Zooming Ahead on the Global Highway

By Pooja Kothari

Photograph by Subhojit Paul

"Even my mother doesn't understand what we do," says Uday Challu, CEO and co-founder, iYogi.

In fact, she isn't the only one. Parents of most of the 20-somethings employed by iYogi find it hard to comprehend what their children do. Is the 'i' for investment, or India? Or, for the internet? And, what to make of Yogi? That's not a common word, even in India.

Put them together, and what do you get? Well, a global business worth Rs 250 crore in four years—one that provides technology services and support to end consumers in the US, UK, Canada and Australia for prices varying between $40 and $169.

Here's how the service works. If a consumer faces a problem, they can seek iYogi's assistance either on phone, or online. Depending on the nature of the problem, iYogi charges them for a one-time intervention, or for an annual contract to help every time a problem arises. While a single person remains in contact with the consumer for that complaint, at the back end, multiple specialists can be brought in to solve the problem.

It doesn't matter which brand, device or technology has a problem. It doesn't even matter which geography the consumer is calling from. As long as there is a tech problem—a computer that has crashed, or an iPad that refuses to sync with the iPhone, or a printer that just won't follow a command—these Yogis will do their best to solve it—all to earn some 'good karma'.

There are a few thousand of them—6,000 to be precise—a majority sitting in six floors of a tony commercial building in Gurgaon. This army of engineers, call centre agents, business developers, researchers and search optimisers starts work every afternoon. It is bound by a single mission—to resolve a problem that's sent its way in the least possible time and in the most satisfactory manner.

It's a simple business, really. Someone has a technology problem. iYogi solves it—and, gets paid. "It was a hugely underserviced market. We just spotted an opportunity and went after it," says 48-year-old Challu.

THE MARKET
"Technology support is a $30-billion market in the US alone," says Alok Mittal of Canaan Partners, the initial investors in iYogi.

There's little doubt that it's a huge market. According to a Fast Company article, "Americans spent a whopping $4 billion on tech support last year. That number should grow to at least $6.4 billion by 2013, and remote help is poised to drive much of that expansion".

With the growing popularity of devices in the hands of consumers, be it smart phones, tablets, laptops and so on, this market will only get bigger in future. For instance, even within mobile phones, there are now multiple operating systems supporting different phones. Just syncing gadgets with different OS is stressful for end-users, especially those who haven't grown up with these devices. Not surprisingly, a majority of iYogi's customer base are over 50 years of age.

No wonder Challu and his team are confident of victory in the battle to set up a tech support company out of India. "There are 74 million broadband homes in North America. If I get 25 per cent of those, I will have 18 million households. That's $3 billion in revenue. And then, there's UK, Australia, Middle East, India, China and so on," counts Challu, excitedly.

Given that iYogi's journey began only in 2007, when the company was incorporated and the first call taken, its scale of achievement is commendable. The firm has built a subscription base of around 400,000 customers in the US, and solved more than 2 million problems—all on phone, or online.

The firm's winning combination—an ability to communicate with the consumer and a platform to deliver support—has helped iYogi create a successful business on first try. "We're the first consumer services brand out of India," says Challu.

It has held its own among competitors, who are based locally. There's Geek Squad, the customer service operation run by Best Buy, a leading consumer electronics retailer in the US. It runs in-store services, where consumers can walk in with their hardware to get the problem sorted, sends technicians to people's homes, or takes the equipment to its depot for repairs. Then, there are a clutch of online support services, such as PlumChoice.com, which provide tech support to the customers of other companies. Mostly, there are the call centres of manufacturers, such as the service centres run by Dell and Apple that a consumer can turn to for support.

Despite sitting miles away, iYogi has done a good job of understanding its customers. "Our first call resolution rates are among the highest in the industry," claims Challu. There's no independent verification of these numbers. However, iYogi claims to have "90 per cent resolution rate" for the past 24 months and an even higher customer satisfaction rate.

It's this ability to solve problems that appealed to Canaan Partners many years ago, when Challu approached the venture capital firm for funds. "Their first call resolution was in mid-80s, while the rest of the industry, including Microsoft and Dell ran rates of 50-60 per cent. These guys were much better even at the pilot stage and that too, in a multi-brand environment," adds Mittal.

Convinced of the potential, Mittal's firm invested $3.2 million in iYogi, along with SVB India Capital Partners, almost four years ago. Since then, iYogi has gone on to raise $57 million in several tranches from reputed investors, such as Draper Fisher Jurvetson and SAP Ventures. Most recently, it raised $30 million from Sequoia Capital and existing investors in December 2010.

This money has clearly been put to good use. According to press reports, iYogi's turnover has increased from under Rs 13 crore in 2007-08 to Rs 82 crore in 2009-10. It aims to close the fourth year of operation—2010-11—with revenues of Rs 250 crore, three times that of last year.

