Gurgaon-based Lok Capital venture fund in India has recently invested $3 million into rural business process outsourcing (BPO) firm RuralShores Business Services Ltd. to help the company expand into different states and double its number of employees from 1,000 to 2,000. Investors now include HDFC Bank, which financed the company’s first round of funding and Lok Capital, which together own 49% of RuralShores. The company, which serves approximately 20 clients from the banking, financial and insurance, and telecom sectors will help create jobs in villages through its back office operations. The three year old company is currently a market leader in the emerging rural BPO sector.

BANGALORE: Lok Capital venture fund on Thursday said it has invested $3 million (Rs.1.44 crore) in RuralShores Business Services Ltd, a rural business process outsourcing (BPO) firm.

“RuralShores will use the second round of funding to expand its operations in the rural BPO space for business development,” Lok Capital partner Ganesh Rengaswamy said in a statement here.

With 10 back office centres across the country, including three in Karnataka, two in Tamil Nadu and one each in Andhra Pradesh, Gujarat, Maharashtra, Madhya Pradesh and Rajasthan, the company is set to open 10 more centres by March 2012.

“Besides adding one more facility in each of the states where we are operating, we will open one centre each in Bihar, Punjab and Sikkim in this fiscal with the venture fund,” RurulShores chief executive Murali Vullaganti told IANS here.

Post-expansion, the three-year-old company’s headcount will double to 2,000 from about 1,000 currently, with the ratio of young men and women being employed at 50:50.

“As we have opened the centres in tier-three cities, our attrition rate at five-seven percent is the lowest in the industry, especially in the back office segment. Majority of our employees hail from surrounding towns and villages who are unwilling to migrate to big cities for personal and economic factors,” Vullaganti asserted.

HDFC Bank participated in the first round of funding for 30 percent of the equity while Lok Capital invested an unspecified sum for 11 percent stake.

After the second round of funding, promoters still hold majority stake (51 percent).

“Validation of the RuralShores business model and leadership position in the category with big ticket clientele are the factors behind our decision to re-invest in the BPO firm. We believe this model can make a difference to the fortunes of rural India by providing employment opportunities and powering our rural economies,” Rengaswamy said.

The back office has about 20 clients, mainly from the banking services, finance and insurance (BFSI) and telecom sectors.

“In addition, major BPO firms have outsourced a part of their work to us. Two US-based firms in logistics and publishing are availing our back officer services,” Vullaganti pointed out.

Set up on the social objective of generating jobs in villages through back offices, RuralShores is the market leader in the nascent rural BPO category.

“We not only enhance skill sets and employability of the rural youth, but also check migration from villages to cities, promoting economic and social inclusion,” Vullaganti noted.

Being privately-funded, the company is yet to make public revenues generated during the last two fiscal years though its chief executive claimed that it had been growing at a whopping 300 percent on annualised basis.

The Gurgaon-based Lok Capital is focused on investments in social enterprises that empower lower income and the bottom of the pyramid communities.