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Now is not the best time for bold moves, but don’t tell that to Uday Challu. The audacity of the 47-year-old Founder-CEO of iYogi is coded into his business.

Saumya Bhattacharya        Print Edition: October 4, 2009

Now is not the best time for bold moves, but don’t tell that to Uday Challu. The audacity of the 47-year-old Founder-CEO of iYogi is coded into his business. In 2005, when he launched iYogi, scepticism greeted his business model— this man wanted to sit in Gurgaon and provide online technical support for personal computers to individuals and small businesses in the US!

Today, it’s tough for the sceptics to laugh at a turnover of Rs 100 crore (expected this year). But what do they say if the man decides in the middle of the recession to expand his global footprint and acquire talent in the US and the UK?

iYOGI
BUSINESS: Computer support. Provides technical assistance to home and small business consumers via phone and remote online access in the US, the UK, Australia and Canada
TURNOVER: Rs 100 crore (estimated 2009-10)
LESS-KNOWN FACT: iYogi’s resolution rate today is 85-90 per cent and is the highest published benchmark in the industry, where average hover around 50 per cent.
KEY SKILL: Tailormade services from the point of view of the customer.
“Our focus is on delivering personalised computer support services for the individual, and the approach is geography-agnostic”
- Uday Challu, Founder-CEO, iYogi

Challu’s business, which he started with $750,000, is doing well, thank you: his customer base is growing at 15 per cent a month. And by the way, he has created vendorindependent support as a new service category. iYogi offers support for a wide range of technologies, including hardware, Microsoft Windows operating systems, software, peripherals and multi-functional devices.

iYogi is privately-held and has raised capital from three venture funds. Through its three rounds of funding, including angel, Series A (Canaan Partners and Silicon Valley Bank) and Series B (Canaan Partners and Silicon Valley Bank), iYogi raised $12.8 million.

What made Canaan Partners fund a venture that had no worthy precedent of success? “The ability to disrupt the market, most of which has a local base,” says Alok Mittal, Managing Director, Canaan Partners. The competing business came from OEM vendors with less connectivity and a resolution rate of 50-60 per cent. iYogi had a resolution rate of 85-90 per cent. iYogi’s model had faster service, and greater overall satisfaction.

Challu’s background may have helped: He had co-founded a thirdparty desktop support business in 1986, held key roles in start-ups, and was head of operations at a mid-size SAP implementation company in the US called Dynpro in the late ’90s. In 1999, he had co-founded Concordia Consulting, a management consultancy boutique.

Most recently, (in 2003 and before iYogi) Challu co-founded IQ Resource, an outsourcing company focussing on B2B media. He currently serves on the board of Wizcraft, an entertainment media company.

Equally weighty was the market size. Take the US: there are currently more than 200 million PCs that are out of warranty and an average customer needs tech support at least four to six times a year. “Additionally, the ecosystem for support is changing as traditional providers are no longer the preferred option,” says Challu. So, the same model is delivering growth country after country. “Our focus is on delivering a personalised service for the individual, and the approach is geography-agnostic,” he says.

Most of iYogi’s growth is coming from consumer business in the US, the UK, Australia and Canada. It is also expanding its services in 12 new geographies in the next 18 months. Other than consumer business, it has forged partnerships with the likes of Amazon and Wal-Mart to sell its service.

What next? India. iYogi has set up the infrastructure and will focus on launching the offering for small businesses first and then go on the consumer front. “We are now working on our go-to-market strategy for this market. We will be looking at partnering with ISPs to reach the end consumers,” says Challu.

iYogi currently has 850 employees. “Our current ramp-up plan, based on existing marketing channels, is to increase our base of employees by 15 per cent every month,” says Challu.

In addition, as part of its unique global service delivery strategy and to support growing North American demand, it is recruiting and training US-based support staff. Acquisition of quality talent is top of Challu’s agenda. He claims to have a zero per cent attrition at middle to senior levels. In May 2009, when iYogi acquired the US-based PC Clean Machine, a PC concierge company, the founder of the company Larry Gordon joined iYogi as the head of global sales channels. Now, former Rediff.com CFO Joy Basu is set to join him.

How sustainable is iYogi’s growth? Canaan’s Mittal says: “One of the key inflexion points for iYogi is reaching more verticals. That will determine where it lands three years from now.”

A VC hawk puts his stamp of approval on iYogi but also has a word of caution. Says Saurabh Srivastava, Chairman, Indian Venture Capital Association: “iYogi has a very good model that it can leverage through alliances and partnerships. As it scales to $100 million and beyond, it will face a challenge in maintaining its profitability as it will have to go in for organisational changes to manage a company of that size.”

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