How do you bootstrap a profitable outsourcing company?
Joining me in this interview is Abhishek Rungta, founder of Indus Net Technologies, an Indian company that started out with just him doing door-to-door sales and has grown to about 450 engineers and designers. Grab this interview and you’ll hear how mastering online sales helped him build up his company.
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Abhishek Rungta, Indus Net Technologies
Abhishek Rungta is the founder of Indus Net Technologies.
Indus Net Technologies is a premier Internet consulting company offering diverse tailor made solutions to help organizations around the world gain an edge over competitors.
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Here’s the program.
Andrew Warner: Hey everyone, my name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. How do you bootstrap a profitable outsourcing company? Joining me is Abhishek Rungta, founder of Indus Net Technologies, an Indian company which has about 450 engineers and designers. Abhishek, welcome to Mixergy.
Abhishek Rungta: Sorry?
Andrew: Oh, I was saying welcome. It’s good to have you on. You are in India right now, by the way. What time is it that you’re doing this interview and staying up for me?
Abhishek: It’s almost 8:30 P.M.
Andrew: Thank you so much for doing it. What’s the typical end to your day, by the way? What time?
Abhishek: My end generally ends at around 8:00 or 9:00 P.M. Depends on the meetings that I have to do online. So this not uncommon.
Andrew: Oh, good, good. I felt really bad having you stay up. I figure, you know what, why does everyone in India always have to work around the hours of the people in the U.S.? I appreciate you staying in the office and doing this interview.
So let’s make sure that people in the audience understand what your business is. I like to understand companies through single examples. Do you have an example of one client that you’ve helped? Maybe the SEO company you told us about earlier, or you told me about in the pre-interview, I mean.
Abhishek: Yeah, sure. We basically have worked for a UK-based SEO company, which is one of the biggest SEO companies in the UK and they have a huge portfolio of clients. They have approximately 150-180 clients, which were not very big and which were kind of, they don’t want to work with them anymore or they were not profit-making clients, actually. They were not profit-making for primarily the reason was they were small businesses and they were highly demanding and these are the clients which were expected to actually scale up into major clients.
So they were having a difficult time managing these clients, so what we did is, when we spoke with them, we said, “OK, why don’t you give us the chance to kind of convert these clients and manage these clients for you and deliver them the results that you promised them?”
And we started with all these 180 clients, which were transferred gradually. And over a period of six months, we kind of got almost 80 percent of the clients the desired results that they promised them. So in this way, they kind of outsourced their entire operations for the small business clients to us and when one of these clients became big, the actually [xx] them and took them in house.
Andrew: I see.
Abhishek: Over that period of time they were so happy with the performance that now they’re also talking about putting some large clients towards us because they have seen that the smaller clients have actually got better served than some large clients.
Andrew: Oh, that’s awesome. Actually in the introduction I called you an outsourcing company. Your company’s actually considered a talent cloud or an agency of agencies. What does that mean?
Abhishek: Basically, what we do is, we actually operate as an extended arm of a digital agency. So if someone is running a digital agency, they can actually kind of extend their arm up in the cloud and access us at the extended delivery center. So they can have a team of developers, designers, SEO. So all the talent is on demand. So that is why I sometimes call Indus Net as a talent cloud. So you just access the talent as much as you need, whenever you need it and just pay for the exact uses that you are doing.
Andrew: I see. Kind of like the way I use Rackspace Cloud. At the end of this interview, I’m going to take the video file that I have, put it on Racksapce Cloud and they give me as much hard drive space as I want. Your business is similar, but for talent.
Abhishek: On the talent, yeah.
Andrew: OK. And what kind of companies do you work with, in addition to the SEO-type businesses that you were telling me about, what other kinds of comapines do you work with?
Abhishek: We primarily work with most of the digital agencies. Digital agencies means web design companies, web application development companies, SEO companies. We also have divisions which serve governments, so we actually work for the government of India.
Andrew: The government of India hires you?
Andrew: OK. Impressive.
Abhishek: And we have a small division, which takes care of enterprises as well. So there are some enterprises which actually use us as their extended delivery center for [??] of their legacy systems.
Andrew: Let me ask a question that some people in my audience hate and others really appreciate that I ask. What size revenues do you have?
Abhishek: Haha. Our last financial year… Our financial year closes in March. The last financial year we did around $3 million US dollars and this financial year we will be doing at least $5 million US dollars.
Andrew: Why do you talk about that publicly? Why are you willing to say that here on Mixergy?
