In 2009, Lok Capital I LLC invested in RuralShores Business Services Private Limited, a rural Business Process Outsourcing (BPO) company. This was Lok’s first investment outside of microfinance. The Company has since grown to become the industry leader in the rural BPO space, created substantial impact employing over 2,500 rural youth, and provided Lok a highly profitable exit

1. In 2009, Lok Capital I LLC invested in RuralShores Business Services Private Limited, a rural
Business Process Outsourcing (BPO) company. This was Lok’s first investment outside of
microfinance. The Company has since grown to become the industry leader in the rural BPO
space, created substantial impact employing over 2,500 rural youth, and provided Lok a highly
profitable exit
LOK INVESTMENT IN RURALSHORES
FROM MICROFINANCE TO BROADER INCLUSION

2. 1
LOK INVESTMENT IN
RURALSHORES
FROM MICROFINANCE TO BROADER INCLUSION
With the first fund of US$ 22 mn raised in 2004, Lok was focused on
investing in microfinance companies. The experience of working
closely with the low income segment gave deep insights into social
development and the need for interventions beyond microcredit. Thus,
in 2009, Lok was in the process of ideating a transition from being a
microfinance investor to an impact investor serving various sectors. It is
then that they came across the RuralShores investment opportunity.
RURALSHORES – GENESIS
RuralShores was established in May 2008 by Mr. Murali Vullaganti. The
idea for creating a rural Business Process Outsourcing (BPO) business
was seeded in Murali while he was the Managing Director of Xansa
India, a British outsourcing and technology company.
Around 2003, Xansa wanted to significantly scale its business from 500
to 5,000 employees and went searching for talent in smaller Indian
cities and villages. While such talent was available and many of them
joined urban outsourcers such as Xansa, their salaries were not
enough to live in larger cities
like Bengaluru and hence
attrition rates were high. This
made Murali think "rather
than bringing people to the
jobs, why can't we bring jobs
to the people?"
Murali was quick to realize
the potential for creating a
chain of rural BPOs that
would bring jobs to the
villages. He was joined by V.
V. Ranganathan, his audit
partner at Xansa, who
shared similar social agenda. Meanwhile Sujatha Raju, MD, MMC
Infotech, was running a BPO centre in Puttaparthi, Andhra Pradesh in
an effort to bring employment to the village’s youth. Murali approached
OVERVIEW
Started in late 2004, Lok
Capital is an impact
investor with two funds
under management – Lok
Capital I LLC (US$ 22
mn) and Lok Capital II
LLC (US$ 65 mn). Lok
invests in social
enterprises across
sectors such as financial
inclusion, healthcare,
education, employability
solutions, livelihoods, etc.
RuralShores was
founded in May 2008 with
the objective of
assimilating rural India
into a knowledge
economy by providing job
opportunities to the rural
youth of the country. They
are a rural Business
process outsourcing
(BPO) company with 18
delivery centers across
various Indian States
employing over 2,500
rural youth.
Lok was an early investor
in RuralShores and has
supported the growth of
the company through
follow on investments,
and provided operational
and strategic support.
RuralShores is present
across 18 centres and
employs over 2,500 youth
They recently raised
capital from a large
domestic BPO firm. This
round saw a highly
profitable exit for Lok I
RuralShores Value Proposition

3. 2
Sujatha and they collaborated to set up a proof of
concept RuralShores center in Puttaparthi. They
then approached C. N. Ram, then CIO at HDFC, to
outsource HDFC projects to RuralShores. The
center soon grew to over a hundred seats. This
group of individuals, along with G. Srinivasan,
former Vice President of Wipro Finance, and
Sudhakar Ram, Chairman and MD at Mastek,
together formed the promoter group and invested
seed money to kick start the operations.
The promoter group, led by C. N. Ram, then
approached Mr. Deepak Parekh, Chairman, HDFC
who provided them with seed funding through
HDFC. Mr. Parekh also provides personal support to
RuralShores, donning the roles of Chief Mentor and Principal Advisor. In addition, the company also
roped in Deepak Satwalekar, Director, Infosys, and Vivek Gour, CMD, Air Works and ex-CFO Genpact,
as advisory committee members.
LOK IDENTIFIES THE OPPORTUNITY
In mid 2009, RuralShores promoters approached Lok for an investment. Incidentally, at the same time,
Lok was working on its strategy for diversifying outside the
microfinance sector.
Lok’s investments until then were only in microfinance
companies across India and majority of impact investments in
India were also towards microfinance, while the need for
institutional investments in other sectors were largely unmet.
Lok team realized that RuralShores brought the right elements
to become the anchor investment for its portfolio outside of
microfinance and expressed their interest to explore the
opportunity. The team met with the promoters, visited
RuralShores centres, and was unanimously convinced about
the business model’s effectiveness in generating rural
employment and the promoter’s intent to serve the rural
markets and capability to execute successfully.
Lok Capital I LLC invested in the RuralShores and made its
entry into the broader inclusion space. Lok further invested in
the company, in late 2011, from its second fund (Lok Capital II
LLC). Venky Natarajan, Managing Partner, Lok, sits on the board of RuralShores.
Rajiv Lall, Founder, Lok Capital and
Executive Chairman, IDFC
“The employees here are often the first to
have a professional career in their family.
This is particularly true for their women
employees who would not normally have
been allowed to work locally or move to a
big city.
Local employment generating businesses
like RuralShores are highly impactful”
From left to right: G. Srinivasan, Sujatha Rao, Murali
Vullaganti, and C. N. Ram at the 2012 Edison Awards

