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UNITED BY
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UDAY CHALLU and VISHAL DHAR have built iYogi
into a Rs-250 crore tech support business in four years.
Now, they’re chasing billion-dollar dreams. PAGE 32
March 2011 | 150 | Volume 02 | Issue 02
A 9.9 Media Publication

2. 32 | INC. | MARCH 2011

3. ZOO MIONG
AHEAD
N
THE GLOBAL
HIGHWAY
It’s not enough that Uday Challu and Vishal Dhar
have built a consumer services brand in the West,
sitting right here in India. They’re gearing up for
$1 billion in revenue in the not-too-distant future.
BY POOJA KOTHARI | PHOTOGRAPHS BY SUBHOJIT PAUL
MARCH 2011 | INC. | 33

4. ZOOMING AHEAD ON THE GLOBAL HIGHWAY
VEN MY MOTHER doesn’t understand
what we do,” says Uday Challu, CEO and
co-founder, iYogi.
In fact, she isn’t the only one. Parents of
most of the 20-somethings employed by iYogi
find it hard to comprehend what the company
does. Is the ‘i’ for investment, or India? Or, for
the internet? And, what to make of Yogi? That’s not a common word, even in India.
Put them together, and what do you get? Well, a global business worth 250 crore in
four years—one that provides technology services and support to end consumers in the
US, UK, Canada and Australia for prices varying between $40 and $169.
Here’s how the service works. If a consumer faces a problem, they can seek iYogi’s assis-
tance either on phone, or online. Depending on the nature of the problem, iYogi charges
them for a one-time intervention, or for an annual contract to help every time a problem
arises. While a single person remains in contact with the consumer for that complaint, at
the back end, multiple specialists can be brought in to solve the problem.
It doesn’t matter which brand, device or technology has a problem. It doesn’t even
matter which geography the consumer is calling from. As long as there is a tech prob-
lem—a computer that has crashed, or an iPad that refuses to sync with the iPhone, or a
printer that just won’t follow a command—these Yogis will do their best to solve it; all
to earn some ‘good karma’.
There are a few thousand of them—6,000 to be precise—a majority sitting in six floors
of a tony commercial building in Gurgaon. This army of engineers, call centre agents,
business developers, researchers and search optimisers starts work every afternoon. It is
bound by a single mission—to resolve a problem that’s sent its way in the least possible
time and in the most satisfactory manner.
It’s a simple business, really. Someone has a technology problem. iYogi solves it—and,
gets paid. “It was a hugely underserviced market. We just spotted an opportunity and went
after it,” says 48-year-old Challu.
34 | INC. | MARCH 2011

5. THE MARKET
“Technology support is a $30-billion market
in the US alone,” says Alok Mittal of Canaan
Partners, an initial investor in iYogi.
There’s little doubt that it’s a huge
market. According to a Fast Company
article, “Americans spent a whopping $4
billion on tech support last year. That
number should grow to at least $6.4 bil-
lion by 2013, and remote help is poised to
drive much of that expansion”.
With the growing popularity of devices
in the hands of consumers, be it smart
phones, tablets, laptops and so on, this
market will only get bigger in future. For
instance, even within mobile phones, there
are now multiple operating systems sup-
porting different phones. Just syncing gad-
gets with different OS is stressful for
end-users, especially those who haven’t
grown up with these devices. These include
people above 50 years of age, who form a
majority of iYogi’s customer base. UDAY CHALLU | Co-founder and CEO
No wonder Challu and his team are
confident of victory in the battle to set up a
tech support company out of India. “There Always an Entrepreneur
are 74 million broadband homes in North
America. If I get 25 per cent of those, I will
have 18 million households. That’s $3 bil-
B orn to an officer in the Indian Air Force, Uday Challu led a life typical of the
armed services. He attended 11 schools in 12 years and lived in different
cities across the country. He wasn’t to know then, but it was a good rehearsal
lion in revenue. And then, there’s UK, Aus- for the professional life he was to lead. In his 27 years of working life, Challu
tralia, Middle East, India, China and so has dabbled in many things. “I’ve held a job twice in my life,” he recounts.