Abhishek: It doesn’t matter because our clients know what is our revenue. They don’t mind. Our competitors, they know our revenue. We don’t mind because if they have less revenue, they will feel nervous and if they have more revenue than us then it doesn’t matter to them.
Andrew: I see.
Abhishek: [??], It goes in the newspaper, which gives us more mileage.
Andrew: You’re reported in the newspaper? You talk about it that publicly?
Andrew: And are you the sole founder of the business?
Abhishek: Yeah, I am.
Andrew: All bootstrapped, I said in the intro. Was there any outside funding in this?
Abhishek: Not a single penny.
Andrew: Wow. Not a single penny. All right, I want to find out how you built the company. Now that we understand what the company is and how big it is, I want to understand how you got here. What ws the original idea that launched this company?
Abhishek: To be very honest, I started this company without much of an idea. So I started this… Because when you talk about web design and development, it’s not rocket science, it’s not invention. There are thousands of companies already doing it. So when I was in college, I came across a book on HTML and I thought, “Let’s make a website.” So I started it actually as a hobby and eventually I decided to make some money out of it. So I actually ran this business as a hobby until 2000, so three years I was running this business as a hobby.
Andrew: And what kind of business were you doing in those three years when it was just a hobby?
Abhishek: In the three years I was making small websites for small and medium sized companies around us. Primarily, I was hosting sites because, in India, infrastructure was always an issue and those days, hosting was not a service which was easily available and if there was some hosting companies there who were operating, the support was absolutely ridiculous. So what I did was, I researched and researched on the Internet and I found out how the hosting business works and I started offering hosting services in India.
Andrew: How did you do that? How did it work at the time?
Abhishek: I can remember that time because, if you have to send one single payment for domain registration to a company called Network Solutions, we have to stand in a queue for the bank and we will actually have to fill out this thick documentation to prove that we are not actually sending money outside India for any other reason apart from that business. And we had to wait for 21 days to get a confirmation that the money has gone through Network Solutions. So that was the kind of pain that people were going through at that point of time.
When it comes to hosting, it would only provided by one or two public sector companies and, as you know, most of the public sector companies in India do not have that quality of service. So we found that it was a fantastic opportunity for me to come in. When I researched on the Internet, I found the same hosting that these public sector companies were offering for — I will talk in Rupees — they were offering it for 20,000 Rupees and it was available on the Internet for 5,000 Rupees. So what I had to do was basically to find a good provider and then basically sell that service in India.
Andrew: And it was a foreign provider that you were re-selling their service?
Abhishek: Yeah. I found a provider in the US and I started re-selling the service in India and soon I understood one thing that, if I can take a dedicated server, I can actually put many more sites on that without really bothering about the space constraint. [??] And that was the time when our business actually boomed out and that huge amount of sales that I could make helped me in arranging the initial capital for the company.
Andrew: And how’d you find clients back then?
Abhishek: I followed the same methodology that I’m following today. I never went to individual clients. I actually went to small web design companies and I made them my re-seller. I prefer to work through channels, because then you have to serve lesser number of people, you can serve them better and you are kind of working in partnership rather than you are competing with people.
Andrew: I see.
Abhishek: So I think that model has always worked for me and I’m quite comfortable there.
Andrew: How did you get the initial agencies that would work with you?
Abhishek: I had to knock on doors.
Andrew: You did? You physically left your office or your home, you walked over to the agency and you said, “Hey, I’m re-selling hosting service, do you want to talk?”
Abhishek: The best thing was, I didn’t have an office at that time, so I was at home and I used to go out and use public transport or use my bike and go out to each and every possible business, which was either a web design company or who might have harbored an ambition of becoming a web design company.
Abhishek: So even companies that were not web design companies, I used to go and knock them and say, “OK. You sell computer hardware. Just ask your client if they’re also interested in hosting a website.” So it actually gave me, you know, a wide spread. So very quickly, when I started selling these services in Eastern India, I almost occupied 75 percent market share within a short span of six months.
Andrew: OK. Wow.
Abhishek: Because there were no other providers, you see. So I would not say it was a perfectly competitive market and I used the channel which is, you know, can give you exponential growth because the moment you put something in the channel and the service quality is good, you know, it just keeps growing and growing.
Andrew: And this was unannounced cold calls that you’d just make on these companies? You’d say, “Hey, I think we should talk about hosting?”
Abhishek: In fact, I didn’t even call them. I just visited their office.
Andrew: You just came in their office.
