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Building a Web company with bricks: A case study

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CIOL Bureau
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BANGALORE: The crash of the Internet stock in the US early this year forced

many to review their strategies and mission. One of the biggest realizations

that dawned upon dotcoms was that it was impossible to survive as a pure Web

company. It began to dawn on them that their business model should include some

features of the traditional brick and mortar versions.

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One such case is that of 24/7 Customer.com, a US based company offering

customer relationship management (CRM) services and solutions. The company

started off by offering Web-based CRM services. However, over the past few

months, the company has changed its strategy to include some of the offline CRM

services, such as call centers.

Points out CEO, US Operations, PV Kannan, "The world has shifted during

the last six months. It is difficult for pure Net-based companies to survive.

Companies will need to have both offline and online presence. We cannot offer

only e-mail based services. We need to provide voice-based services too."

And, therefore, the company has embarked on setting up call centers in India for

its clients.

Kannan compares call centers to software outsourcing. "There is a lot of

similarity between the two. However, unlike in software outsourcing, if you do

not scale up fast, you will not survive. Also, you need huge investment for

setting up call centers." But, isn’t the business of call centers a

crowded one? "We are at an early stage of the development cycle for call

centers. There is huge demand. However, over time there will be consolidation

and only a few will survive," Kannan says.

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The company, which raised $3 million in its first round of funding, is

scouting for VCs for the second round, which is expected to bring in more than

$10 million. In the next few weeks, its first CRM solutions will also roll out.

According to its Founder and CEO Prakash Gurbaxani, the company’s revenues

should touch Rs 100 crore in the next 3-5 years.

Kannan plans to start with focusing on the US market. "Some amount of

market awareness is required. We (the top executives) all have worked in the US

and understand the market well," he says, adding that in the Europe, the UK

market holds some potential, where again, the accent of spoken English differs

from that of the US market."

The call center market is fast growing in the US. However, it is becoming

increasingly difficult to manage the growing number of these centers. With an

unemployment rate of less than three per cent, the employee turnover rate is in

excess of 50 per cent. "This is creating huge problems for companies. The

situation opens up attractive opportunities to India, which has a sizable number

of educated non-engineers. In terms of cost advantage in setting up centers in

India, one tends to cut down cost by about 30 per cent depending on the industry

and the scale of the centers," says Kannan.

And, what is the future of CRM in the Indian markets? "A lot of

consulting companies have emerged. However, it is still in its early stage.

People are talking about it. Hospitality and the financial services industries

seem to be taking the first steps. It will slowly trickle down to other

industries," feels Kannan.

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