"We are in the process of finalising the guidelines for establishing BPOs in small Tier II and III cities across the country especially in states like Uttar Pradesh, Bihar and Odisha," Telecom Minister Ravi Shankar Prasad told PTI.
Setting up of BPOs in these towns and cities is expected to help in upgrading the economic levels in these places. This is through creating more employment that will enable youth to stay put and not migrate to cities like Delhi, Bengaluru and Mumbai in search of jobs, he added.
"It is a major step in the Digital India programme as it will help connect the tier II and III cities in the country with the global map and will help them grow and realise their potential," Mr Prasad said.
The government is also discussing the issue of setting up of BPOs with the state governments.
"There are issues like supply of 24-hour electricity and other infrastructure needs that has to be taken care of. Once this is done, the states can easily invite companies to set up BPO centres," he added.
These cities will have quality manpower in terms of engineers and English-speaking youth and all that will be needed is opportunities to realise their business potential, the minister added.
A government official said the guidelines are expected in the next financial year.
The government is trying to bring the small towns and cities in the country on the Information Technology map and setting up of BPO centres in these cities is one of the steps.
BPO, which is growing at 12 per cent annually in the country, is expected to touch $50 billion by 2020 from the current $21 billion.
According to a study by IT-ITeS industry body Nasscom, cities like Ahmedabad, Bhubaneswar, Indore, Jaipur, Kochi, Lucknow, Madurai, Mangalore, Tiruchirappalli, Vadodara and Vishakhapatnam have great potential to run BPO operations.
Cities like Aurangabad, Bhopal, Goa, Gwalior, Hubli, Kanpur, Mysore, Nashik, Puducherry, Salem, Surat and Vijayawada also have the potential to develop BPO centres.
Other cities like Allahabad, Dehradun, Durgapur, Gangtok, Guwahati, Ludhiana, Patna, Raipur, Ranchi, Shimla, Siliguri, Srinagar and Varanasi can also have BPO centres, it said.
Low operational and real estate costs, untapped talent pool and low attrition are some positives that can help these small cities run successful BPO operations, the study said.