Abhishek: Yeah. Frankly speaking, at that time, I never had an indication of how to do things. I didn’t know how to do things. I didn’t know how to actually manage accounts and all these things. So I didn’t know that I should actually call and go. I used to just go and a lot of times it worked.
Andrew: All right. What was the next step in the evolution of the business?
Abhishek: The next step… After doing this for three years, I thought that if I really wanted to build a career or a business in this field, I need to take some education and what I did was I went to UK to do a master’s. During that time, I used to manage my company at night after my college and my sister used to provide the daytime support in India.
Andrew: And what went into managing at the time?
Andrew: What did you have to do as a manager while you were in school? Did you have to look for new clients? Or was it just maintaining the ones that you had?
Abhishek: Just maintaining the ones I had, yeah. Just maintaining the ones I had and provide them technical support. Because in hosting, that is the most important thing to provide timely support to clients.
Andrew: OK. All right. So once you were done with school, what was the next step?
Abhishek: When I was done with school, I came back to India. It was not the best of times to come back to the country. It was 2000. The dot com boom had happened and the bust had happened as well so there was no business around and I was again out knocking on the doors to get business and this time for web design. So I think I must have visited more than 500 offices in a span of one year and the total business that I could do was less than five lakh in Indian Rupee.
Andrew: Less than what?
Abhishek: Less than five lakh Indian Rupee. Five lakh Indian Rupee would be around, I think, $10,000 US dollars.
Andrew: That was the total business that you were able to do?
Abhishek: Total business I could do by knocking on all the possible doors and derive all possible businesses that I can.
Andrew: You know, I’m wondering, as I understand the timeline, why you continued with the business? Why didn’t you go get a job? You’re an educated man who had experience running his own company who just got back from school who was just starting his life. Why are you starting your life in an industry that’s destroyed instead of saying, “I’ll go to school and then come back into this industry later.”?
Abhishek: There were a few instances which had happened before which made me come back to this. One is that I am from a business family. My father is an entrepreneur in his own right. He runs a business in Kolkata. He always supported me that if you want to do a business, do a business. In fact, he would always recommend that you do a business rather than a job.
Second was that when I was running my hosting business prior to my master’s, someone told me that a web design business can only be a five to ten people agency setup and you cannot really earn a fortune out of it. What you can do best out of it is basically just earn a living and some cool name in the industry and be considered as a cool guy roaming around. At that time, I thought that, I mean why this constraint has been put on this industry? Why can’t this be a 5,000 people company? Why can’t this industry have a proper professional corporate setup?
And that was something which was going behind in my mind which pushed me to really go ahead and do this business rather than just go and take up a job, which I had plenty of them when I was out of college.
Andrew: In addition to running the business?
Andrew: OK. And so it sounds like, based on what was going on in the back of your head, you were thinking of transitioning from a hosting company to an agency, is that right?
Andrew: Why not stick with the hosting company and build that up and build that up knowing that it naturally scales? Why challenge a business that everyone says isn’t going to scale? Why challenge that industry to scale?
Abhishek: Good question. I think what actually happened is that I went for my studies in 1999 and I came back in 2000. I think it’s all about the timing. When I went, we had this dot com boom. Everyone was talking about Internet and making a website and making a huge amount of money from that and I missed that time and since I missed that time, the huge market share that I used to have shrunk to less than ten percent. And I always want to dominate whatever I’m doing and that is why, when I came back, it was uphill task of pushing that market share up there where the prices had gone down so much that there was very little value in actually doing that business. So I thought, let’s go up, move the value chain, let’s try to do something different, something big and that actually brought me to web design.
Andrew: So how did you get started in web design?
Abhishek: I mean, I was already doing couple of odd jobs in web design before I went and when I came back, since I had worked in an agency in the UK while I was studying, so I gained a lot of knowledge about how to make websites, what is international standards, what are the [??] compliance standards, etc. and stuffs like that. And I started going out to companies and tell them and show them how websites should actually built, because most of the companies in India, at that time, were building non-standard compliant websites.
Andrew: Can you give me an example of what the difference was between the look of a compliant website and a non-compliant website that was standard?
Abhishek: Again, if you go by validating it through a lot of validators available at World Wide Web Consortium site you will see that most of the sites do not validate. They have got lot of errors. They have been built by amateurs and lot of times they will not work the same in different browsers. But when you talk about standard compliant websites, they have actually to be professionally built. They have to be tested and they, again, have a look and feel that is clutter-free, which makes you actually buy, which makes you really get engaged with that website. So I was trying to bring the transition in the industry when I came back, but unfortunately for the first two years, I didn’t find many takers.
