Monday, September 17, 2007

Outsourcing businesses acquiring up-close and personal flavours

In the past three months, GetFriday, has seen more than 300% increase in its business in terms of customers

Finding a new job for an out-of-work software engineer in the US or having a repairman fix a broken window pane in Geneva is all part of the day’s work at GetFriday, a Bangalore-based company that offers such services, termed virtual assistance, to individuals and small businesses across the world.

This is outsourcing up-close-and-personal. Companies offering such services remotely support faulty home computers, file individual tax returns, tutor schoolchildren online and run personal chores. The business could be worth $2 billion (Rs8,100 crore) by 2015, up from $250 million in 2006, according to an April 2007 study on person -to-person offshoring by Evalueserve, a global knowledge services firm.

In the past three months, GetFriday, a division of TTK Services Pvt. Ltd, part of the TTK Group, has seen more than 300% increase in its business in terms of customers: from 200 customers in June, it now services 700. To cope with the demand for more work, it has, over the past six weeks, hired 80 employees to take its staff strength to 120. “There is still a three-week backlog of requests to deal with,” said Sunder Prakasham, chief executive of TTK Services, who conceptualized and launched the service in August 2005.

Mphasis Ltd, a Bangalore company that is part of Electronic Data Systems and is better known for the back-office and software applications work it does for large companies, files up to 10,000 tax returns for individual customers in the US. “We deal with various levels of complexity; for instance, if the client has used returns from the sale of a ranch in Texas to fund a round of gaming at a Vegas casino, we go back with annotations to the chartered accountant firm in the US which outsourced the task to us,” said Sachdev Ramakrishna, vice-president, strategic marketing, Mphasis.

“Cost arbitrage is not the only reason personal tasks are being outsourced to India. For instance, we get the bulk of our business from accountancy firms that prefer to focus on high net worth clients and pass on routine tax filings to offshore firms,” said Ramakrishna, who added that the Mphasis’ billing rate of $75-80 for filing a return is comparable with what an accountancy firm in the US would charge.

There is a similar trend in support services for individual users of computers. More than 40% of the $100 billion IT customer-support market in the US is outsourced. In India, this has spawned businesses such as iYogi, a start-up company based in Gurgaon, offering remote support for computer users primarily in the US and the UK.

“Ninety per cent of computer malfunctions are software-related, which are problems a user can fix himself if he is guided by an expert on the phone,” said Vishal Dhar, president, iYogi. Launched in early 2007, iYogi aims to have one million customers by 2011, up from the current 55,000.

“Remote technical support, education services and health care are the three segments where we expect the highest growth in offshoring of personal services,” said Alok Mittal, executive director at Canaan Partners, an early stage venture capital (VC) firm, which, along with SVB Financial group, invested $3.1 million in iYogi in April.

Tutor Vista, an online tutoring service based in Bangalore, has also raised a total of $15 million in VC funding from investors such as Sequoia Capital and Lightspeed Venture Partners to fund a growing business that now has more than 100,000 registered users primarily in the US and the UK. Tutor Vista has a network of 600 tutors, spread across 28 Indian cities, who receive 60 hours of training before they actually start to tutor a student online. “Personal offshoring is finally a consumer marketing business where service providers have to spend on marketing and brand building if they are to attract and retain customers,” said K. Ganesh, founder and chief executive officer of Tutor Vista.