The first one was just after he finished his graduation in economics from Uni-
on,” counts Challu, excitedly.
versity of Delhi, when he took up a job with CAL Systems, a start-up in Okhla in
Given that iYogi’s journey began only in 1984. He joined them at a princely salary of 650 per month, and worked there
2007, when the company was incorporated for the next six years. “Even Wipro wasn’t into computers then,” recalls Challu.
and the first call taken, its scale of achieve- In the middle, he left CAL along with a colleague to start a computer main-
ment is commendable. The firm has built a tenance business in 1986, but when that didn’t do well, he shut it down and
went back to his former employer within a few months. His first entrepreneur-
subscription base of around 400,000 cus-
ial stint was rather short but it gave Challu a first-hand experience of the limi-
tomers in the US, and solved more than 2 tations of trying to build a scalable business with people.
million problems—all on phone, or online. In 1992, he joined a friend of his, who was working in the apparel manufac-
The firm’s winning combination—an turing industry. Challu and his friend decided to set up a retail chain of retail
ability to communicate with the consumer stores along the lines of Benetton. This was a business he knew nothing about.
And, yet, Challu landed up creating a chain of six stores in Delhi, called Yankee
and a platform to deliver support—has
Clipper. With two factories in Okhla and Ludhiana, and a workforce of 1,400 peo-
helped iYogi create a successful business on ple, Challu established a turnover of more than 2 crore a year in 1995, when he
first try. “We’re the first consumer services sold the business. “I realised that India has no core competence in this industry,
brand out of India,” says Challu. except that we grow cotton. Machines come from abroad. Manufacturing is done
It has held its own among competitors, better in a place like China, where people have an industrial bent of mind; the
real designs and clothing sense come from the West,” recalls he.
who are based locally. There’s Geek Squad,
After that Challu worked for another start-up, did a three-month stint with
the customer service operation run by Best a technology firm in the US, and started a boutique consulting firm mentoring
Buy, a leading consumer electronics technology start-ups. That’s where he met Dhar. For the past many years, he’s
retailer in the US. It runs in-store services, had no life beyond work. It’s only when he gets absolutely physically drained
where consumers can walk in with their that he goes home to Gurgaon to his wife, his 22-year-old daughter, and dog.
Two years short of his 50th birthday, Challu hopes to free up some time from
hardware to get the problem sorted, sends
iYogi to drive his bikes, a Ducati and a Hayabusa.
technicians to people’s homes, or takes the
MARCH 2011 | INC. | 35

6. ZOOMING AHEAD ON THE GLOBAL HIGHWAY
equipment to its depot for repairs. Then,
there is a clutch of online support services,
such as PlumChoice.com, which provide
tech support to the customers of other
companies. And, there are call centres run
by manufacturers, such as service centres
of Dell or Apple, which a consumer can
turn to for support.
Despite sitting miles away, iYogi has
done a good job of understanding its cus-
tomers. “Our first call resolution rates are
among the highest in the industry,” claims
Challu. There’s no independent verification
of these numbers. However, iYogi claims to
have “90 per cent resolution rate” for the
past 24 months and an even higher cus-
tomer satisfaction rate.
It’s this ability to solve problems that
appealed to Canaan Partners many years
ago, when Challu approached the venture
capital firm for funds. “Their first call res-
olution was in mid-80s, while the rest of
the industry, including Microsoft and
Dell ran rates of 50-60 per cent. These
guys were much better even at the pilot
stage and that too, in a multi-brand envi-
ronment,” adds Mittal.
nity. Friday followed, which he started with two
partners and built into a considerable business.
“At one point in time, we were providing content
to 44 different websites,” recalls he. However,
VISHAL DHAR | Co-founder and President, Marketing despite two acquisitions and the best efforts of
Dhar and Co, the company had to be shut down
Bullish on the Future within three years. Luckily for him, that company
introduced Dhar to his future business partner,
and now, co-founder at iYogi, Challu.
W hen Vishal Dhar met Uday Challu in 2001 to seek
investment for his entrepreneurial venture, he was
hardly to know that just a few years later, they’ll become
Together, they first set up IQ Resource, a business targeted
at business-to-business media industry. It was while working
on this business that the idea of iYogi first struck Challu.
partners in businesses. Dhar was then running Friday Cor- Since its inception, Dhar has looked after marketing at
poration, a content aggregation business and his first stint iYogi. “I’m always amazed at how tech can change people’s
as an entrepreneur. lives. My mother has a Kindle, and a laptop; and my dad has an
Prior to that, Dhar had set up the Indian arm of UK-based email ID. The fact that Google has become the window to the
Text 100, a public relations firm focused on technology busi- world shows a change in consumer behaviour,” adds Dhar.
nesses. “I got my first taste of entrepreneurship with Text 100 It almost seems that his entire life prior to iYogi was spent
because even though I was an employee, we scaled it up from a in preparing for this business. Whether it was the ability to
team of two employees to more than 50 employees across four market technology brands that got honed at Text 100, or sim-
offices,” says the alumnus of The Lawrence School, Sanawar. ply the idea that processes can drive efficiency that came
Born in Kashmir, Dhar’s childhood was spent in the idyllic from IQ Resource, Dhar has put a lot of his past learning into
environment of pre-violence hit Valley. Post his schooling, Dhar his current responsibilities.
attended Pace University in the US, where he stayed till 1995. Based out of New York, where he lives with his wife and two
After returning to India, Dhar spent a year with Mudra’s public children, Dhar remains focused on the “opportunity-of-a-life-
relations arm, before he chanced upon the Text 100 opportu- time” that makes every day at iYogi an exciting one.
