BE THE NEXT DESI MCDONALD’S
DECODING THE
New Tax Code
CASHING IN ON THE BPO BOOM
JULY 2010 VOLUME 1 ISSUE 11 Rs 75
HIRE THE BEST AND AVOID THE REST
10 Ways to Retain the Best Find Talent in Rural India 7 Tips to Spot Leaders in Your Company How to Avoid Workplace Conflict
Turbocharge Your Website Guy Kawasaki’s Start up Mantras Flipkart: India’s Answer to Amazon E-commerce 2.0: Sell Something New
table of contents 46
30
GET YOUR A-TEAM!
Forget everything else. Unless you have the right people, the chances of your business succeeding are as much as India qualifying for the football World Cup in 2014. By Ankush Chibber
33
KEEP YOUR FOLKS INTACT
Found the right personnel for your company? Here’s how to keep them motivated. By Nithya Nagarathinam 10 WAYS TO RETAIN THE BEST
WOMEN ENTREPRENEUR
34
Finding the right talent for your startup is tough enough; retaining them is equally challenging. By Shonali Advani WHO AFTER YOU
36
For a startup to grow constantly, it is important for the founder to find employees who are as passionate and able as him to lead and manage it. By Ankush Chibber RETURN OF THE NATIVES
38
Attracting local talent is all about customized HR strategies.
40
Found the right personnel for your company? Here's how to keep them motivated. By Nithya Nagarathinam THE REAL COST OF WORKPLACE CONFLICT
41
We reveal how much office drama cuts into your bottomline. By Jennifer Lawler
SOCIAL ENTREPRENEUR 46 A PHILOSOPHY OF PHILANTHROPY Rohini Nilekani, the founder of Bengalurubased NGOs Pratham Books and Arghyam, feels everyone should be water-wise today. By Shonali Advani
OPPORTUNITIES
By Prerna Raturi A DROP TO DRINK?
44 CAUGHT IN TRANSLATIONS Anjali Gupta is trying to bridge the language gap with her products Lipikaar and Dubzer. By Shonali Advani
48 THE POWER OF INNOVATIONS Kunwer Sachdev set out to manufacture pens but ended up being one of the largest inverter manufacturers of the world. By Pranbihanga Borpuzari 50 ONLINE RETAIL IS NOT DEAD Forget setting up the next Amazon. Start slow and smart, and you will have your own profitable space in the virtual world. By Ankush Chibber 54 THE BPOS ARE CALLING YOU As the Rs.50,000 crore BPO industry spreads its wings deeper into India, ancillary services which feed this sector present a huge opportunity for entrepreneurs to cash in on. By Team Entrepreneur 56 CHARGE OF THE McDESIS Forget the Big Mac. The humble dosa and gola are kicking some serious butt. By Ankush Chibber 60 REIGN IN THE RAINS It never rains, but pours. This adage holds true for the monsoon and the business opportunities this season throws up. By Sriya Ray Chaudhuri 63 CONSTRUCTION GETS COMPUTED Balaji Sreenivasan incorporated his company Aurigo Software Technologies in the U.S. but today his customers are global. By Shonali Advani
8 Entrepreneur + July 2010
26
INSIGHTS
Astute advice from experts and industry veterans.
22 VC INSIDER
Brad Feld takes you inside a VC’s mind
23 WISE GUY Guy Kawasaki gives us the startup checklist 24 WOMEN IN CONTROL Nandini Vaidyanathan on the importance of investing in yourself 26 IDEA DECK IAN's Sunil Kalra wants entrepreneurs to be humble first. 27 SOLUTIONS FOR SUCCESS Vijay Anand on the art of finding profitable solutions
48
28 BANKANOMICS Bharat Banka asks entrepreneurs to let the hunger die down
MONEY
Where to get it, how to make it, how to keep it coming in.
74 DECODING THE TAX CODE
The Code aims to create an economically efficient and equitable direct tax system. By Prashant Khatore
76 CREDIT INFORMATION COMPANIES
What they do, why they do it and how they work for the benefit of the economy. By Phil Nolan
50
79 FROM DEBIT TO CREDIT Turn the tables on business costs and look for creative ways to eke out a little revenue. By Jennifer Lawler 80 OUT OF SEASON
Strategies for surviving the downtime in a cyclical business. By Gwen Moran
81 SHARING THE PIE
Does it make sense to trade ownership for services? By Gwen Moran
IN CONVERSATION
Face to face with those who matter.
66 THE CASE FOR ENTERPRISE GROWTH Dr. Krishna Tanuku, Executive Director, ISB's Wadhwani Center, talks to us. By Ankush Chibber Entrepreneur + July 2010 9
table of contents 126
TECH DEPARTMENT
Cool ways that tech can help you grow. 85 SECOND STORM A good handset, and an improvement over its predecessor. By Shayne Rana 86 SOUND THAT ALARM A look at the most destructive threats to your network—and what you need to do about them. By Erica Chickowski 89 TOUCH AND GO Touch technology isn’t just for the iPhone and iPad. By Jonathan Blum 90 TWITTER: THUMBS UP OR DOWN? Frauenfelder and Godin weigh in. By Jennifer Wang 91 YOUR IT LIFELINE A great reseller can save the day. By Erica Chickowski 92 COOLNESS HAS ITS PRICE Seven reasons to avoid using Flash on your website. By Mikal E. Belicove
REGULARS 11 ONLINE 12 FEEDBACK 13 RESOURCES 14 NEWS IMPACT 16 SME DOCTOR 18 STUMPSPEAK 20 YOUNG TURKS 132 BACKSTAGE
SPEND IT
Business in style.
122 WAKA WAKA It’s the land of the wildebeests and the lions, of Zulu warriors and Amurela, but South Africa is also a great country for Indian entrepreneurs. By Sriya Ray Chaudhuri 125 SEATS OF LUXURY Tease your senses as you sit back and relax on these chairs. By Namrata Gogoi 126 WOK A TREAT!
SUCCESS STRATEGIES How to play your cards right.
68 BROADCAST YOURSELF Sometimes the best way to develop your business concept is to get into a room with like-minded entrepreneurs. By Ivy Hughes 70 THE JUICE BEHIND YOUR WEBSITE The content management system—the powerful, behind-the-scenes operator—can make or break your site. Here’s how to choose the right one. By Erin Weinger 10 Entrepreneur + July 2010
The Mumbai Grand Hyatt’s multi-cuisine restaurant Fifty Five East is sure to quench your gastronomical thirst. By Sriya Ray Chaudhuri
128 OBJECTS OF DESIRE
We bring you a selection of the finest accessories money can buy. By Sriya Ray Chaudhuri
130 FUELLING YOUR DESIRE
Whichever you choose, the Skoda Superb and Mercedes C 250 are both winners in their own ways.. By Pranbihanga Borpuzari
93 A MORE POLISHED VOICE New phone platforms can boost the perception of professionalism. By Erica Chickowski 94 PRO ON THE GO The Multi-Educator’s Formulator Series is a collection of apps aimed at professionals. By Dan O'Shea 95 SCAN-TASTIC Where barcode scanning fits in a small business sales strategy. By Dan O'Shea 96 MAKE YOUR VIDEO SOUND OUT Skip the built-in microphones to get better audio quality. By Erica Chickowski 86
+online [Info from cyberspace]
from our blogs
200 Ways To Be More Productive WHETHER YOU NEED to optimize your office space, get the latest cutting-edge gadget or just do some good, old-fashioned delegating, our experts will help you get more from your business–and your life.
