ROPE (Rural Outsourced Production Enterprises) focuses on outsourcing or contracting production to villages in select sectors and using ICT tools and applications for efficient production organization. Based in Chennai, operations started in March 2007.
The mission of ROPE is to integrate domestic and international markets with informal sectors of rural India and generate value for the skills and resources available in these sectors through production outsourcing. ROPE has so far supplied its products to more than thirty big and small clients both within and outside India. Some of the prominent names in its client list include IKEA, Chennai, Industree Crafts, Bangalore, CwithCo, New York, TiE, Chennai and IIT Madras.
This interview was conducted with Mr. Sreejith NN, Chief Executive of ROPE, in March 2008.
Is this the first company that you have started, and what drove you towards it?
Yes, ROPE is my first company. After my post-graduate degree in Development Management from Tata-Dhan Academy, I worked with couple of reputable organisations in micro-finance and rural business incubation. One of the assignments I handled was being the Managing Director of a federation of self-help groups of poor rural women promoting micro finance services among them. During this period I was exposed to the development challenges of rural India and the social entrepreneurship opportunities it offers to build effective rural-urban linkages.
I wanted to be a social entrepreneur building business opportunities out of the existing rural – urban divide thereby bringing more opportunities to disadvantaged rural population. One of the ideas was to outsource production and back office works from urban clients to rural centres. With this idea I approached the Rural Technology and Business Incubator (RTBI) of IIT Madras headed by Dr. Ashok Jhunjhunwala. There was already an incubatee in RTBI building Rural BPO business. Having helped her build the model for some time I proposed to build a business in production outsourcing from urban companies to rural centres, which was accepted by RTBI.
"Business incubation support from RTBI can be seen as the single most important reason for ROPE’s birth and growth so far."
Mr. Sreejith NN, CEO, ROPE
How did you finance your start-up operations and how long did it take for the company to become self-sustainable?
Our start-up operations were funded by RTBI. RTBI provided us the space and bear the expenditure on team members during the incubation phase. Apart from this they gave us seed funding for running our operations. After almost one year of our operations we were able to attract other investments, which helped us to be self-sufficient.
What are your major products and services and how are they unique?
ROPE has developed a model of outsourcing or sub-contracting production needs of urban clients to distributed village based production centres and using ICT (Information and Communication Technologies) for efficient production organisation, execution and delivery.
ROPE Production Centers (RPCs) in villages use local skills and materials to manufacture high quality items ordered by global customers. ROPE’s central team, business processes, ICT, controls, and customer service take care of satisfying clients, which will provide the artisans more work and on a more consistent basis.
ROPE’s model is unique for several reasons. First of all, the approach is customer driven as it works to customers’ orders. We offer customized production as per our clients’ needs. Secondly, our approach competes with modern manufacturers on price and quality. The model is also vastly scalable as there is a large rural need, a vast number of outsourced products, and the production centers require low capital and overheads. Furthemore, the use of ICT enables us to carry out efficient operations. In financial terms, the model achieves sustainability through cost coverage, and in terms of human resource development, we emphasize entrepreneurship at every level.
Currently RPCs offer production of hand woven and knitted products. For example: natural fiber based home furnishings like mats, carpets and window shades, bags, folders, paper bags, prayer mats, wallets and pouches. In the future, we plan to expand into cotton and silk fabrics and apparels.
What is your competition?
Competition in our current products category is from organised factory model manufacturers like big mills, NGO model producers who are working with artisans from different parts of the country and traditional middlemen or commission agents who buy products from rural producers and sell to exporters.
Factory model producers cannot compete with us in price as their fixed cost investments are high in real estate and building and they also cannot offer customisation to clients as we do, even at shorter lead times. NGO model producers again cannot achieve our efficiency in delivery and cost. The middlemen or agents on the other hand cannot actively work with clients to assure quality standards, standard and ethical production processes and also their scale is limited.
How did you first launch the product?
Though we had the idea of production outsourcing, we were not sure about which sector to focus on, whether it be leather goods, garments, electronics or any other. What actually at that time triggered the venture formation is an order we got from one company in Bangalore who later became a very close partners to us. That order was to make yarn out of banana fibre by establishing production centres in identified villages. We set up village production centres for them. This is when we realized that we should first enter into the natural fibre products area because that is where we have a natural advantage because the raw materials also come from villages.
How do you measure the success of the company?
We measure the success both in financial terms like revenue generated and in terms of our impact like number of artisans employed and number of man/woman days of employment generated. Though these are initial days, we have had very encouraging results so far.
Who are your clients and how many do you have? How are you focusing on expanding your user community?
Within our first year of operations, we have had a number of big and small clients from both domestic and export markets. They range from other home textiles producers like window shade manufacturers and mat manufacturers to retail chains to design houses to corporate clients buying our conference bags and folders for various corporate events and conferences. We also export natural fiber raw materials like banana fiber for industries such as paper companies and composite material companies. Some of our clients are IKEA, Industree Bangalore, TiE Chennai and CwithCo US.
