A few months ago, the company would probably have sent a different kind of signal to the discerning public. Three members of 24/7’s senior management team quit the company on short notice, and there were doubts about the venture’s future. But founder P.V Kannan, previously founder of Business Evolution Incorporated (BEI), took over the reins as CEO and brought the company through a bad phase.
It has been a tough time for Indian startups offering remote services. The specter of the Gujarat riots still fresh in the minds of his clients, Kannan now finds it a little tougher to convince them about the benefits of shifting call center functions to India. “At least 50 companies that were considering outsourcing their business processes to India are having second thoughts now,” he says. “Clients were worried that our operations were concentrated in Bangalore. Riots or some other calamity could derail critical business processes. So we decided to start another contact center in Hyderabad.” That is the least of his plans for the future growth of the company.
“I am looking at the IPO market with interest. It’s early days yet, but that is a viable exit strategy as far as 24/7 is concerned,” he says.
Second Coming
24/7 is not Kannan’s first foray into uncharted waters. He was running BEI as a services company in 1998. “Running a services business was the easier thing to do,” says Kannan. “But I didn’t want to get complacent. So we shut it down and started on e-mail chat software. The risks were bigger but at least we were the ones taking them.”
Luckily for Kannan, his timing was impeccable. The $140 million in stock that Kana Communications paid for nascent BEI in December 1999 was the kind of windfall reserved for the shotgun exits and fast-track IPOs of the technology bubble. Soon Kana Communications saw its own stock fall through the floor below the one dollar mark, on the way to a desperation merger with also struggling Broadbase. Crafting an exit for 24/7 will require a lot more staying power, in a much more realistic market.
Quantum Shift
So how different is building a remote services company from building a software products firm? “Apart from the obvious differences, one also has to realize that in a BPO company, the processes cannot be viewed in isolation from the people. People are the most important asset of my company,” says Kannan.
“In the beginning,” Kannan contends, “I had to rely on my networks in companies to convince them that I could deliver. Our first client, AltaVista, agreed to work with us after I showed them our proposed facility in Bangalore. But the people were something of an unknown quantity to them, in the early days.”
Much Maligned
“Call centers are regarded as the poor cousin of the enabled services sector. Too many people think that a call center is just taking a call, sounding nice and hanging up. But to a company like Avis, I am a very important guy. I generate about $40 million in business every year for Avis. We also do a staggering job for AT&T,” Kannan says, declining to divulge figures.
Kannan’s angst probably stems from the fact that this is a sector where results are obtained real-time. “If a customer is unhappy, we get to know of it immediately. Whereas in a software company, you don’t tamper with the code every day,” he says. “In this field, a few minor errors could mean a lost account. You don’t recover from that.”
Kannan highlights the importance of consistent performance. “When you promise a client certain capabilities, you have to be prepared not only to meet those expectations consistently, but also exceed them. That is what it takes to succeed at this level,” he says.
It remains to be seen whether Kannan lives up to his promises, in the face of intense competition from other players in the domain. His goal to ramp up to an IPO will depend on how many clients decide that what 24/7 offers is more attractive than what they could do in the U.S., or develop themselves in India.