Andrew: How were you looking that you didn’t find takers? What was your sales process at that point?
Abhishek: Again, since I’m not a trained management person, my sales process was very crude. My sales processes was let’s hire a few guys and let’s go out in the market, print a brochure, and let’s go to every possible business and try to sell them what we do. Truly when I look back, I realize that it was the wrong process. It was, I think, if I would have gone through making a network, if I would have gone by qualifying my clients, I would have done much better.
Andrew: First of all, that’s a gutsy way to do business. A lot of people, I think, are too embarrassed to sell at all, let alone to sell in-person to strangers. I know that’s tough. But, how did you make the transition from that to more effective selling methods?
Abhishek: Yeah, that is an interesting story because when I was doing this and I was not reaching anywhere, my turnover was not growing at all and I was getting deeply frustrated because in most of the offices, I used to wait for hours and hours in reception and people would not honor their appointment because website was not at the top of the agenda. So one day when I was coming back to my office, I was absolutely frustrated and I decided that I will not go to any other office tomorrow and I will try to find business somewhere else and what I did was, I started searching on Internet. How can I find business on Internet? Can I find business on Internet?
And then I came across a few websites which were like this talent exchange. One of them was called Elance.com and I hooked onto that and I hooked onto a few more exchanges and when I found that, I found quite excited. It was interesting. I spent my entire night and next two days without getting off my chair, just exploring that website. I couldn’t just get off the chair and I started bidding. And then I realized that I have got my first order, which is giving me decent value for my work and without moving out of my chair, without having a single sales guy and just by explaining and showing them some sample of my work. And that was the turning point.
Andrew: You know, it’s so shocking because I experienced something similar on the other side of the computer. I was the guy who was going to sites like Elance saying, “I can’t believe I can just hire someone to fix this one problem for me to just add one plug-in for me for WordPress or create this one website.” It’s amazing for me and it’s interesting to see what it’s like for the person on the other side of that bidding process. So how…
Andrew: No, go ahead. You were going to say something. I want to hear your story.
Abhishek: It was very exciting because, when I found my first client online and that was not a proper name, it was just a username, and he placed the order and I knew that I’ll get paid, it was so exciting that I actually couldn’t get off my chair for three days.
Abhishek: I was eating on the table and I was going through that and trying to explore it as much as I can and it was so more exciting because nobody in the entire region had ever done that. So I was kind of one of the first person exploring a business outside my regional territory for something which had not been done before.
Andrew: How big were you able to get by going onto sites like Elance?
Abhishek: Elance had its own limitations. I started working on Elance. I started getting projects. I started hiring people. I even hired someone to bid on Elance, a gentleman who is now quite close to me and he is the head of operations of Indus Net Technologies today. We started getting more and more projects, but at one point of time, we understood that the Elance is getting very competitive because the news spread outside that I am using Elance to get business, not only in my region, but obviously other people who were in similar state like mine started using Elance somewhere in India and other countries and so Elance started becoming crowded. I think by 2004-2005, Elance was very crowded, the competition was cutthroat and we realized we cannot make profits on there. So we decided to get off Elance after three years.
At that time, I was experimenting with something which was called GoTo.com which was interesting search engine that I stumbled upon that would actually rank me on the top if I’m ready to pay them per click and I became one of the early adopters of their search engine. I was actually using it for quite some time, but when I found Elance becoming very, very competitive, then I thought let’s focus all of our budgets to something like GoTo.com. And as everyone knows here, GoTo.com was acquired by Yahoo eventually and we had Google AdWords that came in. The day Google AdWords was launched, we signed up there and I did put in my campaigns and that was a new beginning altogether.
And all my competitors were actually looking at Elance and similar sites, like RentACoder. I have actually moved ahead and I was actually looking at something like lead-generation mechanism, which will give me independent leads that are not shared with 100 other companies like me. And that was another turning point, because now I am much ahead of my competitors who are actually fighting out in a crowded marketplace and I am actually having a relaxing time, where people are coming and placing orders and building relationships rather than looking for the cheapest provider.
Andrew: I remember being on GoTo’s bidding process and paying a penny, two pennies per click. Five cents was a lot of money, but it was converting so well you said all right, let’s go for it. For me, I was trying to convert people to small stuff, to join an e-mail newsletter or to send out a greeting card. Five cents was still very little. For you, you’re doing high end work. Five cents, ten cents to get a click that would eventually convert into a customer that was paying thousands of dollars must have been a bonanza.