4. 3
PIONEERING A BUSINESS MODEL WITH INHERENT SOCIAL
IMPACT
RuralShores was among the handful of companies across the world to first enter the rural BPO space.
The sector then went on to become a significant space in the
impact investment world, with Rockefeller Foundation, among
others, realizing the potential scale of impact and committing to
further the growth in the sector. “Impact Sourcing (IS)” became
the industry term for the sector, a term coined by Monitor
Inclusive Markets and defined as “any BPO activities that
provide formal employment or supplementary income to
individuals in low income areas (urban and rural) with limited
alternative employment opportunities)”1
RuralShores business model has social impact intrinsically
woven into it, given the geography of operations and the nature
of jobs provided – improving skill sets of the rural youth,
providing local employment thus curbing migration, and
providing steady income. RuralShores also works closely with
the village population through community health and education
programs in partnership with other organizations, building strong
ties with the local community.
In line with the impact envisioned, a recent study undertaken by
RuralShores showed that over 75% of the employees would
have migrated to cities in search for jobs but for RuralShores’s
presence in their villages.
Working for RuralShores has also significantly improved the
social standing of their employees, especially the women, who
constitute over 45% of the workforce.
The study also found encouraging data across other key impact metrics that showed their impact in
improving the rural economy:
 Annual household income of employees increased by 100% after joining RuralShores and the
nature of income changed from unpredictable farm income to steady and secure income
 Average increase in family savings after joining RuralShores was over 20%
 All employees have bank accounts and are covered by medical insurance
 ~60% of employees have purchased mobile phone and consumer durables after joining
RuralShores
The study further showed that the employees spend two thirds of their income in the village thus fueling
the village economy.
1
Job Creation Through Building the Field of Impact Sourcing - MIM
Anjitha, Associate, Bhiloda, Gujarat
“I am working at RuralShores, Bhiloda for
the last 2 years. We are seven members in
my family, I am the eldest among my brother
& sister. Our family income was very less.
My father is a labourer. But he always
encouraged me to study despite me being a
female and girls in our village do not study
beyond Standard 8 or 9. In these conditions
I completed my M A in Arts. After that, I went
to Ahmedabad for a job and stayed there for
1 month. But I found it very difficult to
manage and mold myself in the culture of
big cities. Then I heard about RuralShores
opening a center in Bhiloda that required
manpower with typing knowledge on
computers. I joined here as a process
trainee and now I am a process associate. I
learned so much after joining RuralShores. I
am supporting my family and encouraging
my siblings to study”