“ON THE ONE hand, you don’t want to seem so eager for a term sheet that the investor thinks you’re desperate and tries to low-ball you. On the other, you don’t want to appear so aloof and arrogant that the investor passes on your deal because he doesn’t think you need his money.” – Rosalind Resnick on “The Rules of Venture Capital 2010”
entrepreneur.com/200ways
SecondAct
ENTREPRENEUR’S NEWEST ONLINE destination, uniquely tailored to the needs and interests of readers over 40. Get the inspiration, information and hands-on know-how you’ll need to get the most out of life in the years leading up to and following retirement. secondact.com
Mobile Entrepreneur
IF YOU WANT TO compete in a mobile world, you need an office that goes wherever you go to do business. Read up on the latest gear and mobile trends and get strategies from our tech experts. entrepreneur.com/mobilewarrior
Women Entrepreneurs
CHECK OUT Entrepreneur’s sister site by, for and about women. You’ll find articles, blogs, videos and more geared toward helping women become successful.
The Entrepreneur Marketing Competition 2010 THE UPS STORE and Entrepreneur are proud to announce Entrepreneur® magazine’s Entrepreneur of 2010 awards. We’re awarding three winners this year: one for an emerging business (less than four years in business), one for an established business owner, and one for a college entrepreneur. Candidates will be judged based on the positive effect they’ve had on their industry and their community. For more information and to enter, go to entrepreneur.com/e2010. Winners will be featured in Entrepreneur magazine and will be honored at a luncheon in Atlanta in January 2011. ©Entrepreneur June 2010 by Entrepreneur Media, Inc. All rights reserved.
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cover story
Unless you have the right people, chances of your business succeeding are as high as India qualifying for the football World Cup in 2014. By Ankush Chibber
I
am sure you have heard the adage of people making a business many times before. It is probably the second most-used phrase after an army marching on its stomach. Why then, I wonder, do many startups and small businesses make mistakes while choosing the right people? How does one come about the right combination of people to make a successful team? How to identify the people you must not hire? Namrata Singh, Founder, Antfort, a Mumbai-based HR, process and web solutions company focusing on the digital, media and retail verticals, says that the first thing startups need to do is go beyond the obvious reasons why one would want to hire an employee.
WHAT NOT TO LOOK FOR
PLUGGING THE GAP! Prashant Bhaskar of PlugHR wants startups to think like MNCs when hiring
30 Entrepreneur + July 2010
Many entrepreneurs bring their own style and personality to the hiring process. While this is vital to judge how the prospect fits in with the employer’s mindset and plans, sometimes this can also make the entrepreneur overlook the basics. Singh points out the four not-to-dos—hiring people because they seem brainy, because one likes them, because they seem driven or because they are cheap. These four reasons should be junked even before you think of scouting. Prashant Bhaskar, the founder of PlugHR, which is a Mumbai-based HR firm that provides
subscription-based HR services to startups, agrees with Singh. He believes that sometimes hiring for startups can be too easy. “Startups have limited budgets and if they find a reasonable candidate within their resources, they tend to close the deal there itself. That is not healthy. Your limitations cannot define your hires.” Allwyn Agnel, founder of MBA forums site Pagalguy.com, was looking for people for his editorial team last year. He says that finding the right guy takes considerable effort and it would have been easy for him to fall into the trap of hiring someone cheap. Besides these, he says, the right stuff also means that the person has integrity, honesty and the ability to communicate and learn. All others are secondary to these important ingredients.
THE RIGHT STUFF There have been many books written on this topic; you must have read many articles about what the right employee must have. But these also tend to be more theoretical than practical. Theoretically, as Agnel said, a person must be honest and be willing to learn from others besides the obvious technical skills. Antfort’s Singh, however, believes when starting out the element of curiosity is a must. “Plus, a positive, happy disposition and disregard for the dingy office, clunky computer and peeling paint goes a long way.” PlugHR’s Bhaskar explains it further. He says that startup employees need to be the ones who come from unstructured and open working environments—people who have the itch of volunteering for initiatives. “So the class topper is not the person you should be ideally looking for, but rather the students who sat in the college canteen planning the next college fest or social initiative. Startups do not have great static infrastructure and you need employees who would not get unnerved by that,” he says. Plus, they need to have demonstrated some sort of multi-tasking in their previous roles, he adds. “A startup requires an employee to fill many shoes, so an employee must have demonstrated incidences of this—whether at the previous job or at school and college,” he says.
Another requirement that a prospect must fulfill is the ability to work under limitations, more specifically, budget limitations. “He should have worked in an environment where you first thought of more financially feasible ways before the obvious expensive way. A judicious outlook to resources is a must,” adds Bhaskar.
WHERE DO YOU LOOK FOR THEM? Antfort’s Singh believes that you are wasting your time if you are looking to put up advertisements for filling your positions. She is right. Most founders say that a majority of their first employees were not even looking for a job, but rather came on board from the desire to create something new. Singh believes that bar camps and college circles are the best places to hire from. She believes that good things travel faster and more effectively by word-of-mouth. “Look in your post graduate and engineering school networks,” she says. “This is where you will find your best employees, referred to you by your own friends.” PlugHR’s Bhaskar adds that founders need to take a proactive role in the scouting process. If it is young, fresh blood the startup is looking for, the post-grad schools are a good place. “Founders can make themselves available for guest lectures,” he says. “This allows for a two-way interaction for your brand with an audience that will definitely have two or more prospects.” Besides this, the founders should always make themselves available at all events held by the TiE and NEN networks which have a large captive audience that is genuinely interested in startups and entrepreneurs. But, says Bhaskar, often a lot of your prospects will be employees at large corporations. To get to them, founders must attend all possible industry events, and even get middle references to set up an informal interaction. Inderpreet Wadhwa, founder of solar power plant operator Azure Power, believes that for most startups requiring special skills and experience, like his, you have to look into established corporations. “Then on, it is a matter of how good your idea is and how good you are at influencing the prospect with it,” says Wadhwa.
“DON’T HIRE SOMEONE BECAUSE HE SEEMS BRAINY OR IS COMING CHEAP .” IS THERE A PLACE FOR SOCIAL MEDIA IN HIRING? We all know that LinkedIn, Twitter and Facebook are the latest buzzwords in the hiring circles. But are they really working on the ground? Antfort’s Singh believes that the stumble-upon aspect of these social media sites provides an edge to the startups. “HR consultants cannot get you your employees,” she says. “You need mavens who believe in you or people who stumble upon a startup of their interest.” PlugHR’s Bhaskar says the biggest advantage that social media gives startups is that it allows them to access their target population. “It allows the startup to project its brand and then interact two-ways with the prospect,” he adds. “You suddenly have direct access rather than paying
HOLDING FORT! Antfort’s Namrata Singh (l.) and Bhawna Dahiya, COO say that the element of curiosity is a must in new hires.
Entrepreneur + July 2010 31
cover story consultants and job sites which are expensive and cannot project your brand like you can.” Siddharth Rao, Founder, Webchutney, a digital media agency, clearly believes in the aspect of scouting through social media. Even before the company puts up a job listing on the sites, it is common to see the listings being put up on Twitter and Facebook by the company’s current employees. And Webchutney is ranked by many as one of the best places to work at in this sector.
