Suresh Gyan Vihar University International Journal of Economics and Management
Vol 6(4)
ISSN : 2278-2478
A Case Study on Corporate Strategic Management for Sustainable Growth of a Technology Startup
Kapil RANA,
Founder & Chairman Hostbooks Limited
PhD Scholar
All India Management Association
Centre for Management Education
Management House, 14 Lodhi Road, New Delhi – 110003
Telephone: 011 – 24645100 / 011 – 24617354 / 011 – 43128100
Fax: 011- 24626689
Introduction
Today, it is a matter of fact that for world, India is the back office owing largely to IT and ITeS Sector. Having realized the great economic scope in the IT/ITeS sector, the Indian government is making all efforts to develop world-class infrastructure for this sector. From executing the lowest value projects to large-scale turnaround projects, Indian IT/ITeS sector seems to be winning over all the ups and downs of the economy during recent decades. Not to ignore the SMPs in this sector which have been outperforming during these days of economic fluctuations. As per one of the reports by NASSCOM*, India, is the fourth largest base for tech start ups/young businesses in the world.
eN Technologies is an established name among many in the tech start ups in ITES sector in India. Founded by three technocrats with the help of total 10 employees, eN Technologies is capable to mark its presence among top tech start-ups.
After taking an intelligent bird eye view of the lucrative scopes in software support industry, eN Technologies invested INR 14,00,000 in tech support and choose PC Expert as the brand name for its software support services. PC Expert spearheading its way towards great customer support and services. The strategies adopted by the masterminds at eN Technologies helped its tech support business earn more than 60,000 customers from across the globe in three years span. Customer centric policies and honest business approach have helped PC Expert grab the greatest recognitions from great players in the market. Microsoft partner, NASSCOM membership and BBB A+ accreditation are some of the remarkable achievements by the company in such a small span of time. eN Technologies’ PC Expert has bagged the rank of top Indian tech support companies with 300+ human resources and its 25000+ square feet state of the art facilities at IT hub Udyog Vihar, Gurgaon, India.
Present scenario
Today, eN Technologies’ tech support business is into a position to compete with big names like Dell, Quatrro, ConsumerSoft, Lester Inc, Damco Group Tech Live Connect, PlumChoice, GeekSquad, TechZilla and Colocation America etc.
No doubt there are companies like Tech Live Connect Pte Ltd and Inbound Call Experts, LLC that outperformed eN Technologies in terms of revenue, customers and employees base because of their unique business strategies like development of business through innovation, channel partner and affiliate programs.
Many companies tried their expertise in tech support business but failed as Federal Trade Commission (FTC)** banned these companies to operate and froze their accounts, for example Pecon Software Ltd, PCCare247 inc, Lakshmi Infosoul Services Pvt Ltd, Zeal IT Solutions Pvt Ltd etc.
The reasons for the failure of many tech start-ups were fraudulent, deceptive, and unfair business practices and unethical advertising method like pop up and under banners traffic, whereas some companies failed because of non-availability of effective collection and advertising methods as per FTC website.
Mission:
To create an effective impact on lives of millions of people and organizations worldwide by providing speedy, reliable and affordable cloud base software & IT supports services.
Vision: To bind the world technologically
Values: “eN Technologies is driven by values. The values in fact continue to steer towards the growth. Below are prime values that define eN Technologies way of conducting the business” says the CEO of eN Technologies Mr. Rohit Mukherji.
- Integrity
- Quality
- Co-Ordination and
- Responsibility
Milestones
Employees Statistics:
Figure 1.1: Employees Statistics
Customer Base:
Figure 1.2: Customer Base
Revenue Stream:
Figure 1.3: Global Revenue in USD
Other Achievements:
- Became a prestigious member of NASSCOM in year 2014.
- Became a Microsoft Silver Certified Partner in year 2014.
- Became a BBB A+ accredited business in year 2014.
- Launched its global mobile App, “LivePC Expert” for facilitating its existing customers in 2015.
- Become PCI DSS Compliant in year 2014.
Success Factors:
- Choosing the lucrative business, “Tech Support” at the right time.
- Active, responsive, decisive and lethal mix of top management team.
- Featured and user friendly website and strong content platform.
- In house developed CRM and Customer Service knowledgebase.
- Efficient business policies & transparent business approach.
- Young, well-trained pool of capable human resources.
- Good rating mechanism and social platform.
- 24X7 Customer Services.
