''Services industry is following the manufacturing sector''

The company has been advocating the Services-on-tap delivery model for some time and is now beginning to offer a few services based on this model to a few customers. Somshankar Das, president and CEO, e4e Inc, spoke to Priya Padmanabhan of CyberMedia News about the changing IT services scenario and the company’s plans.

Can you elaborate on the Services-on-tap model that you are betting on?



We are seeing a democratization of technology usage in the market. And now technology is no longer the prerogative of rich enterprises but is also going to small and medium enterprises. Services-on-tap (SOT) is nothing but the pay per use model. We feel that the market is not ready yet for this. But at the same time, the current “services-in-a- barrel” model works only for large enterprises. We are still in the early stages of SOT. We will probably start this in the technology vertical. We are offering some services based on this model in the mortgage area already. We have to make this grow. The important thing about SOT is that there is no direct selling. You can’t sell salesforce.com directly but through online marketing. There are many differences between services in a barrel and SOT. The former involves more of a sales component, customized IT service and is for large enterprises. SOT on the other hand involves standardized services, more of a marketing component and is more suited to small and medium enterprises.

What are the trends you see in the IT services industry?

Whatever has happened in the manufacturing sector is now happening in services. That is why I believe SOT will become a reality in four years time.

In the world of manufacturing, we saw the establishment of global supply chains. One can manufacture by sourcing parts from five different locations. This has happened over the last 20 years. Manufacturing today has become so efficient. When this happens you can produce more products at a lower price. And when you produce more products at a lower price, you expand the market. PC industry is one good example of an area where the market has been growing since the prices have been dropping.

We are starting to see the same thing in services. Services today are very localized. The services business is very fragmented as opposed to product market, which is less fragmented. Services will be standardized and be offered in a pay-per-use mode.

This will happen because of a few technology interventions-fat pipes (for data transmission) mean lower costs; collaboration technology and security of data. These are the things that could make the services supply chain a reality and e4e wants to be at the vanguard of that.

How has e4e evolved from its beginnings in 2000?

There are a lot of misconceptions about e4e. I want to stress that e4e is not an IT services company. We are not designed or ‘architected’ as a company that is into IT services. We are a provider of business services. We are not a VC or an incubator either. We have done the incubation for our own purpose. We put in money into these companies like iCelerate, Vinciti and iSeva to create e4e.

The idea was to build a company out of these building blocks. We sell to three vertical markets- healthcare, consumer and high tech.

Do you plan to venture beyond these three market segments?



No. We have chosen these three areas for a reason. The technology segment is the most mature market while consumer finance is less mature. Health care is very immature and offers a lot of growth potential. By choosing these areas, we can manage a balance between revenue growth, profitability and customer stickiness. Stickiness is important because our model is annuity revenue model.

Technology is an area where we can grow our revenues very quickly. Health care and consumer finance contribute more to the profitability. Health care is a sticky business.

You are targeting revenues of $100 million by next year? What are you doing to get to that milestone?



Yes. The goal is to get to that annual run-rate in 12 months. We’ll reach the target through organic growth and also maybe through one or two small acquisitions just to fill up our holes. Instead of waiting for two years to build a requirement in-house, it would make more sense to acquire the competency.

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