THINK LIKE AN MNC Though scouting for startups does happen in a number of unconventional ways, would it be the same for the recruiting process? Does a startup have to go unconventional here too? There are contrasting views. Antfort’s Singh believes that though you may try going the planned way through the recruiting process, it’s most unlikely to actually work. She believes that hiring for startups needs to be flexible and the process need not be rigid to the corporation’s tested methods. Bhaskar of PlugHR, however, believes in a slightly different theory than this. He says that though the scouting process can be unconventional, the recruitment process, once the initial point of contact has been made, must be akin to that of any large corporation. “You must make him feel like he is joining an organization; an organization that he is helping to build,” he says. He explains that startups need to think like brands from day one and then act like that when it comes to the prospect going through the recruitment stages. There needs to be a method that gives the prospect an assurance of the brand’s ability and people, according to him. “The prospect is already excited enough by your business plan and idea to be there across the table,” he adds. “He just needs reassurance that he is doing the right thing and having processes akin to large corporations will help in that.”
you both agree to the conditions of employment and that you will have a new team member. But in the real world, this may not always turn out to plan. Anand Morzaria, founder of Hyderabad-based Pennywise solutions and the company behind tolmolbol.com, says that many a times he has lost good prospects at the last stage, thanks to the higher salaries offered by the IT giants in Hyderabad. So how can a startup make itself more attractive to a much-needed individual who might not join on the money on offer? Antfort’s Singh is aware of this stumbling block. “If it is a funded startup, then perhaps more money is the answer if the prospect is really good and needed,” she says. “Else, offering equity options can help turning the tide in the startup’s favor.” PlugHR’s Bhaskar, though, believes that the equity option only works when applied the right way. He explains that for every 10 people who understand the concept of equity options, there are a 1,000 people who do not and hence do not care for it that much. Equity will however work wonders when offered on top of what he is expecting, Bhaskar says. “So if he is getting Rs.5 lakh at another place, he will definitely join you if you offer him the same plus equity options on top. That is why I am not a big believer in equity.” Bhaskar says that one way to influence the prospect is to proactively make him meet the other team members of the startup. “That is a huge statement of confidence,” he says. “You must involve them subtly and make the prospect see what the other side looks like.” Another way is to make the prospect meet the startup’s advisory network in an independent environment. “Typically, these are wellknown professionals, successful entrepreneurs and investors,” he adds. “The validation of your idea and the business around it from such people will give the prospect the necessary and required push to join the startup.” In the end, both Singh and Bhaskar agree, it is your business idea and the hope of creating something bigger than yourself is what will succeed in pulling the best available individuals.
“FOR EVERY 10 PEOPLE WHO UNDERSTAND THE CONCEPT OF EQUITY OPTIONS, THERE ARE A 1,000 WHO DO NOT .”
THE FINAL SNARE If all goes to plan, you will have rounded off to the person who looks most fit for your startup. The preferred choice of road from here would be that 32 Entrepreneur + July 2010
Intact KEEP YOUR FOLKS
TALENT RETENTION In my father’s generation, people usually found work that offered job security and then they stuck to it and slowly worked their way up as far as they could. But job security is no longer an issue today. People look more for challenges and personal growth. With a growing demand for talented minds, they are always being lured with everything from more money and better profile to impossible growth curves.
IMPRISONMENT IS A PUNISHMENT, NOT STRATEGY In an attempt to avoid the talents from being snatched away by others, organizations have gone to a great extent and some have even resorted to binding the new joinees or candidates up for promotion with contracts for a minimum period of employment that goes for as long as five to eight years. But these are not really going to work, as nothing can be gained from an unwilling and disgruntled employee. In fact, they may even engage in destructive activities like spreading despair amidst the rest. Soon the work place will be nothing more than a zoo with lazy and depressed inmates with absolutely no enthusiasm. Those with energy would have already left. WHY DO PEOPLE LEAVE? The main reasons for quitting are: Little or no increments/promotions Dissatisfaction with job profile Overworking Little personal value addition Lack of recognition Employer market value Fortunately, in a small company, most of these issues can be handled quite easily. Here are some pointers: Regular incentives and rewards, even if small in measure, go a long way in making one feel appreciated and understood. Incentives need not always be monetary or expensive. Innovative unconventional training programs that are interesting
Found the right personnel for your company? Here’s how to keep them motivated… By Nithya Nagarathinam
as well as inexpensive simply because not every corporation is running after it can be planned; sponsor a holiday package to the ancestral farmhouse of your friend in his scenic village. Even the best genius will be of no use if not used properly. This will lead to not only poor performance but also boredom and personal dissatisfaction. Identifying and assigning the right task which will stimulate the best of his intellect is a good manager’s responsibility. Although a small and growing business often demands eccentric work schedule, it’s advisable not to go for days on end without proper rest. It’ll bear little fruits and more wasted resources and reduced performance. Frigid bureaucratic organization breeds frustration. Conflicts with colleagues or superiors also lead to stress. Team work teaches co-existence but when overdone, it causes loss of individuality and leaves some people feeling stifled. Establish free and frequent flow of communication to avoid rumors and grudges. Not being able to work in a team is not a punishable sin or even a disability. If someone is at his best when working alone, there is nothing wrong in giving him the option. It’s no secret that appreciation is a very powerful tool of motivation. Small acts of appreciation in everyday work are very refreshing and encourage one to stretch himself beyond his best. Despite all the advantages of working for a startup or a small organization, let’s face it, people want to be part of a powerful player or a player who is gaining momentum. It’s very important for your enterprise to grow continuously and, more importantly, to communicate that to your staff. It’s easy to list things and preach on the subject but very difficult to implement them and more so to maintain the status. But if it is successfully done, there definitely cannot be a better company to work for.
“TEAM WORK TEACHES CO-EXISTENCE BUT WHEN OVERDONE, IT CAUSES LOSS OF INDIVIDUALITY.”
To read more, grab the July issue of Entrepreneur Entrepreneur + July 2010 33 To Subscribe, visit www.entrepreneurindia.in
in conversation When we say knowledge, we don’t just mean theories and whitepapers on entrepreneurship and small businesses, but rather delving into the practical depths of the whole ecosystem. So, when I took over earlier this year, we began looking at what more could be done over and above these activities to fully leverage ISB’s reach and ability for fostering entrepreneurship. My team and I went back to the drawing board. There were questions to be answered— what can we do and more importantly, what are we capable of?
ENTERPRISE GROWTH
IS AS IMPORTANT AS
ENTERPRISE CREATION
E: Is the Entrepreneurs Development Initiative (EDI) an offshoot of this rethinking? KT: Yes, even though the
initiative started a little before I joined, we have been fine-tuning it all along. The rethinking resulted in a line of thought Dr. Krishna Tanuku, Executive Director, Indian that we need to focus on two things: enterprise creation School of Business’ (ISB) Wadhwani Center for and enterprise growth. Entrepreneurship Development (WCED), explains While the EDI program why the next stage of India’s growth does not lie with was part of the former, the the Tatas and Birlas, but brick-and-mortar businesses. latter has been taken care By Ankush Chibber of by something we call the Growth Initiative (GI). The GI program came about ENTREPRENEUR (E): You have just taken after a fundamental question arose while at the over as the head of the Wadhwani Center. drawing board. How can we take small compaCould you take us through the evolution of nies that are doing relatively well but not growthe center from its inception in 2001 to its ing significantly to the next level? In effect, the present avatar? aim of the GI program is to take a Rs.15 crore Krishna Tanuku (KT): We have seen quite a company and help it become a Rs.100 crorefew changes at the center. Earlier, the center was Rs.200 crore company, for example. focused on two main activities: the many trainE: What does this GI program involve? Is ing programs we have for entrepreneurs, and the ISB actively involved with it or does it provery popular annual event called the TiE-ISB vide consultancy services? Connect. But over the last year, we have started KT: Under the GI program, we selected five to change things. companies in 2008 after a serious vetting E: How so? And what prompted the need process that saw us meeting the management, for change? going through presentations and running KT: Broadly, our aim is to make ISB the place to go through the books and operations. These five to for knowledge in the area of entrepreneurship. companies were then ‘virtually’ incubated. This
66 Entrepreneur + July 2010
E: Let’s talk about the EDI program. How many applicants do you typically get and what is your vetting process like? KT: In the last batch, we had over 65 applicants;
is to say that we worked them to understand their challenges and work out solutions. We also advised them on the strategies they had to introduce and inculcate in various aspects of their business to start the next stage of their growth.
