme for the poor. Under the scheme, the card is given to a family of five to cover hospitalization costs of up to US$661.5 (INR 30,000).

Similarly, financial services providers have also stepped up to address this market segment.

The Tripura Gramin Bank (TGB), for instance, opened several mobile bank branches to provide banking services in Indian villages. It issued biometric cards to disburse wages under the Mahatma Gandhi National Rural Employment Guarantee Act, as well as pension under the National Old-Age Pension Scheme (NOAP). The devices are equipped with a fingerprint verification system, allowing rural residents to withdraw their payment with a thumbprint impression on a touchscreen.

Tele-education is also making its way to the villages. For example, Comat Technologies offers supplemental education services through its rural business centers located in thousands of villages. The company also offers coaching for rural youth who aspire to pursue higher education, and has reached over 10,000 students, resulting in a marked reduction in the school dropout rates.

Niche applications for rural
The growth of India's rural market has spurred several applications, including:

  • Tata Teleservices' Nano Ganesh is a mobile device which has enabled farmers in Gujarat to operate their irrigation pumps from distant locations, saving electricity, time, money and water. With its network support, rural distribution channel and handset, Tata also offers remote device access to regulate irrigation systems.
  • Nokia and Bharti Airtel joined hands to launch Ovi Life Tools, a service that provides Airtel's mobile customers with access to relevant content on agriculture, education and entertainment.
  • Qualcomm developed a mobile app called Fisher Friend, which fishermen can use to access data on market prices, weather and emergency information in local languages.
  • Hindustan Unilever's community portal "iShakti "promotes connectivity and communication in villages via Internet kiosks and delivers information pertaining to health, education, agriculture and other services to registered users.
  • Hewlett-Packard introduced the Village Photographer Program, which has been piloted in Kuppam, Andhra Pradesh. It comprises a HP Digital camera, portable photo-printer and solar power-pack.
  • Digital Green, a not-for-profit organization started at Microsoft Research India, uses digital video to train small and marginal farmers in India.
  • Gram Vaani, a community media company, created an open-source to help millions in far-flung villages, without infrastructure or resources, to create a community radio station of their own. Seven stations are online today.

Swati Prasad is a freelance IT writer based in India.

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