We have a dedicated marketing team comprising of professionals. Our overseas marketing efforts are going to be headed by my co-director in the company, Mr. Patrick Fischer. We are targeting other established manufacturers to outsource their production needs and large retail chains. Within the domestic market we are targeting other exporters, buying houses of large multinationals.
What was the biggest challenge in starting an innovative business in your country and how did you overcome that?
There are three challenges for anyone starting an innovative business, especially a social enterprise. First, finding the initial funding or seed funding before you become worthy of the attention of angel investors and venture capitalists. Second, getting or attracting talented team members when you are barely known to the outside world. Thirdly, getting the first few clients, and particularly to have the credibility in the eyes of those first few clients.
I could overcome all these three challenges because of the RTBI support. RTBI gave us the space to sit and work and also gave us seed funding. The fact that we are situated in RTBI and RTBI is part of IIT Madras helped me to build a quality team, and the RTBI address gave us the credibility and brand image in front of clients. In addition to these, RTBI brought to me a large network of investors, clients, industry experts and other entrepreneurs. RTBI could be termed as the single most important reason for ROPE’s birth and growth so far.
"The money that you spend on receiving quality ROPE products is also an investment in a better future for thousands of poor people in rural areas."
Mr. Sreejith NN, CEO, ROPE
Who are the shareholders in your company?
Apart from me, ROPE has two other directors who are the other major shareholders. They are Dr. Aarti and Mr. Patrick Fischer. Patrick is an American who came and settled in Chennai to start his own social enterprise. He graduated from the Kellogg School of Management (USA) and worked with Population Service International (PSI) – a worldwide NGO with presence in 70 countries – as its Finance and Operatins Director in Namibia. We were introduced to each other through a common friend. As we found that our ideas and models matched, we decided to work together and focus both of our energies in ROPE rather than in separate companies. Dr. Aarti is a consultant to RTBI and as a social scientist and designer she was closely associated with ROPE from the beginning. ROPE in some sense is a continuation of the rural crafts project she was running with the TeNeT group of IIT Madras. Apart from directors, RTBI is another shareholder of the company.
How have you benefited from business incubation?
Busness incubation at RTBI has helped ROPE in many ways. To begin with, they helped me conceive the idea, they gave the space to work and have a paid salary for all the team members for close to one year, they provided us a seed funding for our operations, they helped us attract clients, suppliers and investors, they helped us and continue to help us in figuring out how technology, particularly ICT, can be used effectively in our distributed production environment. On top of these thinkgs, they gave huge credibility and lent us their brand name, which helped us to quickly establish ourselves.
Do you have some specific lessons that you know now and wish you would have known when you started your business, and which you would like to share with fellow entrepreneurs?
The entire process right from conceiving the idea to setting up the company, raising funds, building the team and making the initial sales and their delivery - everything gave new lessons to me. And the learning is still continuing.
Some of the specific lessons I learned are that is important for any start-up entrepreneur to simultaneously focus on short term sales and revenues – as this is the only way to learn and keep the team motivated and active – and long term strategies and vision. And while it is important to find partners, clients and investors for growth it is more important to choose them well and consistently with our long term objectives, strengths and the model. Entrepreneurs should overcome short-term solutions and greed and learn to say ‘NO’ when required. Finally, over-committing in our eagerness to win a deal could be very harmful. It pays off to be honest and genuine.
How do you plan to internationalize your product and if so, how?
We do plan to internationalise our model, which we think is ideal to leverage and employ the large parts of unorganised sector rural worker populations in developing and under-developed countries. Our current focus is on proving the model in the Indian context across different states in India. Using Patrick’s international exposure and experience in working in different countries, we plan to expand to different countries in due time under his guidance.
With hindsight, are there any particular lessons or messages that you wish you would have known when you started up your company?
I think, I should have reached RTBI or TeNeT Group of IIT Madras who founded RTBI a few years earlier than I did. Then I would have been an entrepreneur much before. I did not know it is so exciting apart from being challenging.
Do you feel that you had the necessary advisory and support network when you started your company?
Yes. Dr. Ashok Jhunjhunwala who is Chairman of RTBI and Dr. Aarti, both spent lots of time with me during the initial periods. RTBI board and TeNeT Advisory Board, both consisting of successful entrepreneurs and industry experts, also reviewed our progress on a quarterly basis and gave very valuable inputs. Apart from this RTBI has set up various support teams to help its incubatees. These include research and technology teams which were both helpful to us.
What is your message to funders/supporters and what is your message to the users of your product?
To funders and supporters I would like to say that we are very thankful and grateful for your support. We are sure that your support to us will bring larger returns in the future – both in terms of financial returns and the larger social impact. Keep supporting us and keep your faith us - we will never let you down!
To our customers my message is that we are committed to delivering quality products to you in time, at the best possible prices and according to your needs. At the same time please also be aware that we are trying a new model of production, which has the potential of impacting the lives of large numbers of poor rural artisans and workers. To help us to scale up in order to provide employment to thousands of these poor rural producers please keep coming back to us with your orders and help us get more orders. The money that you spend on receiving quality ROPE products is also an investment in a better future for thousands of poor people in rural areas.
For more information about the RTBI Business Incubator (TeNet), please visit their profile in the Global Network Directory.
For more information about ROPE, please visit their website.