NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Taking a page from Thomas Friedman’s The World is Flat, a group of business students in India are piloting a new idea to share some of the data processing wealth of India’s urban centers with its villagers. The team, Profits for People (also known as ProGreen), has developed a model whereby small rural and semi-urban cooperatives can do the data-entry and conversion services of large Business Process Outsourcing (BPO) companies at a fraction of the cost.

The model captures the strengths of enabling small cooperatives to own their equipment with vital support from Profits for People. To secure this equipment, the team plans to partner with financial institutions. They will also provide a space and ensure connectivity, offer skills-training, and sub-contract with larger BPO centers. And the benefits? According to a summary of their prizewinning business plan: BPO centers get reduced wages and a reliable source of manpower, less attrition and an opportunity to adopt socially responsive practices; cooperatives are projected to earn US$1,100 per year for each member, and will have the benefit of owning valuable technology with the skills to use it.

The advantages for both BPO centers and workers will be difficult to achieve. Low wages are better than no wages, but earnings that are too low will tip the balance between lifting people out of poverty and making a profit. Although villagers own their equipment, they are still dependent on Profits for People to provide the services that make it profitable. Cooperatives will also be tied down by the debt of the equipment–estimated at US$400 – hindering their ability to negotiate. If Profits for People is to succeed in generating both profit and positive social impact these issues will have to be addressed.

The project faces further hurdles from a production standpoint. Handling data requires security and stability, both of which are difficult to achieve in a rural setting. Further, many BPO centers have developed extensive training programs–Profits for People will need to train their workers to a high standard with fewer resources at their disposal. These challenges certainly don?t preclude success, as Digital Divide Data has shown through training and hiring members of disadvantaged groups in Cambodia.

Though this idea has so far gone untested, the group succeeded in winning 1st Prize at the Imagine Cup, held by Microsoft and also won the University of Washington’s 2005 Global Social Entrepreneurship Competition. Keep an eye on their blog for future updates and info on their other projects.