Abhishek: Exactly. It was. Our sales cost was, I think the lowest you can get. We had no salesmen. It was just me and one guy and we had a team which would deliver services, which would be around 25-30 people, a little more, I don’t remember the exact numbers, but it was like 25-30 people who were delivering the service. It was very interesting time.
Andrew: How do you… Before I continue with the marketing, which is where my passions are, I want to understand the rest of the business. How do you find developers and other employees who are competent, who are strong, who can represent your business when you’re growing that fast?
Abhishek: I have always believed in talent and developing talent from scratch, so most of the talent I actually recruited was freshers because my business was small and I had enough time to kind of work with them, so I actually recruited a lot of freshers.
Andrew: “Freshers” meaning somebody who’s fresh into the business like freshmen?
Abhishek: Absolutely, yeah. You use the term freshmen.
Andrew: So this is someone who couldn’t code before they walked in your door? You’re training them on development?
Abhishek: Oh, no. It was not like that. They actually knew coding because they did their degrees in coding, but they have not had professional work experience.
Andrew: OK. So still, schools turn out lots of different kinds of people, some who are good, some who are bad and maybe they both have the same grade. What I mean is, how can you tell who’s is the right person and how do you then once you find them, how do you develop them once they’re in the company to make sure they’re a good fit for you and your clients?
Abhishek: The first thing I used to do the filtering process was I used to do a mass interview. So I would actually have 25-30 people sitting in the room who actually kind of matches the grades and then I used to throw in questions in the audience and see who takes the initiative of coming up first and answer that.
Andrew: What kind of questions?
Abhishek: Some of them were technical questions. Some of them were small, interesting case studies. So for example, a question would be how would you handle a difficult client? And some question will be how would you assess the size of the project? So I wanted not only objective answers. I also wanted subjective answers to understand his thought process and we could identify a few guys who were very good and today they are working in very large companies, some of them. Some of them are still with us and some of them are working in very large companies like IBM, Cognizant, the ones like that.
Andrew: OK. All right. So now you’ve got them on board. How do you train them in your ways? How do you make sure that they’re good with their clients?
Abhishek: Initially, the entire customer facing was done by me so most of the time they never used to front customers. Because the biggest challenge we face in India, especially in service sector, and in the startup, is communication skills. I came from UK after my studies, so I understood how to exactly assess a particular e-mail, how to understand the communication and to deliver results based on that. But most of these people, though they are very good technically, very nice human beings, but it’s very difficult for them to really understand the client’s precise requirement and decipher the unsaid requirement and then deliver the services.
Andrew: I see.
Abhishek: But as we grew, people who were actually doing the coding, I started delegating them some tasks. I asked them to do some kind of client communication and it was kind of complete hands-on training. It was never structured classroom training. I have no background in HR, so that was, I think, one of my weak points, but I think somehow we pulled through.
Andrew: So at first, all the client relationships were done by you and one other person who was in the company. You would take the clients requirements, you would pass them on to people inside, they would develop it, they would give it back to you, you would then give it back to the client and back and forth and back and forth. That seems like a real bottleneck and eventually you started shifting more client interactions to your people. Is that right?
Andrew: By the way, Indus Net Technologies. Where does the name of the company come from?
Abhishek: Indus Net Technologies comes from… When we were deciding the name of the company, me and my mom, we were thinking what name should we give to this company and we thought India Net Technologies, but then it was too generic. We thought everyone will think of this name, so we thought we’d put it Indus Net Technologies. And this Indus Net name, Indus was somewhere in my mind because I saw this name of a restaurant called Indus Restaurant, so it was somewhere in the back of my mind and it came out and so we named the company Indus Net Technologies.
Andrew: Is Indus a word? I-N-D-U-S. Is that a word? In English?
Abhishek: Yeah. Indus, like Indus Valley civilization. So it relates to India very closely.
Andrew: I see. I didn’t know that. I actually… It didn’t even occur to me to wonder about the name or else I would have done a little research on it before we started the interview. But as we’re talking I said, “What is this word that we keep bringing up here?”
So Indus Net Technologies now is on GoTo. It’s converting customers who you’re paying a penny or so to acquire as prospects into bigger clients. You’re growing your people inside. At what point does GoTo and Google AdWords get crowded?
Abhishek: It took a lot of time because Google AdWords and GoTo needed a very clear cash investment from day one unlike Elance, which was not so expensive, and which showed leads statically. So on Elance, people could see leads statically on the screen and they knew what they were getting so they were already… So most of our competitors were comfortable paying them.