5. 4
SINGLE CENTRE TO PAN INDIA OPERATIONS IN FIVE YEARS
With 3 centres, when Lok first invested, RuralShores has now grown to over 18 centres and
employed over 2500 rural youth.
Rural Shores started as a business providing remote processing of
non-critical business transactions such as data entry, simple book
keeping, expenses handling, document digitization and archival,
etc., that required a lean infrastructure with reliable network
connectivity and enthusiastic rural youth who could be trained.
Currently they have diversified into higher margin BPO/ KPO
services in customer care, payroll management. They also delved
into Business Enablement Services by providing field level support
in rural area, covering processes like marketing and sourcing, in a
drive to become the leader in rural market solutions for corporates.
The initial days were also marked with several sub contracted projects, from other large BPOs, as they
were yet to establish their reputation. They have now etched a significant place for it in the market and
works directly with a host of large clients across sectors such as telecom, banking, insurance, etc. and
has also partnered with PSU banks to work on field support for financial inclusion (account opening and
documentation). Rural Shores today serves over two dozen clients including HDFC, Infosys, Wipro
Technologies, Genpact, Vodafore, Airtel, Uninor, etc. In addition, RuralShores also works with
Government on census projects by providing field support in rural areas.
They have thus significantly scaled up their revenues to become the largest standalone player2
in the rural BPO space.
However the scale up in revenues has come with its own
set of challenges. In the initial growth phase bulk of the
revenues had come from low end processes with a much
lower margin and longer ramp up period. In government
business, they also faced delays in receiving payments –
putting stress on the working capital.
These challenges, though not unique to RuralShores, have
stretched the path to profitability. However they have fine-
tuned their approach to effectively overcome these challenges. RuralShores is now focused on
consolidating its revenues – weeding out non profitable processes, focusing on higher profitability and
tenure in newer contracts, and sharper criteria for government contracts.
Some challenges have also been opportunities in disguise. In the RuralShores ecosystem, training
forms the cornerstone in ensuring delivery consistent value to customers. However during the training
(~4 – 6 months), the employees are not billable – creating a revenue vs cost mismatch. RuralShores
thus identified the need for a separate training center in the rural areas. They have now set up
RuralShores Academy (RSA) to deliver specialized fresher and refresher training programs through a
2
Not a subsidiary or associate of larger BPOs/ corporates
0.0 1.3
3.6
18.6
31.5
FY 09 FY 10 FY 11 FY 12 FY 13
Revenues (Rs. cr)

6. 5
blended learning model and by leveraging a world class
partner ecosystem for trainers and training content that is
efficient and scalable. This move has helped create a ready
pool of billable employees available to be recruited in
RuralShores centres. RSA, though formed to primarily train
employees for RuralShores, will train rural youth for other
corporate jobs.
LOK FORGES A TRUE PARTNERSHIP
WITH THE COMPANY
Lok has provided continuous support to RuralShores in terms
of both strategic and operational guidance. Venky has been
involved in most of the senior management hiring and the Lok
team has been instrumental in identifying potential candidates
for various roles.
Lok has also helped RuralShores in identifying new business
opportunities by finding relevant synergies in its portfolio
companies – RuralShores is currently working with
Janalakshmi and Vistaar (Lok investees) across various business processes from data management to
customer support.
Lok Foundation, the charitable trust at the heart of the Lok Capital Group (funded by grants and
investment profits from Lok Capital; a unique model in the impact space), has funded a project at
RuralShores to create a workflow platform - “Seedling” - that enabled them to win and service large
data entry projects and outsourcing contracts such as membership enrolment for a large social/ political
youth organization, telecom customer application form data capture, digitization of academic records for
Brazilian universities, etc.
The platform has the ability to handle large volumes of data. For the period from April to October of
2012, Seedling had a throughput of more than seven million transactions with revenues amounting to
Rs. 16.6 million. The Seedling applications generated jobs for rural youth worth approximately 2,300
person months in FY 13.
The team at Lok has also been actively involved with the company on their fundraising processes:
 Lok team kick started the Series C fundraising process by mapping out the landscape of potential
funders and helping the company focus on relevant investor groups
 Facilitated conversations with Development Financial Institutions and other venture funds
 Created M&A opportunities: initiating a conversation with another rural BPO on a potential merger
opportunity
Lok continues to be a sounding board for discussing RuralShores’ strategic initiatives and also works
on ground for operational consulting around systems and processes. In 2011, Lok invested further in
Murali Vullaganti, CEO, RuralShores
“As a rural enterprise we not only have a
significant cost arbitrage for servicing
outsourced contracts, our centres also form
a medium to conduct other rural enablement
services making RuralShores a one stop
shop for any business enablement service
in rural India
Lok team has worked closely with the
Company since the Series A funding and
continues to provide strategic and
operational inputs.”