this year, we have over 120. Students need to send us a brief on their business idea, their value
E: This seems to be a unique initiative at a time when there is greater focus on starting up than on pushing the alreadystarted to the next level. KT: Yes, it has been very well received. We had put an ad in the paper, and over a 100 companies responded. Of course, we had to be partial to Hyderabad-based companies purely for logistical reasons, but our intention is to have a national footprint with this program. Another interesting side-effect of this program has to do with the students at ISB. Many students worked on these five companies under the program. After the program, one student was invited to work as the CEO at one of the companies, while two other companies asked our students to join their management team and become stakeholders.
E: ISB is the first truly global business school in India. It has an international reach that’s matched only by the better IIMs. How are you leveraging that to further these initiatives? KT: It’s interesting that you ask me that, because we have started a global entrepreneurship initiative. Under this, we are inviting highly qualified graduates from top business schools overseas to come for a year to the Wadhwani Center. Now, what we look for in these candidates is eight to 10 years of work experience and, most importantly, an emerging market focus. These candidates can come and spend a year at ISB, during which they are made a part of the GI program and work with the SMEs from their sectors. This gives them the valuable experience of enterprise creation and growth in India. In return, I get for my EDI program valuable resources that have seen their sectors inside out. They act as dayto-day mentors for the incubatees, not just as an-hour-a-day advisors. Photo© Lakshmi Prabhala
“THE AIM OF THE GI PROGRAM IS TO TAKE A
Rs. 15 CR COMPANY AND HELP IT BECOME
Rs. 100 CR
A COMPANY, FOR EXAMPLE.”
proposition, and why they want to work in that sector. They are then screened with one-hour interviews along with all the applicants. Then we go into detailed plans and presentations before we come to a decision.
E: Would you agree that fewer entrepreneurs are now starting up with brick-andmortar businesses? KT: For one, there is a lack of awareness and opportunities. More worryingly, today’s entrepreneurs are enamored with glamour and, hence, tend to gravitate toward web businesses. We are trying to change that within ISB, too. We want to be more focused on non-web businesses. Look, by 2020, India is expected to become a Rs.93,200 crore economy. However, if we extrapolate size of companies like Tata and Reliance, according to their current rates of growth, they will not contribute even 40 percent to this. Where will the remaining Rs.23,300 crore come from? Not from web businesses. That’s why enterprise creation and growth of brick-and-mortar businesses is vital to make India the global economic superpower it aspires to be.
To read more, grab the July issueEntrepreneur of Entrepreneur + July 2010 67 To Subscribe, visit www.entrepreneurindia.in
opportunities
FEEDER SERVICES
As the Rs.50,000 crore Business Process Outsourcing (BPO) industry spreads its wings deeper into India, ancillary services which feed this sector present a huge opportunity for entrepreneurs to cash in on. By Team Entrepreneur
THE BPOs ARE I
ndia’s BPO sector is expected to spend over Rs.10,000 crore every year in various services to run their businesses smoothly— and this is expected to grow considering the fact that more and more work is outsourced to sweatshops in India to cut cost by global companies. The BPO boom has already created over four million jobs in allied services and businesses.
NETWORK AND APPLICATION SERVICES The backbone of a BPO, the network and application services is set to boom. If you have a model to support the BPOs, this is the place to be in. According to Desi S. Valli, Executive Director and COO, Net4 India Ltd, a company that helps call centers to set up their internal and external communication networks, with cost being an eternal factor in the books of a BPO, most of them would be looking at outsourcing network and application services to other companies. It is estimated that the licenses of simple applications to monitor inflow of calls are sold and managed for Rs.50,000 per month. In addition, hosted model, where IT applications and servers required for the functioning of a BPO is housed at an outside location, is becoming hot amongst Indian call centers.
TRANSPORTATION SERVICES Consider this. About one million youngsters needs to be transported in various cities in the country everyday to attend phone calls and e-mail queries from the U.S. and Europe in the thousands of call centers. That too in multiple shifts. It is estimated that there are about 15,000 cabs currently running at 54 Entrepreneur + July 2010
breakneck speed to places like Gurgaon and Koramangala from city centers ferrying the call center agents. Erratic work hours and unavailability of public transport has meant that the cab business has got a leg up. After the salary of employees, transport is the biggest payout for any BPO today and stands at about 12 percent of the total expenses. “The BPO industry means a lot to cab businesses or the so-called transportation services. I still remember when I started out, people used to think my business involves transportation through trucks, lorries, etc. Today, however, we all know that BPO has raised the bar of the business periphery,” says Tarun Jain, Chairman and Managing Director, Legend Outsourcing Pvt Ltd. A startup in this space can earn anywhere from Rs.1 lakh-Rs.5 lakh in its first year of operation and may rise up to Rs.1 crore by the fifth year.
FACILITIES MANAGEMENT Facilities management (FM) is responsible for coordinating all efforts relating to planning, designing and managing buildings and their systems, equipment and furniture to enhance the organization’s ability to compete in a rapidly changing world. According to Parikshit Roy, Director and CEO, Vipul Facility Management, within the organized FM sector IT/ITeS industry vertical contributes to more than 50 percent of the revenue and growth potential. Most BPOs/ITeS businesses outsource a significant component of this noncare function. Based on trends and scope of FM service, providers in this sector cover services like housekeeping, maintenance and Photo© Neha Mithbawkar, Shamik Banerjee
CALLING YOU! operations, front office services, horticulture, concierge services, liaison services and a host of such support functions. One can safely project a potential opportunity exceeding Rs.500 crore of revenue across the country for the FM services providers.
CATERING SERVICES Every BPO has a cafeteria and it has always been a part of its culture to take care of its employees’ gastronomical needs. While smaller vendors have been ruling the roost, institutional catering is fast turning into the next big thing in the Indian BPO industry, with players like Sodexho entering the market and multinational companies venturing or increasing their stake in the segment. The market for this service is huge. Gurgaon alone generates revenues of about Rs.1 crore every year in this space. A call center, for example, which employs approximately 1,500 to 2,000 people, would have at least 10 percent-15 percent of its employees using catering services. That itself would mean 300 clients per meal. So, even if a firm gets about 10 companies, it is clearly a huge client base. The institutional catering industry for BPOs is largely an unorganized sector in India, estimated to be Rs.100 crore.
services that go beyond just outsourcing payroll and benefit administration. Today, more functions such as training, recruiting and personnel development are being outsourced. TD Newton & Associates, which started its services in June 2008 from home, had to consider moving to an office when a deal to hire 1,000 frontline junior level staff came its way. Trupti Devpuria, its Co-Founder and Managing Partner, says that while they were already hiring for senior management levels for BPOs, the opportunity which came with hiring frontline junior level staff was great. “Per placement you would earn about Rs.5,000, provided the candidate stays with the company for 90 days. In 50 percent of the cases there is attrition within these 90 days. If you do well in a year you can expect Rs.20 lakh-Rs.25 lakh a year from a client,” says Devpuria. If a startup can generate about 100 inductees a month, the sector is lucrative.
