British outsourcer Xchanging is setting up a business process outsourcing (BPO) center in a town in India, hoping to tap into the low-cost, skilled staff available outside the country's cities.Inside IT OutsourcingOffshoring: The 25 Most Dangerous Cities for Outsourcing in 2010The company has already hired about 400 staff locally at Shimoga, northwest of Bangalore, with employment letters issued to another 200 staff, said David Andrews, CEO of Xchanging, in a telephone interview on Wednesday. The company plans to have 1,000 staff at the center in about 18 months, with an option to scale to a 2,000 seat center."We have tested complex processing at Shimoga, and we can get the same standards of delivery there as we can elsewhere," Andrews said. India's outsourcing industry has grown primarily in large urban locations, leading to a large-scale migration of people from towns and rural areas into the cities. About 60 percent of the staff working in the BPO industry comes from Indian towns and villages, according to the National Association of Software and Service Companies (Nasscom). The rural BPO model has so far been tried mainly by NGOs (nongovernmental organizations). However, as demand for BPO services is booming, including from the domestic market, there is greater interest from outsourcers in setting up centers in small towns and rural areas.Having a low-cost BPO in Shimoga will help Xchanging better compete for domestic Indian business, Andrews said. As costs in Indian cities increase, and getting quality staff becomes difficult, the company is exploring a model that combines delivery centers in big cities with centers in smaller towns. The new center in Shimoga will be Xchanging's fourth major processing center in India. The company employs over 3,400 people in the country, and has three of its top 10 global processing hubs in Bangalore, Gurgaon and Chennai, the company said. It employs over 8,000 staff worldwide.Xchanging offers business processing services and technology services to support business services, Andrews said. The new center at Shimoga will have IT and BPO staff to reflect the mixed services profile of the company, he said. It will service customers both in India and abroad.