Strategies EMPLOYED
eN Technologies Pvt Ltd has been working with keen interest on various strategies to achieve its target, including:
Financial strategy: Major portion of its financing requirement is fulfilled by funds from the operations and till date, eN Technologies has not approached any investor or equity partner for any funding requirement. In software and services subscription industry, customer pays upfront payments so company is enjoying a healthy Cash Flow. At times, eN Technologies uses statutory dues to meet its working capital requirements resulting additional 1.5% per month interest and penalties imposed by government departments time to time. eN Technologies effectively manages its banking and payroll and vendor payments through HSBCNet facility, which is considered among best banking platform worldwide.
Marketing strategy: Only Digital Marketing is focused by eN Technologies to target its customer in last three years through paid advertising campaigns with Google and Microsoft and various organic search engine optimization techniques. eN Technologies has tried many times to enter channel partnership and affiliate marketing through hiring business development team but not been very successful till yet. eN Technologies uses different Social media platforms like face book, you tube, twitter, pinterest, blogs and news feeds to engage their potential and existing customers. Remarkable thing about the Social Media Strategy is that there is no paid push on the social media platforms. The reason for not going for the paid push could be a fear of taking up new risk, which is to some extent not benefiting the company the way it could have otherwise.
“We never tried any unethical advertising methods and approach like under pop ups and banners to increase our customer base” says Marketing Director at eN Technologies, Mr. Mohit Tomar.
Growth strategy: eN Technologies introduced new products and services to increase its market share and customer base and also enter untapped market like New Zealand and Australia. As a full-fledged Knowledge Process Outsourcing (KPO) unit, the company possess the prowess to provide solutions for different sectors like Business Process Outsourcing Units, Hospitality Industry, Customer Services, Remote Support B2B and E-Commerce.
The company provides a huge spectrum of solutions that includes ERP Development and Implementation, CRM, Dialer for BPO, E-Commerce Solutions like Payment Gateway Integration, Mobile App Development, Shopping Cart and Web Development.
The company is focusing on product development instead of enlarging the existing tech support business with the help of strong development team as management view to go ahead with products rather than services. The products by the company that have successfully hit the market with the help of experienced process engineers, designers and technical account managers, today are:
EazePro: A software package with essential utilities like File Shredder, Registry cleaner, Home Network Manager, Duplicate File Finder, Disk Cleaner and Start up Manager.
EazeConnect: A package of amazing tools like EazeChat, EazeDesk, EazeDialer, EazeMonitor, EazeReview and EazeDrive.
EazeCRM: Packed with all the essential features required for great customer relationship management.
Its products like EazeChat and EazeDesk has also got the competitors like Liveperson Inc., Zopim, Comm100, ZenDesk, FreshDesk, Olark Chat and BoldChat etc.
Globalization Strategy: From the day first, eN Technologies provides its services globally including United States, Canada, United Kingdom and Ireland etc. and has significant major share in the global market. The product offering of eN Technologies worldwide is fully standard product and services, uniform market approach and integrated competitive moves.
Feeble Strategies: The strategies that somehow cause harm to otherwise super fast growth of eN Technologies are:
- Multiple Payment Partner and lack of contemporary payment methods
- Heavily depends on paid advertising and want of innovative marketing Strategy
- Pass over on technical, channel and affiliates partner strategies
MAJOR SET BACKS
Non-starter Product/Service:
Virtual Voir is the non-starter product of eN Technologies Pvt Ltd. Though the company made every effort to make it a success and the idea behind the launch of Virtual Voir was also quite good. It was a venture on which the company invested around INR 100,00,000.
An insight into the Failure of Virtual Voir:
eN Technologies started its Virtual Voir operations in 2014 with a well-experienced and qualified staff in the software development on many different platforms. Virtual Voir aimed to deliver a tip-to-toe solution for the customers seeking help for software development with a substantial spectrum of solutions, including – but not limited to- ERP Development and Implementation, Application Development, CRM, Dialer for BPO, E-Commerce Solutions like Payment Gateway Integration, Shopping Cart, Web and Mobile App Development.
Reasons of failure:
Appointment of relatively non-experienced product head could not lead the product anywhere. Virtual Voir was initially introduced with an idea to offer a Virtual platform to hire software professionals. But, the lack of relevant experience of the team head caused a deviation from the original purpose. And the team focused more on providing development services by its own development resources.
The other possible reason of the failure of this product was that the management team had a biased approach and was more concerned about the ongoing successful product, “PC Expert”. Considering PC Expert the major income source, the team actually could not take the risk of trusting any other product. After nine months, the whole idea of creating a platform for hiring software professionals was ramped down.
CricYo:
The team head of Virtual Voir team introduced yet another idea to possibly divert the attention of the management team from his incompetence to serve the original idea behind Virtual Voir. Influenced by the reflected possibility of this product, “CricYo”, the company took over CricYo a product by Ziq Solutions Pvt Ltd.