SECURITY SERVICES The BPO industry in India has already provided a huge impetus to the security business. According to Harsh Wardhan, President & CEO, Securitas India, this is mainly due to the following fact:
HR SERVICES
TRANSPORT SECURITY (ESCORT GUARDS):
They are hired in hordes. But every company follows its standard process to hire an agent. Typically an agent hire is likely to cost about four hours. BPOs, with their high attrition rates and need for training and coaching, are a HR services company’s good bet. As the BPO sector grows, the demand increases for
This aspect was practically non-existent in the security industry prior to the entry of the BPO sector. BPOs have to cater to providing security personnel in cabs used for their pick ups and drops. This aspect was practically nonexistent in the security industry prior to the entry of the BPO sector.
“CONVERGYS HAS
11,000 employees, 700 cabs FOR TRANSPORTATION,
44 shifts 20,000 pick-ups
AND
AND DROPS EVERY DAY.”
“CATERING SECTOR IS EXPECTED TO GROW AT
10% - 15% A YEAR.”
To read more, grab the July issueEntrepreneur of Entrepreneur + July 2010 55 To Subscribe, visit www.entrepreneurindia.in
opportunities VIRTUAL SHOPPING
Online Retail is Not Dead Forget setting up the next Amazon. Start slow and smart, and you will have your own proďŹ table space in the virtual world. By Ankush Chibber
IN
early 2009, a major event passed without a whimper when Hypercity-Argos, an operation between Shoppers Stop and Argos, shut shop for good. It had decided to discontinue its online catalogue operations. In short, India's largest online retailer, backed by its biggest retail group, came up a cropper against India's fickle consumer base. So what does that tell you about retail businesses in India? Well, for one, it is quite tough to crack the Indian market. And two, its even tougher if you are running an online business. Still, over the last few years, there are many multi-brand online retailers that have entered the market with moderate achievements in terms of traffic as well as orders. These would include eBay, HomeShop18, Rediff Shopping, Indiatimes Shopping, Future Bazaar, and our hot startup this month, FlipKart. As you would have probably noticed, save the last one, all others aforementioned are backed by major business houses. Suffice to say that this means that a new entrant in the sector has higher entry barriers, at least in terms of competition, size, logistics and inventory, and any market penetration would have a high turnabout time. Playing with the big boys on their turf is a recipe for disaster. But then, why not create your own niche turf, like Mumbai resident and former filmmaker Derek Affonso has with his startup Smart Art? This is an online store that sells the likes of cult movie posters, pop culture prints and reprints of high-end art pieces.
customer. It is a level playing field; one where an entrepreneur can keep some turf for him. Affonso is one such entrepreneur. Back in 2008, he and his wife were looking for some prints to do up their daughter's room. After a bout of constant searching, Affonso realized that there was really no one-stop shop for buying such pieces. And like every entrepreneurial story, the lacunae gave birth to an idea. "The idea was to create an online store where one could shop for popular posters, art and the like without having to visit a hundred real world stores," he says. "It was also important that the pieces offered were of high quality, given that the target audience for such products would be the upper middle class and above." Today, smartart.in stocks over 15,000 pieces of movie posters, sports memorabilia prints, reprints of major art works and other major pop culture pieces. The prices for these pieces range from Rs.600 to around Rs.50,000, depending on the quality of paper, size, and cultural value, of course. The most important thing to note here is that Affonso's company
CREATE YOUR OWN TURF Online businesses have an advantage over businesses in the real world—they all have the same 13 inch monitors as our windows to the 50 Entrepreneur + July 2010
PhotoŠShamik Banerjee
SMART RETAILERS: Derek Affonso of Smart Art and (below) Rohit Saxena of Exciting Lives
is the only one doing this in India. Outside of India, there are the 'All Posters' and other companies, but they do not cater to the Indian market. If you want a Monet for your living room or a classic Andy Warhol print for the study, you can only go to Smart Art for it. Affonso tells us that the exhaustive inventory covering everything from movies to sports to abstracts to photography allows him to offer people the ability to do up entire spaces and not just walls. "So, a customer coming to the online store can, at one go, choose prints for the living room, the bedrooms, the study and the kids' room." Though he does not speak numbers to us, Affonso tells us that the biggest indicator of his success is that a good chunk of his business comes from tier II and tier III towns. "Only an online store could have allowed a niche offering like mine to reach these places," he says. "Now someone in Jamnagar can get a Gustav Klimt print sitting at home and not by scouting at a hundred stores in the metros."
began her entrepreneurial journey setting up Fashion and You with co-founder and serial entrepreneur Harish Shah in August 2009. The portal follows a private sales model that has been previously implemented successfully in Europe and North America. Here, customers get access to private flash sales, lasting upto a maximum of 24 hours, of private brands such as Louis Vuitton and D&G at hugely discounted prices, sometimes knocked down by 80 percent. Uppal explains that this allows premium brands to make use of perishable inventory without diluting the brand itself. "High fashion is a perishable commodity. What is hot now will not be hot three months later," she tells us. "At the same time, it is also an aspirational commodity for the growing Indian upper middle class." Making the two converge at the platform of affordability is what Uppal and her team accomplish with Fashion and You. "The supplier is also sure of what audience he is reaching out to because to be able to shop at the store you
"BE IT SHOPPING IN THE REAL WORLD OR VIRTUAL, CUSTOMERS LOVE THEIR DISCOUNTS AND SALES." Affonso also tells us that he has not spent anything on advertising beyond a little on Facebook and the launch releases. Most of his marketing is via word-of-mouth, he tells us. Much like Pearl Uppal's fashionandyou.com, an online invitation-only sales portal that does flash sales of high-end brands like Gucci, Prada and the like.
THERE IS NOTHING LIKE A GOOD DISCOUNT Be it shopping in the real world or virtual, customers love their discounts and sales. Nothing gets the women of India going like a good sale, does it? However, many online stores tend to price their products higher than in the real world, trying to accommodate back-end and logistics costs within the margin. So is there a place for heavy discounts in the world of online retail? Uppal seems to think so. Formerly in the business and operations units of internet giants like Yahoo and Rediff, Uppal PhotoŠ Neha Mithbawkar
need to be able to bank online and also have high bandwidth internet access and that is typically a luxury afforded only by the upper middle class in urban towns." Fashion and You's recommendation model also makes a future case for what can be termed as social shopping. It already has 250,000 users, according to Uppal, and most of them are on by referrals. This means that typically there can be a set of people, known to each other in the real world, shopping together online. "This would allow us to offer deals to closed user groups. This is like deals within deals, making the experience of shopping on sales akin to the real world where you would typically shop with your regular shopping partners." That makes it easy to understand why the maximum investment for the company goes into shooting the clothes, shoes and accessories in a professional studio to get the closest-to-real feel for the customer. Shopping is a visual experience and there cannot be any shortchanging
To read more, grab the July issueEntrepreneur of Entrepreneur + July 2010 51 To Subscribe, visit www.entrepreneurindia.in
opportunities POWER LOOM
The Power of Innovations Kunwer Sachdev set out to manufacture pens but ended up being one of the largest inverter manufacturers of the world. Now, 12 years later, he is brimming with fresh ideas and plans to continue innovating. By Pranbihanga Borpuzari
K
unwer Sachdev has come a long way from the days when he thought the late C.K. Prahalad was a salesman trying to sell him something. The owner of Su-Kam says he is humbled by the innovation and out-of-box thinking people do. “I didn’t know what innovation was. I was a simple businessman who was trying to improve his products and earn money. It was when people told me I was innovating that I realized what I was doing,” says Sachdev.