7. 6
RuralShores, in the company’s Series B round, from its second fund (Lok Capital II LLC) – staying true
to its commitment and support for the company.
LOK’S JOURNEY AS AN IMPACT INVESTOR
Starting its journey of exploring the social enterprise space, outside of microfinance, with RuralShores,
Lok raised its second fund of US$ 65 mn in 2010 and invested in sectors such as healthcare and
education, and actively exploring opportunities in agriculture, energy, etc.
RuralShores investment helped Lok in realizing that employment generation/ income enhancement is
probably the most sustainable way of intervening in the low income segment and has the potential to
create substantial, tangible economic and social impact. The model is replicable in various sectors such
as agriculture, crafts, etc. opening up endless opportunities to create impact.
With this focus, Lok Capital is actively investing in companies that are focused on providing education,
employment, and market linkages to the rural producers/ employees and protecting them from income
shocks due to lack of access to basic services in healthcare, energy, water and santitation, etc.
Lok’s current portfolio outside of microfinance includes investments across SME lending, retail lending,
healthcare, education, etc. These investments were in companies such as Drishti, that provides
affordable eye care in rural Karnataka, and Everest Edusys, a science content provider that works
towards providing active learning methodologies in science
education in public and private schools.
These investments have further strengthened Lok’s presence
in the impact space and also established proof of
sustainability of commercial establishments in the social
space.
Lok also believes in the importance of providing operational
support to its portfolio companies. In Lok Capital II LLC, the
team has worked on targetted operational projects in over
60% of the portfolio companies – helping them in areas such
as marketing, new product/ business strategy, cost
optimization, etc.
Lok has strengthened its engagement with portfolio
companies by
 getting functional experts in the portfolio management
team to help companies in areas such as marketing,
process optimization, etc.,
 placing experienced professionals as fellows, and
 getting an experienced panel of industry experts in
Lok’s advisory board – to provide guidance to the
investment team and also the portfolio promoters
Venky Natarajan, Managing Partner, Lok
Capital
“RuralShores is an inherently impact driven
business given the business model and the
promoter intent.
The investment in RuralShores has proven
Lok’s ability to venture into newer sectors,
invest and grow early stage companies, and
help raise further funding for the Company
and secure its exit prospects, while focusing
on the social impact agenda of the company
and Lok’s LPs.
A successful employment generation model
such as RuralShore’s is replicable and
sustainable across sectors – opening up
opportunities to create rural employment
opportunities/ market linkages and
mitigating risks associated with migration.”

8. 7
RURALSHORES RAISES FURTHER
FUNDING AND PROVIDES LOK AN
EXIT
In mid 2013, RuralShores started the fundraise process for
its third round of institutional funding. Given the growth story
and scale that RuralShores established, the roadshow saw
keen interest from investors across venture capital, private
equity investors, and corporate houses to partner and
catapult them on the next phase of growth.
RuralShores consummated the funding from a large
domestic IT firm. The investment was further validation to
the business model attractiveness and track record of the
company as it showed conviction from an investor who is an
established player, having operated and invested in the BPO
space for decades. RuralShores is now utilizing the funds to
further expand its presence across India and create more
rural employment opportunities. The funding has also helped
them build a strong senior management team with an
average work experience of close to 20 years in the sector.
As part of this latest investment round, a new investor has
bought Lok Capital I LLC shares providing a complete exit
for the fund. Through this sale, Lok recorded a highly
profitable exit from RuralShores, generating 4.6x cash-on-cash returns in dollar terms and 6x in rupee
terms, across a four year investment period.
The magnitude of these returns is of significance when one looks at the M&A market in the IT and BPO
space. Since 2008, there have been nine exits in this sector involving blue chip PE firms like Carlyle,
Blackstone, General Atlantic, etc. The highest rupee return among these exits was at 3.2x and the
average stood at ~2x cash-on-cash (VentureIntelligence - IT & BPO exits, Mar 2008 – Mar 2014)
Lok had earlier realized exits from its other portfolio companies like Spandana, Janalakshmi, Satin, etc.
which were highly profitable as well. However the exit in RuralShores has been testimonial to Lok’s
ability to explore newer sectors and identify investment opportunities early on and growing them to
create substantial social and commercial returns.
With its first investment outside of microfinance registering colossal success in delivering social and
commercial returns for its LPs, Lok continues its journey of funding and growing sustainable and
impactful businesses. In this effort, Lok acknowledges employment generation and income
enhancement as a high priority sector, given the direct impact and huge market potential, for creating
tangible long term impact on the economy by funding and building large successful businesses.
For more information, please visit www.lokcapital.com or write to Arun Asok at aasok@lokcapital.com
KEY SUCCESS
FACTORS
The investment in RuralShores
was successful in terms of
financial returns and social
impact generated. The key
success factors in this
investment were:
 Investing in a business that
has impact as an inherent
part of the business model
 Working with a strong
founding team – both in
expertise and intent –
especially in newer sectors
 Identifying early stage
investments in newer sector
with huge market potential
and supporting its growth –
making fast but diligent
investment decisions and
calculated risks