CricYo was basically a cricket predictions platform. Sooner the management team realized the fatal growth possibilities and round table discussions resulted into discontinuation of the product. The company spent around INR 70,00,000 a cost worth of a good lesson.
However, if these products could have worked well then the expected ROI were multifold and the company could have been counted INR 100 plus crores company, today.
Google suspended eN Technologies` AdWords account***
Google suspended eN Technologies and several other tech support AdWords account in October, 2013 to promote it’s own “Google Helpouts” Product in an unfair, discriminatory and uncompetitive manner.
Google launched a tool called Helpouts in November 2013 to connect people with experts over live interactive video for free or paid advice. The service added a revenue stream for the company in the form of transaction fees from providers.
The AdWords account held by PC Expert, eN Technologies support product was withdrawn in October, 2013. In an email Google informed that the account was suspended because of a violation of Google’s user safety policy, without issuing any notice or any prior information, according to the records. Google later made the suspension permanent.
In year 2014, India’s antitrust agency Competition Commission of India has initiated an inquiry into Google’s termination of AdWords accounts with remote technology support business, after allegations that it was done to promote the Internet giant’s own services in the area. “It is unlikely that a firm operating under competitive constraints would undertake such actions that alienate consumers and generate bad will towards it,” the CCI wrote in its order. “Google’s practices prima facie stem, to a large degree, from its un-disputable dominance in the online search market.”
Google was fined about US$166,000 in March by the Competition Commission of India for not providing information and documents required in another investigation that dates back to 2012 and is focused on allegations of Google’s abuse of market power in online search and search advertising.
Impact: It is worth mentioning here that before the closing of the eN Technologies AdWords account with Google, the company witnessed a growth rate of 1400% in 2012, which however slowed down and got stagnant at 34% in 2013 and 42% in year 2014.
Futuristic Steps by eN Technologies
To focus on product development, channel and affiliates programs for newly launched web engagement platform “EazeConnect” company has hired a United States based marketing and business development consulting group and outsourced the digital marketing to another USA based digital marketing company. It has opted for offering 24X7 support as the USP of its newly launched software EazePro and SaaS based web engagement platform.
Also, company is planning to relocate its one of the key management resource and executive director at San Francisco based (IT-Hub Silicon Valley) office to form a US based technical support, business development and marketing team backed by strong BD team at Gurgaon facility. Focus on business development through channel partner program and technical collaboration; adoption of contemporary payment methods would be the part of the future business strategy of the company.
SWOT Analysis
Strength: 24X7 excellent customer support service, experienced mix pool of top management team, task assigned dedicated teams, robust infrastructure, strong development team, own CRM/ERP and other allied software.
Weakness: Business development resources & capabilities, contemporary payment processing solutions and limited equity funds.
Opportunity: Un-tapped huge potential market through channel partners & technical collaborations, funding options through private equity and investors.
Threat: Dependency on Microsoft’s Bing platform for advertising, payment processing due to high chargeback’s, giant competitor and new industry entrants.
Questions
- eN Technologies has not approached any Venture Capital or Investment Partner for its working & seed capital requirement since its inception. Is it a right decision amidst the stories of growth through the seed and venture capital investment worldwide? What is your opinion?
- With a $5.68 million revenue last year and 300 employees base in early 2015, eN Technologies among is the top software support companies in Gurgaon. Do you think its business development and marketing strategies are appropriate considering the competition ahead?
- Having a taste of two product failures in a row within a year, launching a couple of SaaS and Cloud based software products is a wise decision?
- In your opinion, what are other avenues available for eN Technologies to increase its customer base and business development other than paid advertising platforms?
- Are futuristic measures and steps planned by the company sufficient enough for its future growth or something otherwise can be advised to the top management of eN Technologies?
REFERENCES
- NASSCOM* JAN29, 2015: http://survey.nasscom.in/sites/default/files/researchreports/softcopy/Start-ups_Landscape_Report14_0.pdf
- Federal Trade Commission** July 24, 2014: https://www.ftc.gov/news-events/press-releases/2014/07/federal-court-orders-tech-support-scammers-pay-more-51-million
- PC World*** May 13, 2014:
- The Times of India*** May 14, 2014:
- The Hindu, Business Line***May 13, 2014:
Disclaimer: This case was prepared by the author for the sole purpose of aiding classroom discussions. Cases are not intended to serve as endorsements or source of data or illustrations of effective or ineffective management. Some names and information could have been disguised to maintain confidentiality.