36 | INC. | MARCH 2011

7. Convinced of the potential, Mittal’s firm the concept of “delivering a
invested $3.2 million in iYogi, along with high-quality service out of
SVB India Capital Partners, almost four India”. That was the time when
years ago. Since then, iYogi has gone on to Dell had taken its back-end
raise $57 million in several tranches from operations out of India and
reputed investors, such as Draper Fisher back. Even Apple had experi-
Jurvetson and SAP Ventures. Most recently, mented and opted out of India.
it raised $30 million from Sequoia Capital On top of that was the sheer
and existing investors in December 2010. lack of experience that Challu
This money has clearly been put to good and Dhar had in this field. Nei-
use. According to press reports, iYogi’s ther had worked in the out-
turnover has increased from under 13 sourcing industry, and had no
crore in 2007-08 to 82 crore in 2009-10. It idea what it would take to exe-
aims to close the fourth year of opera- cute a model along these lines. ALOK MITTAL | Canaan Partners
tion—2010-11—with revenues of 250 The duo wasn’t in a hurry,
crore, three times that of last year.
Challu claims to have added 5,000 peo-
though. “We ran a pilot for more
than a year. We figured out how to
Guru Speak
ple across cities, such as Bengaluru, Pune deliver this service, built the plat-
and Chandigarh, in the past year alone.
“We hope to add another 6,000 in the next
form, and created the technology and people
processes required to deliver that service,
I t’s said that things get quite
lonely at the top. Rarely can a
CEO find a confidant, or a mentor
12 months,” he adds. then we hired people, and trained them. within the organisation. He has to
usually look outside. We asked
Only once we had all the pieces in the right
Alok Mittal, who has known Uday
THE BEGINNING place did we raise capital,” recalls Challu. Challu since 2007, to give some
It was around 2005, when Challu and his With an investment of $750,000 from advice to the captain of the iYogi
business partner, and co-founder at iYogi, personal savings, Dhar and Challu set out enterprise. Here’s what Mittal had
Vishal Dhar, put a hypothesis to test. They to “build the company from ground up”. to say.
were then running a boutique consulting Neither had ever worked in the outsourc-
One thing to continue doing: That’s
firm, IQ Resource. The first wave of out- ing industry. Challu had previously set up a an easy one. Uday must maintain
sourcing had proven that back-office oper- few businesses, including a retail chain for his hunger for the business. He
ations could be easily delivered from India. clothes in Delhi; while Dhar came from a has found some very creative solu-
And, as people became more accus- marketing background. tions to problems in the past. He’s
good at anticipating challenges and
tomed to internet and dependent on tech- “For either of us to put our skills and
displaying creativity to solve those.
nology, more and more devices found experience to use, we needed a product.
themselves in people’s hands. Yet, there And, we didn’t have one,” remembers One thing to start doing: When a
wasn’t anyone to support those multiple Challu. So, they did what turned out to be company grows as fast as iYogi is,
devices. “I knew the market existed. The the best thing in hindsight—they hired it hides many weaknesses. I would
advise Uday to keep an eye out for
original equipment manufacturer doesn’t some people from outsourcing firms
those. There is a risk of compla-
own the ecosystem, just the component he around Delhi, including IBM Daksh, Con- cency, arrogance and inefficiencies
makes. Therefore, someone else would vergys, and so on. building up in the system. Uday has
have to take the ownership of the entire “We basically focused on what the busi- to find and weed those out.
system,” says Challu. ness will look like in 10 years—and then we
Acting on his instinct, he travelled the got onto doing things that will take it there
world to check on the need for solving in 10 years,” says Challu.
technology problems. “We spent one year Even as Shruti Dwivedi, the first hire Yogi became iYogi,” regales Challu with
researching this space. We met all sorts of who now runs a large part of operations, tales from the early days.
people; spent time with people that ran went about figuring out how the support Their lack of experience didn’t stop
tech support centres for large IT vendors will be delivered, Challu and Dhar took it them from aiming high, though. “We
like Microsoft and Dell to figure out what upon themselves to build a brand. “We wanted to get into this business only if it
their customers were telling them. We wanted to build a brand out of India. So, was massively scalable. To me, that meant a
experienced the flaws in the IT support we needed a word that was universally firm worth a couple of billion dollars in
COURTESY SUBJECT
ecosystem,” adds Dhar. recognised for its Indian origin. We didn’t revenue, has millions of customers, and
There was large-scale scepticism even get Yoga, so we opted for the closest alter- can still keep evolving along with technol-
among friends and acquaintances about native—Yogi. Together, India, internet and ogy,” says Challu.