Andrew: But with GoTo… Sorry, go ahead. You say it.
Abhishek: But in Google and GoTo, you don’t see any client. You just see some listings of your competitors and you have to pay per click from day one. So it was a mental block for most of our competitors because they were not thinking it through, the whole mathematics of number of possible searches, number of clicks, number of visitors and number of leads and therefore number of clients. There’s a funnel that you can create which is so popular now as we call the conversion funnel, which obviously was not named that at that point of time. So I could envision the conversion funnel very clearly, which many other could not. It took us… We still are on Google AdWords, but Google AdWords was always the primary source of our leads until 2007.
Andrew: And then what happened in 2007? What’s the next evolution, next part of the evolution?
Abhishek: In 2007, one of my clients was US-based. He invited me to see him in the UK, so he said, “I don’t want to travel all the way to India. Can you travel to UK and I will travel to UK so let’s meet up there in the middle.” I said, “Let’s meet,” because he was doing some good business with us.
So when I reached UK, I did the same thing. I knocked on doors, besides the meeting, I went out and knocked the doors for seven days. I did almost six to seven meetings a day. I just went anywhere and everywhere I could get and I initiated conversation, which gave me an idea about the market potential that UK as a country holds. And again, I was quite comfortable in UK because I did my studies there, my master’s. So that actually opened my eyes and I decided I should come more often to the UK and try to get some clients here.
Andrew: But how? First of all, who’s doors were you knocking on and who were you introducing yourself to when you were there on that seven day trip?
Abhishek: I was talking to the Indian embassy. I was talking to people in networking meets. I was talking to people in social networking platforms like [??]. I was talking to people whom I have blindly sent some e-mails and I was also talking to some friends whom I studied with in Baths. So I was talking to a diverse kind of people and I also sent e-mail to the trade boards in the UK, so I went and met them. I won’t say… I mean, I didn’t get any business through this trip, but this trip gave me a lot of insight about how business is actually done.
Abhishek: It made me understand that business is not only about generating leads online and developing those websites. It’s much more than that.
Andrew: And once you know that, how do you take advantage of it? How do you capitalize on it?
Abhishek: I kept visiting UK. I did three or four trips to the UK and I started meeting a lot of people and then I realized that I need to start my company in the UK and I also need to go and exhibit in the exhibitions.
Andrew: Why do you need to start your company in the UK? You don’t mean start your company in the UK, you mean create an office there, don’t you?
Abhishek: I just thought… I mean, I didn’t have any logical conclusion. I am more of an instinctive person than a logically conclusive person so that was an instinct feeling that I think I need to go and I need to start a company there, which will get business and I tried to then logically understand if that will really help me. To some extent it did help, but the company formation was not the biggest step forward. The biggest step forward was my multiple visits to the UK to actually do the company formation, where I met many more people and I started interacting with several clients who we actually did business with due to our online marketing.
Andrew: OK. And what is… When you see someone offline, in person who you’ve met and done business with online, how does that shape the relationship?
Abhishek: I think it makes the relationship very, very strong. First thing you understand about the customer is what is the depth of his business? Is he really in the business or it was just a one-off project that please fix my website? But who is that? You immediately get a bonding as a customer and a vendor. Third is I think you get into a trust relationship. You have seen the person and you have met with him. You have spoken to him. You know him better and you know that this guy will come down to solve my problem if something goes wrong. So this definitely turned some of our businesses, which was very small in nature, it grew those businesses, so the size of the business started growing.
Andrew: I see. And how were you able to find more clients by visiting the UK?
Abhishek: I spent a lot of time visiting my existing clients and that did help and then took references from them to meet new clients and, obviously, generated leads and tried to meet those clients, those leads I would say. It was quite busy, but eventually we decided that OK, if we really want to grow our business in the UK, we should go and start exhibiting because a lot of people will be coming who will like to talk to us.
Andrew: What do you mean by exhibiting? Exhibiting at conferences?
Abhishek: Exhibiting in conferences, right.
Andrew: I see. Get a booth and talk to people, explain to them how you work, understand their needs there. Gotcha. And that worked? That helped you get customers?
Abhishek: It did work. In some cases, initially when we went, for at least first two exhibitions, we didn’t get much business because a lot of time people had apprehension of will the Indian company be able to design things that we want? Would they understand the requirements? How would they manage the project? What is the risk in doing business with an Indian company? So these were the initial concerns, which after going two to three times in these exhibitions, these concerns started coming down a little bit.