Challu claims to have added 5,000 people across cities, such as Bangalore, Pune and Chandigarh, in the past year alone. "We hope to add another 6,000 in the next 12 months," he adds. Such exponential growth makes iYogi an exciting place to be.

THE BEGINNING
It was around 2005, when Challu and his business partner, and co-founder at iYogi, Vishal Dhar, put a hypothesis to test. They were then running a boutique consulting firm, IQ Resource. The first wave of outsourcing had proven that back-office operations could be easily delivered from India. And, as people became more accustomed to internet and dependent on technology, more and more devices found themselves in people's hands. Yet, there wasn't anyone to support those multiple devices. "I knew the market existed. The original equipment manufacturer doesn't own the ecosystem, only one component. Therefore, someone else would have to take the ownership of the entire system," says Challu.

Acting on his instinct, he travelled the world to check on the need for solving technology problems. "We spent one year researching this space. We met all sorts of people; spent time with people that ran tech support centres for large IT vendors like Microsoft and Dell to figure out what their customers were telling them. We experienced the flaws in the IT support ecosystem," adds Dhar.

There was large-scale scepticism even among friends and acquaintances about the concept of "delivering a high-quality service out of India". That was the time when Dell had taken its back-end operations out of India and back. Even Apple had experimented and opted out of India.

On top of that was the sheer lack of experience that Challu and Dhar had in this field. Neither had worked in the outsourcing industry, and had no idea what it would take to execute a model along these lines.

The duo wasn't in a hurry, though. "We ran a pilot for more than a year. We figured out how to deliver this service, built the platform, and created the technology and people processes required to deliver that service, then we hired people, and trained them. Only once we had all the pieces in the right place did we raise capital," recalls Challu.

With an investment of $750,000 from personal savings, Dhar and Challu set out to "build the company from ground up". Neither had ever worked in the outsourcing industry. Challu had previously set up a few businesses, including a retail chain for clothes in Delhi; while Dhar came from a marketing background.

"For either of us to put our skills and experience to use, we needed a product. And, we didn't have one," remembers Challu. So, they did what turned out to be the best thing in hindsight—they hired some people from outsourcings firms around Delhi, including IBM Daksh, Convergys, and so on.

"We basically focused on what the business will look like in 10 years—and then we got onto doing things that will take it there in 10 years," says Challu. Even as Shruti Dwivedi, the first hire who now runs a large part of operations, went about figuring out how the support will be delivered, Challu and Dhar took it upon themselves to build a brand. "We wanted to build a brand out of India. So, we needed a word that was universally recognised for its Indian origin. We didn't get Yoga, so we opted for the closest alternative—Yogi. Together, India, internet and Yogi became iYogi," regales Challu with tales from the early days.

Their lack of experience didn't stop them from aiming high, though. "We wanted to get into this business only if it was massively scalable. To me, that meant a firm worth a couple of billion dollars in revenue and has millions of customers, and can still keep evolving along with technology," says Challu.

OUR PEOPLE, OUR STRENGTH
There are a number of things that have worked in iYogi's favour so far. The most important, according to Challu, is the team he managed to put together. When his team first came on board, each person came with different aspirations. "But once they came here, their individual motivations very quickly changed into a larger platform, a motivation that drives all of us together," reasons Challu.

There might be some merit in that argument. Of the 35 people iYogi started with, 27 are still around. "We haven't lost any people at a senior level, except the ones we asked to go," says Dhar.

It helps that together, the group of some of the earliest and senior employees own more stock on the company than Dhar and Challu combined. Yet, that's hardly the main motivator, feels Challu.

"We found a common purpose in what we wanted to achieve for the company and how that translates into shareholder value, economic value and, therefore, value for all of us. That's a rare situation," he says.

It also helped that from the very beginning, Challu ran iYogi with all systems and processes on board. Whether it was the decision to put 15 per cent of the company stock into an Employee Stock Option Plan (ESOP), or performance appraisal systems, or a balanced scorecard, the company was ready for scale even before it received its first customer call.

Canaan's Mittal adds another perspective to the iYogi growth story. "One of the things that Uday has managed to do is build a transparent senior management team that can challenge each other. Culturally, that has allowed them to grow as a company," says he.

"Uday doesn't believe that he has all the answers, or the best ones. Everyone knows what the issues are, and what's going on. If someone comes back with a solution and it passes muster, it'll get done," adds Mittal.

Challu has the personality and creativity of a "classic entrepreneur", but he has surprised everyone—may be even himself—with his ability to manage scale. "At every stage, he has operated ahead of the curve in bringing the right people on board," comments Mittal.

When growth demanded an expansion of numbers, he opted for captive BPOs to solve the problem instead of trying to hire every resource internally. Similarly, iYogi showed an amazing ability to work with the resources it had. At each stage, it raised money with a clear goal in mind—and met that.

After the first round, the money was spent to explore internet as a sales channel, and get the "unit economics" in place. "Within a year, Uday had shown that metrics," says Mittal. The end result of focusing on specific deliverables ensured the company managed its growth well within its means.

