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iYogi does an Indian rope trick, outsources outsourcing

Aug 3rd, 2012
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What did the outsourcing company do next? Well, it did some outsourcing of its own. Based in Gurgaon, iYogi Technical Services Ltd is handing out some of its own global work to partner companies in India because it has turned its learnings into an automation tool. And thereby

hangs the tale of what could be the next smart move for India's IT services industry.

iYogi began in 2007 as a person-to-person (P2P) services company.

Its agents use software to remotely take over the computer screens of customers in Europe and the US and other faraway places and fix their bugs and guide them over broadband links - in return for a service fee sold in packs.

Working in parallel with such technical support people, iYogi's team of engineers study their processes and create a software platform that helps these agents perform more efficiently but cutting down the time to get a service done.

In the process, the knowledge-based platform itself becomes a key tool - and so iYogi rents out this platform -now branded as iMantra - and makes partner companies to use it.

The smart act in this is that its headcount stays under control while revenue per employee goes up.

"I am expanding through outsourcing," Uday Challu, iYogi's founder and CEO, told HT.

"The entire support is being done out of a platform. We have created a tonne of tools in the platform itself."

The company's business model is a new cocktail of old fashioned service work with Platform-as-a-service (PaaS) - a new buzzword in IT as software rented over the Internet in "cloud computing" catches on.

Bangalore-based Infosys also has a division that develops various industry tasks into platforms that clients can rent.

What the iYogi platform does basically is a diagnostic service.

The software often figures out what is wrong with the query coming in much before an agent takes a call - much like a doctor getting a medical report without having to pick up thermometers and stethoscopes.

For example iMantra can scan a computer to identify the operating system, device or other features.

"We built a service engine and to power it we built the platform," said Challu. "I am now licensing the platform to others. It enables standalone services."

iYogi now gets revenue from subscription as well as platform licensing.

iYogi has 3,000 people working in Gurgaon and Noida and 200 software engineers at work to develop the learnings to develop iMantra.

It now outsources work to even larger companies like IBM Daksh and Genpact, besides smaller ones such as Microland and Infinite Computer Solutions.

They collectively now account for 2,000 people in addition to iYogi's own staff.

"There is a lot of intelligence that comes to the technician," Challu said, explaining how bits of information can be organised to make subsequent work more efficient through the platform.

"Nearly half the money I have raised has gone into the platform."

iYogi has raised more than $56 million in four rounds of venture funding.

The last round of $30 million was financed by Sequoia Capital, the Silicon Valley which has invested in companies like Google in its early stage.

Challu reasons that the platform is needed to stay ahead of big-boy competitors such as Wipro and Tata Consultancy Services because the edge no longer comes from cheap labour but smart work, in which iMantra provides an edge.

The company thinks it is vital to keep its service charges low because users are switching from $600 ( Rs. 35,000) PCs to tablets that cost only a third.

Service packs for maintenance also need to be priced lower in order to make sense to the customer.