HOW IT ALL STARTED Sachdev’s brush with business came early, when he was just 15 years old. Hailing from a middle class family, Sachdev joined his elder brother in selling pens to shopkeepers. Later, during his degree in statistics at Hindu College, Sachdev came up with the name Su-Kam and an idea to get into pen manufacturing. “The idea to call the venture Su-Kam came to me at the college canteen. It does not mean anything special. It just seemed like a nice name to put on the pens that I was going to manufacture,” explains Sachdev of the unusual name. Sachdev carried on in the business with his brother for another two and a half years, but eventually fell out with him and decided to go on his own. That would, however, have to wait as in 1987 Sachdev joined a cable TV company and got to know the finer points of the business. Another two and a half years later Sachdev quit and started his own cable TV business under the Su-Kam brand. He started with cable TV installations and then got into manufacturing by 1991-’92; his products included amplifiers, modulators etc. Then in 1997, destiny wrote a new phase in his life.
INVERTER TECHNOLOGY ‘POOR’ Tired of incessant problems with his inverter, Sachdev one day dismantled it and realized much of what was inside was low quality electrical components. “The technology used was very 48 Entrepreneur + July 2010
inferior. Some of the technology I used for our cable TV equipments was far superior,” he says. Sachdev got a friend to send him some parts of inverters used in OB vans in Canada. Together with his own components, Sachdev tried to mix and match to produce an inverter. The result was a big failure. “The mix and match approach just did not work. I was, however, unwilling to let the project go and stuck to it,” he recalls. Within one year Sachdev managed to get his technology in place and the first Su-Kam inverter was out in the market. By 2000, the inverter business started picking up and Sachdev spent his energy in trying to better his products. Initially he faced huge challenges for product development, service, marketing and every facet of his business. “It took a lot of time and effort to develop all these fields. We made many new innovations to the product and brought in new technologies but I never knew there was something called patents.” Sachdev also did not know anything about a brand name and what it could do for him. But by 2000, he thought of branding and an advertisement plan for Rs.24 lakh for a year was drawn up. The initial advertisements were placed in newspapers—small advertisements stating the dealer locations. “In 2002, there was an excise raid on my facility. That is when I realized that Su-Kam was a brand,” says Sachdev.
WINDS OF CHANGE While it was the norm to have two batteries powering an inverter, Sachdev introduced an inverter which ran on one battery. “Not many wanted to be our dealers. Everyone was sure that an inverter which ran on one battery could never work. I proved otherwise,” says Sachdev. Today, Su-Kam has about 10,000 dealers pan India. Su-Kam has more than 180 products which include inverter, UPS, and batteries. Of this, Su-Kam exports inverters, solar products and batteries mainly to Africa, Middle-East
with a strong presence in Iraq, Afghanistan, Sri Lanka, Bangladesh and even Pakistan. Domestic markets contribute about 80 percent to its revenue with the rest being exports. Of the exports, 70 percent comes from Africa. Su-Kam has crossed revenues of over Rs.500 crore last fiscal and expects to grow at 60 percent this year. From fuel cells to LED lighting with backups, Sachdev says the possibilities are infinite to develop, innovate and come up with new products. Throw in the prospect of an IPO in June next year and complete overhaul of the way the company does its business, one would say winds of change are blowing fast for the Rs.500 crore company. “I do not want to get into areas where we lose our core competencies. R&D, marketing, the brand is all vital to my business and leaving that I want to outsource most of the things. It is easy for me to be complacent but my compassion to innovate more keeps me constantly striving. I want an organization with less management and less people; keep core businesses and outsource the rest,” says Sachdev He has already outsourced his entire logistics, IT and in the process of outsourcing few parts of sales. On the manufacturing front, he has already outsourced half the products and Photo© Shamik Banerjee
“I WANT AN ORGANIZATION WITH LESS MANAGEMENT AND LESS PEOPLE; KEEP CORE BUSINESSES AND OUTSOURCE THE REST.” will slowly outsource the manufacturing process completely. “I want to hold on to only R&D, marketing and the brand. I will complete this process in the next three years,” says Sachdev. At 46, Sachdev says he has professional management to run his company and has no day-today role. “My job now is to give thought process and direction to the organization.” On the other hand, he is also busy trying to find the next level of management. “We have grown so fast that it has been difficult to acquire quality talent for all our products,” says Sachdev, who believes he now needs technical personnel to take his company to the next level. Not very comfortable speaking English, Sachdev keeps the humor level up with a generous dose of Hindi. “I am eccentric in some ways and the endless possibilities in the space I operate in make me so excited. I think I need about Rs.100 crore to achieve my plans,” he signs off.
To read more, grab the July issueEntrepreneur of Entrepreneur + July 2010 49 To Subscribe, visit www.entrepreneurindia.in
start ups FLIP OVER
BOOK YOURSELF GOOD DEAL
A
Sachin and Binny, the young entrepreneurs behind online bookstore Flipkart.com, are out to hook you with books! By Shonali Advani
S
achin Bansal and Binny Bansal are not brothers. However, there are other similarities that run through their blood—IT Delhi, Chandigarh, Amazon and entrepreneurship. During 2006-’07 the duo was working at Amazon, but was not happy in terms of the challenges the job offered. Indian book market at Rs.7,000 crore, growing at the rate of 8-10 They decided to start something on their own. The initial idea percent per annum. With this in mind, the duo quit their jobs was to start a price comparison shopping website which would and finally launched the startup in October 2007 as an online offer better services than counterparts like bookstore, with the USP of free shipping and Rediff Shopping or Indiatimes.com. “We did discounted rates. The early days saw them not perceive too much of a risk in starting selling themselves to distributors as a seri5 our own business,” says Sachin, Co-Founder ous player in the sector, tie-ups with courier 10 and CEO, Flipkart.com. companies, plus investing heavily in building 35 However, other obvious restraints like the website. The firm started with two-three scarcity of resources, lack of a successful book distributors and 50,000 Indian titles 25 enough e-commerce player in the price and by October 2008 got its first internacomparison space to compare themselves tional supplier on board. “Initially we even with and the perils of being a small company bought books ourselves from bookstores to 25 meant such a website would not be a wise fulfill a demand,” says Binny, Co-Founder idea to start with. On the other hand, market and CEO, Flipkart.com. The business model survey showed books are a great resource involves keeping inventory in bulk on the REVENUE GENERATION to start with in the e-commerce space, back of 300 suppliers in the five cities that 35% Fiction given that price points go as low as Rs.100, Flipkart.com has tied up with. Abroad, the 25% Non-fiction making it easier for a customer to trust a firm has tie-ups with four suppliers, two each 25% Technical and professional new company with the first transaction. in the U.K. and U.S. Suppliers share their Moreover, books have a longer shelf life, are stock feed with the firm, which helps them 10% Reference easier to handle and ship, with low invenstay in the loop of current availability. One 5% Children’s books tory risks and high-margins. According to lot of the inventory is stocked with books the entrepreneurs, the online book market the startup foresees as demand and another is less than one percent of the entire book market in India. lot is stocked by back-to-back orders, meaning orders placed by Management consulting firm Technopak Advisors values the customers are procured on demand from suppliers, and then 100 Entrepreneur + July 2010
PAGING SUCCESS INITIAL INVESTMENT: Rs.4 lakh FUNDING: Accel Rs.4.65 crore REVENUE 2008-’09: Rs.2.5 crore REVENUE 2009-’10: Rs.20 crore-Rs.25 crore EXPECTED REVENUE 2010-’11: Rs.100 crore NO. OF VISITORS ON WEBSITE/MONTH: 6 million NO. OF OFFICES: 3 (Mumbai, Delhi, Bengaluru) NO. OF EMPLOYEES: 200 NO. OF DISTRIBUTORS: 300 (India); 4 (abroad) CURRENT GROSS MARGIN: 10-15 percent QUARTER -TO - QUARTER GROWTH: 80-100 percent TOTAL NO. OF TITLES IN INVENTORY: 6 million