Andrew: I see. So the more… Is that because people got to see you and your company more and more? Or is it just that the culture changed and people were starting to understand that India is a good supplier of technology?
Abhishek: I think all these things took place simultaneously because the communication was becoming better because of the speed of Internet and new communication tools, new project management tools. India was considered as an outsourcing destination, so the apprehension about outsourcing was diminishing. People were thinking, “OK. I can outsource. Let’s try it out.”
They were seeing us more often, so they were able to place more trust in us. Luckily for us, very few Indian companies actually exhibited in these exhibitions. We were kind of the only one or the only one of the two. So it gave us a mileage because then we were considered as… I mean, we always were the market leaders in a way because we innovated a lot of things and there the leadership was visible because we were there.
Andrew: I’m writing a note here to come back. Actually, why don’t I ask you now about a big mistake. So far, everything seems to have just grown steadily, steadily, steadily over the years. Tell me about one big setback, one big mistake that you maybe regret.
Abhishek: One big mistake that I made recently, if I look back in the last three years. When I set up my company in the UK, the legal entity, I tried to send an Indian guy to run that business in the UK and I thought he will be able to go and do the sales and marketing. That was one big blow to us. We spent close to £100,000 for the exhibitions, for sending him over, salary, marketing and nothing happened. It all went down the drain.
Andrew: And a better approach would have been?
Abhishek: The better approach would have been… There are two mistakes that we realized. Number one was, we were being looked upon as a competitor to the agencies and number two was, he was an Indian guy who did not have much sensitivity towards British culture, so possibly the choice of the person. I’m not saying that an Indian person cannot go there and build a business, but possibly we made the wrong choice. So what we did eventually was, we outsourced our sales and gradually, we actually hired someone on board in the last two years.
Andrew: How do you outsource your sales?
Abhishek: We found companies who will do telemarketing and we spoke to them that apart from telemarketing, can you also go and see clients and we will pay for that and they did that. So we had a partnership with a company in the UK who would actually go out and see clients on our behalf and we would go and do joint calls when we would be there. So what we decided was, one of our senior managers would be in the UK every month for a week where we would do the more important calls and we would always have this third party outsourcing company present there, 365 days, so they can do odd calls and meet clients and pick up their phone, answer their queries. It was a little difficult, but I think it worked.
Andrew: Wow. I’m thinking someone’s outsourcing their technology to you and you’re outsourcing your sales to someone else. I love the way the world works like that.
Abhishek: Yeah, I think it’s a flat world.
Andrew: It really is and I love it. I still feel though that the governments don’t make it easy as I imagine when I do these interviews, even. I remember when I was in Argentina and I could see these smart developers who would love to work for US companies and other companies, but for the foreign companies to pay money to the Argentine developers was just a headache. For them to collect money from outside the country was a nightmare. What issues do you have with that?
Abhishek: We had a lot of issues as well. When we started accepting clients, they would like to pay by PayPal and nobody in India, including banks and regulatory bodies have heard of something called PayPal. Nobody knows about PayPal at that time. It’s only recently, in 2010, our central bank recognized something called PayPal.
Andrew: PayPal was not recognized until 2010 in India?
Abhishek: No, it wasn’t. No. I mean, they were operating here, but they had lot of problems. In 2010, government put in certain kind of regulatory boundary in which they have to operate. So now PayPal is properly operational in India, but still, with some restrictions, I think. I am not using PayPal India, so I don’t really know what are the restrictions they have put in. Fortunately, I have always used PayPal UK.
Andrew: And you got PayPal UK because, I guess you had a bank account when you were in the UK as a student.
Andrew: I see. That helps. Right. People find workarounds like that. You wouldn’t believe it. I met people in South America who were getting paid or making payments to developers using Visa gift cards because they could take the Visas gift card and I guess put it in the ATM or something.
By the way, here’s another thing I’ve gotta say. Your internet connection is spectacular. I talk to people in Silicon Valley, we can barely hold our connection. You and I have got a connection like we’re practically, not exactly, like we’re sitting in the same office. I love it.
What else do I have? I want to find out about today’s customer. So we found out how you got customers in the early days by knocking on doors, how you evolved it, Elance sitting on your desk, then you eventually found GoTo, then you got off your chair and went out there and met clients. Today, what’s the biggest source of customers?
