Profits for People

29th March, 2007

Profits for People

Profits for People http://profitsforpeople.org/Profits for People http://profitsforpeople.org/

The NeedThe Need

• Immense Economic Growth• Growth comes primarily from the

Service sector

• Immense Economic Growth• Growth comes primarily from the

Service sector• Left out of the Economic Growth• 70% of the Indian Population lives

here, mostly dependent on Agriculture

• Left out of the Economic Growth• 70% of the Indian Population lives

here, mostly dependent on Agriculture

Large scale migration to urban areas

Miserable living conditions

Need for more equitable and

sustainable Growth

Large scale migration to urban areas

Miserable living conditions

Need for more equitable and

sustainable Growth


Investment Profits

Dividends

Profits for People

Profits for People SolutionProfits for People SolutionProfits for People enables the rural poor to participate in the growing Indian economy, by creating community

owned and operated enterprises.

Profits for People enables the rural poor to participate in the growing Indian economy, by creating community

owned and operated enterprises.

Identify ‘cutting-edge’ business opportunities

Identify ‘cutting-edge’ business opportunities

Organizing the rural poor into co-invested

businesses - the functional unit to

commercialize these business opportunities

Organizing the rural poor into co-invested

businesses - the functional unit to

commercialize these business opportunities


Back-office ventureBack-office venture

Back-office venture, providing Data entry and Conversion services

Back-office venture, providing Data entry and Conversion services

Investment for Computers

Profits

Salaries and Dividends

Type of Service Example

Data Entry A consumer products company needs to process its 50,000 paper-based contest forms

Digitization services - OCR and Scanning

A local newspaper needs all the archived editions from early 1900s to be scanned and corrected

Data clean-up and OCR correction

The McGraw Hill company needs some of its archived journals corrected for scanning errors


Back-Office Market in IndiaBack-Office Market in India

US $ 7.2 billion in revenues in 2007

10 percent comes from the Data Entry and Data Conversion sub-

sector

Expected to grow to US $ 25 billion in 2010

Low end services are increasingly becoming commodity offerings

Rising labor costs and competition from other low-cost locations

High levels of employee turnover

Indu

stry

Ch

alle

nges

Indu

stry

Ch

alle

nges

Rev

enue

s in

US

$ B

illio

n


Rural Back-office business modelRural Back-office business model

60% 40%

70% 30%

Rural Back-Office

cooperative

Rural Back-Office

cooperative

Profits for People

Profits for People

Large back-office firms within

India

Large back-office firms within

IndiaSmall businesses

seeking data entry and conversion

services

Small businesses seeking data entry

and conversion services

Share of Investment

Share of Value-chain Profits

Challenges for the large firms

High Attrition

Low-end services are commoditized

Raising labor costs

Advantages for the cooperative

Abundant availability of Labor

50 – 60 percent cheaper than urban employees


Competitive AnalysisCompetitive Analysis

Competitor Examples Intensity of Competition

Competitive Advantage

Large back-office Firms

Convergys, Wipro Spectramind, WNS Global, Genpact etc

• Cost Advantage - Labor arbitrage by employing rural youth

• Collaboration – Partnerships with these firms

Small firms in India and across the world

Firms with < 100 workstations

• Partnering with the large firms offers a competitive edge

• Cost Advantage

Rural back-offices in India

Satyam Rural back-offices, Pilot project by IITM and Jaijui

• Too few in number. Immense scope for expansion


Implementation PlanImplementation Plan

TrichyTrichy

400,000 educated youth. Unemployment: 30%

400,000 educated youth. Unemployment: 30%

May – Aug 2007

Exploratory Research, Forging Partnerships and Recruitment

Aug – Dec 2007

Recruitment of cooperative members and setting up the worksite

Jan 2008 Cooperative will be functional

Partnerships

ASA GV – The top microfinance institution in the region

Funding for the cooperative members

Local Employment Exchange

Recruitment of cooperative members


Management TeamManagement Team Santhosh Ramdoss

Experience working in rural India, as well in a the private sector

Catherine B Reynolds Foundation Fellow in Social Entrepreneurship

Anupreet Sethi Five years of technology

experience with a leading investment bank

Strong understanding of the back-office sector


FinancialsFinancials

Growth in Profit After Tax

Total Start-up Capital Required $ 220,000

Investment by Cooperative members

$ 115,000

Grant Funding/Venture Capital $ 95,000

Deal Structure


Social Return on InvestmentSocial Return on Investment

Benefits Outputs Outcome

Job creation No. of members employed in the cooperatives & incremental income earned by these members

Reducing unemployment and under-employment among rural youth.

Avoid migration to urban areas

The percentage of cooperative members who would have otherwise migrated to urban areas

The youth stay in their villages and towns. Sustainable living conditions in both urban and rural areas

Creating rural entrepreneurs No. of cooperative members who start their own enterprises within the next five years

Stimulate the rural economy by creating more jobs

Bridging the digital divide Incremental number of cooperative members with access to information through the internet

Providing access to information to the rural communities, through the Internet

Profits for People creates $12 of Social Return for every dollar invested in the venture

Profits for People creates $12 of Social Return for every dollar invested in the venture


Non Quantifiable Social ImpactNon Quantifiable Social Impact


Risks and AssumptionsRisks and Assumptions

Systematic Unsystematic

Emergence of other cheaper low-cost locations

Lack of stable contracts and lack of work for the members

Technological development – Automation of manual tasks

Maintaining quality

Security concerns and ensuring data integrity

Infrastructure – Internet connectivity, Uninterrupted power supply etc


Profits for People is creating a new model for conducting business - The poor are the majority Shareholders

Profits for People is creating a new model for conducting business - The poor are the majority Shareholders

Profits for People PortfolioProfits for People Portfolio

Thank You

Santhosh [email protected]

mailto:[email protected]

Profits for People

Economy & Finance

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