packed and couriered to them. “The BOOKED! Sachin and Binny value-add we offer is selling rare Bansal’s Flipkart.com gets 6 books, that sell only a few copies a million visitors every month year and are hard to find at modern retail book chains,” says Binny. Flipkart.com has sold about five lakh books since inception, 90 percent of which are in English. Recently it has started to add regional language books (Bengali, Hindi, Malayalam and Tamil) to its range. “The search options on their site will get better because they are working on improving it continuously,” points out Ashish Gupta, Managing Director, Helion Venture Partners, a mentor to Sachin and Binny. The credibility of this business rests largely on the quality of service delivered. This means working closely with third party service vendors to understand their processes and build a strong relation. “Getting books across from international suppliers is easier than working with local delivery personnel in India,” laughs Sachin. Indian suppliers are more disorganized and not savvy with their own IT systems. “We tie up with multiple suppliers for a single title to avoid a shortfall,” says Sachin. The firm has partnered with 10-15 courier companies to ensure timely and speedy delivery. Vikas Gupta, a student at JNU, Delhi, started using Flipkart.com when he spotted them at a book fair this year. Since then Gupta has bought about 350 books and claims that not a single shipment has been delayed. “Flipkart.com has a very comprehensive inventory with good discounts,” says Vikas. Photo© Sanjay Ramchandran
A VC familiar with the startup feels the firm has focused well on the execution of their services. “We met Flipkart.com when they were only six-nine months old but did not fund them for internal reasons. However, we would consider funding them in the future,” says the VC, on condition of anonymity. Accel India Venture Fund, the firm’s current investors, met the entrepreneurs when Flipkart.com was at a very early stage, selling only a few books a day. “They have done a great job in building the product, both on the customer acquisition side (with a low marketing budget) and the customer satisfaction side; the latter is the hallmark of their success so far,” says Subrata Mitra, Partner, Accel India Venture Fund. The firm has just added music (12,000 titles), movies (20,000 titles) and games in June 2010, given the high demand for these items. “The product categories Flipkart.com offers are good choices and allows the company to expand its operational skills,” explains Gupta. The Bansal duo is also adding more distribution centers, starting with Kolkata and Chennai. Amongst the frequent users, on an average an user spends 15.7 hours per week on the internet, as per research by I-Cube 2009-2010 (Internet in India). “Online book shopping is growing very quickly but what is commendable is how quickly it has become so large for Flipkart.com,” says Gupta. So, have they met their VC’s expectations? “They have done well so far, but we have a much longer run ahead, and continue to innovate and execute to stay the course,” confirms Mitra.
To read more, grab the July issueEntrepreneur of Entrepreneur + July 2010 101 To Subscribe, visit www.entrepreneurindia.in
start ups TROUBLESHOOTERS
Tech Nirvana Though it is yet to begin its Indian operations, iYogi has taken the west by storm with its remote tech support services. By Pranbihanga Borpuzari
E
ver wondered how to liven up your old, underpowered Pentium III system that had just 384MB of RAM, running Windows XP SP2 with no updates, loaded with annoying software and pop-ups? Chances are if you are in the U.S., U.K. or Australia, you have to fret no more, thanks to iYogi, which offers remote tech support to troubleshoot your computer problems. If you are in India, you will have to wait a little longer till the services start in the country. iYogi, the brainchild of co-founders Vishal Dhar and Uday Challu, is a provider of comprehensive direct-to-consumer and small business remote tech support, runs services like software installation, setup of peripherals, e-mail configuration, security installation and troubleshooting for a variety of operating systems, including the new Windows 7 for computers. iYogi’s Global Delivery Platform is powered by Microsoft certified tech experts and advanced tools for diagnostics, repair as well as maintenance. In the three years since it started operations, iYogi has seen its customer base grow to 1,25,000 and signed up
TOOLS OF THE TRADE: Uday Challu, Co-Founder, iYogi 104 Entrepreneur + July 2010
15,000 customers last month. Currently it has centers in Gurgaon, Pune, Hyderabad and Bengaluru and will set up centers in Chandigarh, Kolkata and Chennai this year. It is also looking at expanding across 12 additional geographies beyond the U.S., U.K., Canada, and Australia in the next 18 months. The company has so far seen three rounds of venture financing–about Rs.126.9 crore, with the first round of Series A funding being of about Rs.14.1 crore by Canaan Partners and SVB Capital Partners India. The reason for iYogi’s growth has been that customers have multiple electronic appliances operating at their homes and offices, something which they did not have earlier. “You now have digital cameras, mp3 players, printers, computers and systems on the cloud. The complexities have increased and no one had a single point of contact to address issues. They would go to hardware providers, software providers and service centers and in the process get bumped on from one department to another. That frustration coupled with price points to get someone to come over and sort out the issues did not work out well. This is where iYogi comes into the picture,” says Dhar. Dhar and Challu took the entire services online with a subscription-based model enabling you to call as you want. “The U.S. is our primary market from where we get 70 percent of our revenue followed by U.K., Australia and Canada. The total number of PCs in use today is 1.2 billion, while there are 6 billion people in the world. In the U.S., there are 270 million PCs, while the country’s population is 310 million. This means the number of PCs is almost at par with the number of people which makes the U.S. our fastest growing market. ” says Dhar. The company is also collaborating with other businesses to spur its growth. For example, in the U.S. it has a tie-up with Wal-Mart Photo© Mohd. Nasir
where every PC they ship out has iYogi installed in it. The company’s analysis shows that demographically about 60 percent of the customers are in the 50-plus age group in the U.S., which denotes an ageing population in need of tech support. The market is clearly very large and iYogi plans to have 3,50,000 subscribers for its flagship product, iMantra, in the coming years. “iYogi targets a very large established market and there is precedence that large businesses such as Geeksquad can be built in this segment. When we invested in the company, iYogi did not have significant revenue, but had demonstrated a very high service level through its pilots. It had also shown promise of disrupting the pricing model from per-incident pricing that the market operates on, to an unlimited subscription pricing. iYogi has performed well,” says Alok Mittal of Canaan Partners. iYogi also has a different way of operating. “The company has a different approach to consumer psyche. We did not want our employees to guise their name to John Smith and speak in a weird ascent. We also felt that India today is tightly integrated as part of the global services delivery, where aliases are no longer important to get a higher level of customer satisfaction. This has been transformational in the response that consumers have,” says Dhar. He further adds: “We have in our own minds certain prejudices about a consumer in the U.S. or, in fact, any of these countries. When we started we thought we that have to overcome these prejudices in the West, but to our surprise this bigotry did not exist in the first place. Some of these may have been created by call centers for third parties but in reality there are not many prejudices.” “Even in a long-established area like desktop support, we have found that prospective partners are sometimes wary of offshoring work to India. However, that perception has progressively changed as we have shown repeated evidence of higher quality over the past couple of years. Interestingly, even at the height of the financial crisis, we were able to hire people in Photo© Shamik Banerjee
the U.S. at a lower (productivity adjusted) cost than India and that has suited our business model well,” says Mittal. So why is iYogi not yet operating in India? “The question is not about why not but when. We feel that India is ready for a service like this and we see reference points around. It is just that there are different ways to enter a market. In the U.S. we based our model as an online search which is a direct response model. In India, the model would need to be different because the people do not search online for a service in this country,” says Dhar. Having clocked revenues of about Rs.94 crore last year and with expectations of a whopping 300-400 percent growth to clock about Rs.282 crore-Rs.376 crore this fiscal, the company seems set for the next big step.