Abhishek: When we went to UK, I’ll just pick up from there. When we went to UK, we were considered as threat by most of the digital agencies, so they were not cooperating with us as much as we would like them to and we eventually found that gaining confidence from end customer is very difficult, if not impossible in some cases and digital agencies hate us because they see us as cheap competition from India. So it was like, in a situation where we’re spending a lot of money marketing but somehow we are in stalemate situation. We are not getting much business.
At this point we decided, let’s take a stance, let’s come out of the business of serving the end customers and we did that. It a one-moment decision. We said we will not serve end clients anymore and we will only serve digital agencies and that turned around our business. We started targeting digital agencies. We would not take away their clients. In fact, if end clients walk into our booth, we will give them those clients.
Abhishek: We will throw parties for them that they can enjoy with us. They can connect with us. They can know us as human beings. They can understand our culture. They can understand that we belong to the same society as they do. And I think this did work.
Andrew: How much of your business were you giving away or closing up by deciding to only work with agencies?
Abhishek: Not much. Because, if you see, serving end clients is always a difficult job, primarily because the size of the business is small and most of end clients do not understand how to do projects. But digital agencies do understand how to do projects. So, kind of, we were able to remove a part of project management overhead where we could. So it was actually better for us.
Andrew: I can imagine. So why wasn’t it a decision that you made earlier?
Abhishek: I should have made it, but I think I was not wise enough to make it. In fact, what was happening was, at that point in time I was also going through a mentoring session by our trade body, so they give me an opportunity to get mentored. I used to fly down to Delhi every month and there was a panel of successful CEOs who would mentor me and they made me think that your business is not focused, your business is not targeting any customer so you should have target audience and you should have a targeted marketing strategy. And though by that time I understood and I knew what is marketing strategy, what is segmentation, but somehow you turn a blind eye to your own problems. So I was not looking inward, and when they pointed it out, I was literally shocked and I understood that I am not looking inward.
I should have segmented my client base, which I have never done even after getting so much experience of doing it for others. So as a search engine optimization company, as an Internet marketing company, I have done it for others, but I was not actually doing it for myself. So that was one interesting turning point, which made me focus and, along with that, the problem that we were facing in the UK, the stalemate situation, both put together, I think gave me that impetus that I should stop doing business for end clients and I should focus myself on agencies and kind of carve a niche other outsourcing companies may not be doing. All the outsourcing companies are targeting the end clients and wanting big bucks from them.
Andrew: What an inspiring story. I’m looking here at my screen and my notes and I see that in the intro I said that you have about 450 people in the company and we started the story out with just one person walking door to door offering hosting services and evolving and evolving and figuring things out until you got to here. Wow. What’s next?
Abhishek: We plan a lot of things in the next phase. We now have a full-fledged office running in the UK. We have also set up a content-writing operation in the UK, because content quality in India was not up to the mark. We are also looking at expanding in the US. We are having pre-shows in the US this year and we are targeting to bring in bigger agencies on our fold this year.
Last year, we started working with the government of India because the government of India website was not at all good. User accessibility was very, very poor and the incident inspired me to work for them was that we did outsourced project for a municipality in the UK.
I cannot name the exact municipality for confidentiality reasons, but we did a municipality website in the UK and when I showed it to one of my friends, he told me that “Great job, but you can never say that you have done this job.”
I said, “That’s true because I’m not supposed to say it.”
“But another problem that you can see is that Indian websites are all crap. The Indian government websites.”
I said, “That’s true.”
“Well then why don’t you work for them?”
And I think this discussion which went on for some time made me feel that this is one segment that I should get in and we have actually ventured into e-governance projects in India. We are one of the five empanelled agencies in India to build government websites and we have done quite a few now.
Andrew: Is there one that I can take a look at?
Abhishek: Yeah, sure. There are many, in fact. I can send you some URLs.
Andrew: Is there a URL you can give us here in the interview or do you want to just do it afterwards?
Abhishek: They are quite long ones.
Andrew: I see. Let’s do it by e-mail and I’ll link it up in the post process. All right. Let’s end with this. One piece of advice for entrepreneurs who are listening to us. Let’s end it with that. What would you pass on to them?
Abhishek: I would say that, don’t think that anything is impossible because if lot of people consider something impossible, that is the path less taken and therefore that path may be a little dangerous, but that will take you to the real riches because nobody has explored and mined the gold at the end of that path. So believe in your gut feeling and take the path forward and look at business beyond money because that should be the byproduct of the whole journey and not the end goal.
Andrew: That’s a great place to leave it. The company of course is Indus Net Technologies. Thanks for doing the interview.
Abhishek: Most welcome.
Andrew: Thank you all for watching, bye.
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