Back office support

The growing presence of independent third party support providers will tip the balance of power back in favour of the customer.

Priyanka Joshi, New Delhi, April 26, 2007

TECHNOLOGY: The growing presence of independent third party support providers will tip the balance of power back in favour of the customer.

With 70 per cent computers running on out-of-warranty software and operating systems (OS), the customer support industry (billed to grow to $100 billion by 2008) has assumed a new face.

“Independent vendors who provide live support to customers, either via phone or through remote access, are a growing breed,” says Alok Mittal, executive director (India), Canaan Partners.

Reportedly, the numbers of personal computers is set to touch 1.4 billion by 2010, and the enormity of the situation can be realised from the fact that a meaty chunk of this base number could be running on software and OS for which official support (from the original software publisher) is not available.

Although the third party support industry is an emerging market in developed nations, vendors may lack access to the engineering-level expertise required to develop software enhancement.

Nearly 90 per cent of the users who have a computer running on Windows 98 (for which officially Microsoft has withdrawn support), when saddled with a software error that cannot be resolved, dial an independent customer support representative who can elucidate the problem.

iYogi, provider of live computer support over the phone, claims to have acquired nearly 1,000 customers in the US and UK markets who wanted personalised support services for post-warranty software, hardware, peripherals and security solutions.

Says Uday Challu, CEO, iYogi, “We have subscription-based services in the range of $25-$90 and customers can choose to pay around $25 for per-incident support.”

The difference between iYogi and the numerous other business processing units that do similar maintenance work out of India is that Challu’s start-up is woven around a B2C model.

“Our intention is not only to give cheap support, but we are also in the business of fixing computers as quickly as possible. We are working to get a million customers by 2011,” says Challu.

Also, as in case with support centres based out of India, the outsourcers work for a software publisher and do not directly deal with the customers.

The company is not ruling out plans to launch operations in India and look at small and medium businesses to streamline their revenues in India. Canaan has announced its intentions to invest $3.1 million in iYogi, lending the company the basic support to harbinger their services in mature markets.

Meanwhile, the cash inflow would be used to hire competent staff in India and add to the services portfolio. Mittal, who would be joining iYogi’s board as director, says, “iYogi is Canaan Partners first investment in a growing trend of next generation outsourcing services from India.” The company has begun to strengthen its customer acquisitions and marketing campaigns.

Mittal acknowledges that the presence of independent third party support providers plays an important role in tipping the balance of power a little bit back towards the customer.

“It’s no secret that major software vendors derive a healthy part — sometimes even the bulk — of their revenue from support and maintenance agreements. It’s something of a captive relationship. Let’s say, if a software vendor is the only source of support, the vendor can name its price and the customer has little choice,” he reasons.

The existence of third party organisations such as iYogi lend customers the much-needed choice, which pulls the balance of power back toward the customer, even if the customer does not choose to go with the third party vendors.