It started in quite a different fashion. Business Process Outsourcing (BPO) companies in India began looking at small towns principally for the purposes of recruiting. In the traditional BPO hotspots, such as Gurgaon and Bangalore, attrition rates were high and new staff was difficult to come by. The hinterland had a large pool of potential call centre labour.

What followed was in some ways inevitable. But it was not seen in that light in the beginning. BPO companies have started moving shop to these smaller towns. Yes, a marketing presence in a major metro such as Mumbai is necessary to interact with foreign clients. But, just as India has become the back-office to the world, it is now the turn of small-town India to push aside its metro rivals.

The prime mover, as always, is the bottomline. Salaries in small towns could be as much as 50 percent less than what is the norm in places such asBangalore or Pune. True, you have to put in a lot more training, particularly in voice-related functions. So, in the initial stages, it is the data-related BPO that is spreading its wings.

?Costs are increasing,? says Nasscom president Kiran Karnik. ?Movement out of big cities to smaller towns will help us absorb the rising manpower and other costs.?

Small towns are the flavour of the month not just in India. The Texas-based Dell recently closed shop in India because of ?consumer complaints? (which many say was an orchestrated effort by BPO workers in the US to bring back jobs that had been offshored). It has begun call centre operations now from Twin Falls, which is a one-horse town many in the US itself would find hard to place. Lehman Brothers, which moved part of its operations out of India, is considering taking the same route. ?These small US towns are about as expensive as the Indian metros,? says a BPO analyst. ?To remain competitive, Indian companies have to move to the hinterland.?

Besides, several other countries are emerging as key contenders for the BPO leadership stakes. An Assocham report released recently suggests that India might be elbowed out in a couple of years unless it is proactive about guarding its advantages. China has made English compulsory in schools. And the infrastructure in most other countries is superior to India?s.

Moving to small towns, as compared to taking on staff from small towns, has some advantages. First, if you have a job in a city, low salaries as compared to your metro peers will be acceptable only for a limited time. Secondly, with many other companies nearby, these employees will soon shed their hick status and get on the job-hopping bandwagon. Besides, as some companies have discovered, hiring from small towns to work in the larger cities introduces a regional bias in the workforce. This gives rise to groupism and is very armful to corporate culture.

States are also doing their bit to encourage small towns. Karnataka has launched a variety of initiatives to move the BPO business to its Tier II and Tier III towns. Nagpur is opening an IT park. Kerala has already done so.

Another statistic should be the clincher. Chennai-based recruitment company Ma Foi is opening offices in 29 new locations such as Mangalore, Mysore, Vijayawada, Pondicherry, Cochin, Nasik and Nagpur. Where the headhunters congregate, you can be sure there is action on the cards and killings to be made.