MARCH 2011 | INC. | 37

8. ZOOMING AHEAD ON THE GLOBAL HIGHWAY
OUR STRENGTH
There are a number of
things that have worked in
iYogi’s favour so far. The
most important, according
to Challu, is the team he
managed to put together.
When his team first
came on board, each person
came with different aspira-
tions. “But once they came
here, their individual moti-
vations very quickly
My Office,
changed into a larger plat-
form, a motivation that
My Sanctuary
drives all of us together,”
reasons Challu.
There might be some
merit in that argument. Of the 35 people
iYogi started with, 27 are still around. “We F or more than four years now, Uday Challu’s life has revolved around his
work. iYogi occupies much of his day—and his mind space, so much so that
it takes him “more than an hour” after reaching home to wind down enough to
haven’t lost any people at a senior level, be able to go to sleep.
except the ones we asked to go,” says Dhar. It’s not surprising then that his office is more than a place of work for him. It’s
It helps that together, the group of some packed with personal belongings—whether it’s the gold fish that his daughter
of the earliest and senior employees own gifted him, or the huge painting of Ganesha that was a gift from his sister and now
more stock on the company than Dhar and covers an entire wall of his 12 ft * 18 ft corner room.
There are the corks of champagne bottles that were opened at the office
Challu combined. Yet, that’s hardly the party last month, sitting pretty in a transparent glass vase. And, then, there’s
main motivator, feels Challu. the divine presence of the powers that be that Challu calls upon frequently—
“We found a common purpose in what from the typical mandir hanging on the wall behind his desk to the nishan sahib,
we wanted to achieve for the company and a long metal pole that is sacred to the Sikhs. In another corner are framed pho-
how that translates into shareholder value, tographs of ships from World War I that he bought for a friend. And, now intends
to find the time to send to him.
economic value and, therefore, value for all There’s no missing the influence of Mahatma Gandhi on Challu. The enve-
of us. That’s a rare situation,” he says. lopes, in which he packed the stock options awarded to employees, contains the
It also helped that from the very begin- Mahatma’s sketch along with his famous line: “Find purpose, means will follow”.
ning, Challu ran iYogi with all systems and
processes on board. Whether it was the
decision to put 15 per cent of the company Challu has the personality and creativ- “Within a year, Uday had shown that met-
stock into an Employee Stock Option Plan ity of a “classic entrepreneur”, but he has rics,” says Mittal. The end result of focusing
(ESOP), or performance appraisal systems, surprised everyone—may be even him- on specific deliverables ensured the company
or a balanced scorecard, the company was self—with his ability to manage scale. “At managed its growth well within its means.
ready for scale even before it received its every stage, he has operated ahead of the
first customer call. curve in bringing the right people on IN SERVICE WE BELIEVE
Canaan’s Mittal adds another perspec- board,” comments Mittal. From early on, Challu thought of the busi-
tive to the iYogi growth story. “One of the When growth demanded an expan- ness as a technology business, rather than an
things that Uday has managed to do is sion of numbers, he opted for captive outsourcing business—and, built it accord-
build a transparent senior management BPOs to solve the problem instead of try- ingly. There is a 20-member research and
team that can challenge each other. Cultur- ing to hire every resource internally. Sim- development team today whose only job is
ally, that has allowed them to grow as a ilarly, iYogi showed an amazing ability to to stay ahead of the consumer’s problems.
company,” says he. work with the resources it had. At each “No one knew Steve Jobs was going to
“Uday doesn’t believe that he has all the stage, it raised money with a clear goal in make an iPad. But the moment we knew he
answers, or the best ones. Everyone knows mind—and met that. was on to something like that, we got on to
COURTESY COMPANY (5)
what the issues are, and what’s going on. If After the first round, the money was the task of figuring out what possible issues
someone comes back with a solution and it spent to explore internet as a sales channel, its adoption would have amongst our sub-
passes muster, it’ll get done,” adds Mittal. and get the “unit economics” in place. scribers,” says Dhar.