“THE U.S. IS OUR PRIMARY MARKET FROM WHERE WE GET 70 PERCENT OF OUR REVENUE.” GROWING STRONG: Vishal Dhar, Co-Founder, iYogi
To read more, grab the July issue Entrepreneur of Entrepreneur + July 2010 105 To Subscribe, visit www.entrepreneurindia.in
how to [... do just about anything]
Set Up an
Industry in Gujarat Perhaps the best thing about setting up a business in Gujarat is the minimal bureaucratic hassle you have to face.
ONE STOP SHOP: THE INDEXTB In 1978, the Gujarat government formed a single window co-ordination agency, iNDEXTb, to ensure a smooth start to any new venture. Its functions include promoting NRI and foreign direct investments, coordinating with various government departments at the state and central levels, with chambers of commerce and industries associations and monitoring implementation of all industrial approvals through a computerized system. 114 Entrepreneur + July 2010
By Sriya Ray Chaudhuri
T
he Industrial Extension Bureau (iNDEXTb) is the single point contact organization of the Gujarat government. This makes it easy for an entrepreneur to set up a business in the state. Gujarat has seen an average annual growth rate of 10.4 percent over the last five years, while contributing to 16 percent of the industrial production of the country. It has also mobilized the highest share (12.7 percent) of investments through lEMs in the country.
OBTAINING PROVISIONAL SSI REGISTRATION/FILING OF IEM/LOI/LOP: Approval for provisional small business registration in the case of small business units should be taken from the concerned District Industries
Center (DIC); in the case of medium and large de-licensed industries as well as licensed industries, approval is needed from Secretariat for Industrial Assistance, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, New Delhi.
REGISTRATIONS NEEDED If you have a proprietorship (individual ownership) business, no registration is required. For a proprietorship comprising 2-20 owners, you should register with the Registrar of Partnership Firms, Ahmedabad. For a Pvt. Ltd. Co. comprising 2-50 shareholders with limited liability, you will have to register with the Registrar of Companies, Gujarat Region, Ahmedabad and for a Public Ltd. Co. with minimum 7 to IllustrationŠ Chaitanya Surpur
SPECIFIC APPROVALS NEEDED FOR FOOD AND DRUG MANUFACTURING UNITS: Commissioner of Food & Drug Administration ENVIRONMENTAL CLEARANCE: Forest and Environment Department, Government of Gujarat SITE CLEARANCE CERTIFICATE FOR LOI HOLDERS FOR CONVERTING INTO IL: Industries Commissionerate, Government of Gujarat, Gandhinagar
BOILER REGISTRATION: Chief Inspectorate, Steam & Boiler, Government of Gujarat MINING OF MINERALS: Commissionerate of Geology & Mining, Government of Gujarat STORAGE OF EXPLOSIVE MATERIALS: Directorate of Explosives, Government of India, Vadodara ENVIRONMENT IMPACT ASSESSMENT: Department of Environment, GoI QUALITY REGISTRATION: Bureau of Indian Standards, Ahmedabad IMPORT OF MACHINERY: Joint
maximum unlimited numbers with limited liability, you have to register with the Registrar of Companies, Gujarat Region, Ahmedabad.
LAND ACQUISITION NORMS For land acquired in GIDC (Gujarat Industrial Development Corporation) estate, you should get in touch with the concerned regional office of the GIDC. For government land, you should contact the concerned district collector or DDO under whose jurisdiction the survey numbers fall, with the recommendation of Industries Commissionerate. For private land, deemed NA permission up to 10 hectares should be granted by the concerned district collector or DDO under whose jurisdiction the survey numbers fall.
POLLUTION CONTROL BOARD CLEARANCE Barring highly polluting industries, all other items need an NOC to be obtained from the Gujarat Pollution Control Board. For highly polluting industries, first NOC should be obtained and on effective installation of pollution control equipments/satisfactory arrangement for disposal of wastes/effluents, consent should be obtained from the Gujarat Pollution Control Board.
POWER ARRANGEMENT For sanction of power, you will have to apply to the concerned Circle Office of Gujarat Electricity Board. For captive power, you should
Directorate General of Foreign Trade, Ministry of Commerce, GoI, Ahmedabad IMPORT OF RAW MATERIALS: Joint Directorate General of Foreign Trade, Ministry of Commerce, GoI, Ahmedabad HANDLING OF HAZARDOUS ITEMS: Chief Inspector of Factories, Government of Gujarat, Ahmedabad FACTORY REGISTRATION: Chief Inspector of Factories, Government of Gujarat, Ahmedabad POWERLOOM REGISTRATION: DIC/IC/Textile Commissioner
apply to the Gujarat Electricity Board and for non-conventional sources of energy, you should apply to the Gujarat Energy Development Agency, Vadodara.
WATER ARRANGEMENT For units located in GIDC estates, you should get in touch with the Executive Engineer, GIDC of the concerned region and for units located outside GIDC estates for drawing canal water, contact the irrigation department of the Gujarat government.
APPROVAL OF BUILDING PLANS For units located in GIDC estates, you should get in touch with the Executive Engineer, GIDC and for units located outside GIDC estates for bore-well permission, get in touch with local authority. For registration for incentives available, small business units should get in touch with the concerned DIC and others with the office of the Industries Commissionerate of the state government at Gandhinagar.
LOAN MARKET To get term loan up to Rs.240 lakh for acquisition of fixed assets, you should get in touch with the Gujarat State Financial Corporation; for term loan exceeding Rs.240 lakh for acquisition of fixed assets, you should get in touch with Gujarat Industrial Investment Corporation and consortia of other financial institutions/banks and for working capital, you should get in touch with any commercial bank.
To read more, grab the July issue of Entrepreneur Entrepreneur + July 2010 115 To Subscribe, visit www.entrepreneurindia.in
back+stage
10
signs not to hire the
person you’re
interviewing
1. Parks in president’s space upon arrival you speak 2. Yawns repeatedly while her) 3. Freely quotes Dita Von Teese (Google 4. Complains about wrist chafing 5. Answers your phone during interview 6. Tells you work experience is on a need-to-know basis 7. Winks a lot
8. Cites his hair as his greatest achievement 9. Asks if insurance covers Bot ox 10. Question: “What are your weaknesses?” Answer: “Kryptonite.”
132 Entrepreneur + July 2010
Illustration© Chaitanya Surpur