In Service We Believe
From early on, Challu thought of the business as a technology business, rather than an outsourcing business—and, built it accordingly. There is a 20-member research and development team today whose only job is to stay ahead of the consumer's problems.

"No one knew Steve Jobs was going to make an iPad. But the moment we knew he was on to something like that, we got on to the task of figuring out what possible issues its adoption would have amongst our subscribers," says Dhar.

Adds Challu: "We have to remain ahead of technology, so whenever consumers buy something, we're there with them to solve their problems. That's our core capability. We have to be ready when that call comes."

Another aspect that is unique to iYogi is its dependence on online marketing. Says Pradeep Chopra, co-founder, Digital Vidya, an online marketing consulting company: "They have used search engine marketing really well."

iYogi's online marketing has 200 people, up from four just a couple of years ago. "We're one of the biggest spenders on Google Ad words from India," says K.R. Sreejith, vice president, iYogi, who's been with the firm for the past three years.

This team also creates content that helps customers solve some of the problems on their own. "It's not fair to ask someone to pay an annual subscription fee for something as small as changing the wall paper, or un-installing a program," adds Sreejith. Such issues are solved through self-help videos that are put up online for convenience.

The company has also been quick to realise other channels of service. iYogi bundled its services with partners, such as McAfee, Dell, Avast and Wal-Mart, to gain a toe-hold into American households. Today, its sales come directly from global online marketing campaigns, as well as from its partnerships with retailers, OEMs, anti-virus companies and independent software vendors. "When we offer our services free of cost, the customer gets to experience our service, and we get a chance to convert the customer in to an annual iYogi subscriber," says Ravi Neb, vice president, business services, iYogi. In the two years since the first partner programme was launched, these "non-direct marketing channels" have grown to account for between 30 and 35 per cent of the company's revenues.

THE FUTURE
Like Challu, the business he runs is thinking far ahead of itself. iYogi's opening its first service centre in the Philippines this year. "Within six months, we should have a centre in Latin America," adds Challu. He's also keen on having a presence in the Middle East to cater to Arabic-speaking users. Plans to launch the subscription service in India are already beyond the drawing board stage. "By the end of the year, we will be a household name in India," promises Challu. The company is also planning to launch field services by engaging 14,000 technicians in North America in the next quarter to cater to the home and business segment.

Being a savvy businessman, Challu knows that finding the talent to feed his growing appetite might be difficult. So, he's taken it upon himself to do something about that. "We're launching an online certification programme for technology support and services; and we aim to train 250,000 people in the next three years," he says.

Delivered online, the course will train people in tech support jobs, and make them available for employment in other industries, such as remote infrastructure support and technology support, as well.

Another skill that they've honed in-house, and now intend to market, is that of internet marketing, in which iYogi will offer another certification program. "There is a huge shortage of people trained in internet marketing. But we've cracked it, so now we'll teach others. It will be delivered on video straight to the user's laptop, and we will put people in mock situations, and bring elements of virtual plan into the training," adds he.

Again, he displays the restlessness of a typical entrepreneur. Even before his billion-dollar dream is reality, Challu's looking at other "building blocks". He justifies it with: "There's a selfish reason. If I train 250,000 and iYogi needs 25,000, I can hire the best from them. We'll continue to grow for a long time; we'll need specialised skills. So developing those skills is important from our perspective."

Challu's problems don't end with getting the right talent on board, though. Getting people to deliver on intent is something he's already struggling with. "It's only in India that you need to put a supervision layer and a quality layer on top of people. It drives our costs up—and it drives me crazy. Why can't people simply do what they are paid to do? I've had to put a hierarchy in place—someone who will make sure that another person, who knows he has to do 10 things in an eight-hour shift, actually does those," says Challu.

So far, he resisted having a HR practice in the company. After all, how hard can it be for college graduates to manage themselves in an environment where all systems are automated? Well, as Challu's discovering now, quite, it seems. "Some of the larger companies, like Genpact and IBM, have the same people problems, despite their superior HR practices. So, I am trying to manage this issue in completely different ways. I am going to create a methodology where if you want to work for say, four hours a day, you come and do just that."

The company already has a strong learning and development function. "We constantly engage with the employees through My iYogi, our internal networking site for the employees. From the day they join, people know their career paths, including the options of cross-functional positions. And, we have minimum four weeks of training per employee; even higher for technicians," says Deborah Steele, manager, HR, who hires nearly 500 people a month for iYogi. So far, the company has managed to keep its attrition rates manageable due to these initiatives.

As iYogi puts its ambitious plans into action, it is bound to run into such problems, some will be more manageable than others. But, as long as digital homes become a reality, and Android phones fight with those powered by Windows 7, and iPad gives birth to a new generation of tablets, Challu and Dhar will only get busier in the days that follow.

	EMAIL THIS ARTICLE	PRINT THIS PAGE