38 | INC. | MARCH 2011

9. ZOOMING AHEAD ON THE GLOBAL HIGHWAY
Adds Challu: “We have to remain grown to account for between 30 and 35 the best from them. We’ll continue to grow
ahead of technology, so whenever con- per cent of the company’s revenues. for a long time; we’ll need specialised skills.
sumers buy something, So developing those skills is important
we’re there with them to IKE CHALLU, the business he runs is from our perspective.”
solve their problems. thinking far ahead of itself. iYogi’s open- Challu’s problems don’t end with get-
That’s our core capability. ing its first service centre in Philippines ting the right talent on board, though. Get-
We have to be ready when this year. “Within six months, we should ting people to deliver on intent is
that call comes.” have a centre in Latin America,” adds something he’s already struggling with.
Another aspect that is Challu, who’s keen on the Middle East as “It’s only in India that you need to put a
unique to iYogi is its well to cater to Arabic-speaking users. supervision layer and a quality layer on top
dependence on online Plans to launch the subscription ser- of people. It drives our costs up—and it
marketing. Says Pradeep vice in India are already drawn. “By the drives me crazy. Why can’t people simply
Chopra, co-founder, Digi- end of the year, we will be a household do what they are paid to do? I’ve had to put
tal Vidya, an online mar- name in India,” promises Challu. The a hierarchy in place—someone who will
keting consulting company is also planning to launch field make sure that another person, who knows
company: “They have used services by engaging 14,000 technicians he has to do 10 things in an eight-hour
search engine marketing in North shift, actually does those,” says Challu.
really well.” America in the So far, he resisted having a HR practice
iYogi’s online market- next quarter to in the company. After all, how hard can it
ing has 200 people, up cater to the be for college graduates to manage them-
from four just a couple of home and busi- selves in an environment where all systems
years ago. “We’re one of ness segment. are automated? Well, as Challu’s discover-
the biggest spenders on Being a ing now, quite, it seems. “Some of the larger
Google AdWords from India,” says K.R. savvy businessman, Challu knows that companies, like Genpact and IBM, have
Sreejith, vice president, iYogi, who’s been finding the talent to feed his growing the same people problems, despite their
with the firm for the past three years. appetite might be difficult. So, he’s taken it superior HR practices. So, I am trying to
This team also creates content that upon himself to do something about that. manage this issue in completely different
helps customers solve some of the prob- “We’re launching an online certification ways. I am going to create a methodology
lems on their own. “It’s not fair to ask programme for technology support and where if you want to work for say, four
someone to pay an annual subscription fee services; and we aim to train 250,000 peo- hours a day, you come and do just that.”
for something as small as changing the ple in the next three years,” he says. The company already has a strong
wall paper, or un-installing a program,” Delivered online, the course will train learning and development function. “We
adds Sreejith. Such issues are solved people in tech support jobs, and make constantly engage with the employees
through self-help videos that are put up them available for employment in other through My iYogi, our internal networking
online for convenience. industries, such as remote infrastructure site for the employees. From the day they
The company has also been quick to support and technology support, as well. join, people know their career paths,
realise other channels of service. iYogi bun- Another skill that they’ve honed in- including the options of cross-functional
dled its services with partners, such as house, and now intend to market, is that of positions. And, we have minimum four
McAfee, Dell, Avast and Wal-Mart, to gain internet marketing, in which iYogi will weeks of training per employee; even
a toe-hold into American households. offer another certification programme. higher for technicians,” says Deborah
Today, its sales come directly from global “There is a huge shortage of people trained Steele, manager, HR, who hires nearly 500
online marketing campaigns, as well as in internet marketing. But we’ve cracked it, people a month for iYogi. So far, the com-
from its partnerships with retailers, OEMs, so now we’ll teach others. It will be deliv- pany has managed to keep its attrition rates
anti-virus companies and independent ered on video straight to the user’s laptop, manageable due to these initiatives.
software vendors. and we will put people in mock situations, As iYogi puts its ambitious plans into
“When we offer our services free of cost, and bring elements of virtual plan into the action, it is bound to run into such prob-
the customer gets to experience our ser- training,” adds he. lems, some will be more manageable than
vice, and we get a chance to convert the Again, he displays the restlessness of a others. But, as long as digital homes
customer into an annual iYogi subscriber,” typical entrepreneur. Even before his bil- become a reality, and Android phones fight
says Ravi Neb, vice president, business ser- lion-dollar dream is reality, Challu’s look- with those powered by Windows 7, and
vices, iYogi. In the two years since the first ing at other “building blocks”. He justifies it iPad gives birth to a new generation of tab-
partner programme was launched, these with: “There’s a selfish reason. If I train lets, Challu and Dhar will only get busier in
“non-direct marketing channels” have 250,000 and iYogi needs 25,000, I can hire the days that follow.
MARCH 2011 | INC. | 39