SM: An example is when InsideView did the acquisition of True Advantage and laid off 150 people who were doing the same thing manually. I wrote a piece recently called the “Death of Indian Outsourcing” that featured InsideView and I talked about that example. My thesis is the Indian BPO industry is very much at risk because of the SaaS trend, and if they do not start to get their act together and respond to that trend, they are going to get punished.
BJ: I think that is true, but we see the opportunity that an Indian outsourcing firm could subscribe to a SaaS application and technology enable their BPO.
BJ: They can use their labor component to provide a complete outsourced business process.
SM: I think the issue is also in the numbers game. There is a lot of fat in the Indian BPO industry because they do not use technology effectively.
BJ: There are going to be natural forces that force them to embrace technology.
SM: Is there anything I should have asked you but didn’t … anything else to discuss?
BJ: One thing that I think might be interesting to your readers is that we use this umbrella term technology enabled services, but there are three or four different categories of these services that are worth explaining. I have talked about SaaS, and technology enabled business process outsourcing.
The other two categories are consumer services and information services. Our investment model applies completely to the consumer side as well as to the commercial side. We regularly look at consumer investments as well. As I already mentioned, we do have a preference for subscription or transaction based revenue models versus advertising models because the advertising model is more of a media service.
The last category is information services, and InsideView is a good example of this. The customers are not buying an application, they are buying information that they want, and of course there is new data collected every day. The amount of data is growing exponentially and that is creating new opportunities for startups that figure out a way to harness that data, including, often, from user generated content which can be very effective in collecting massive amounts of data.
SM: PayScale is a good example of that. BJ: Another is a company called Bill.com (previously CashView) which provides a Bill payment service. PayScale is an example of data that has been pulled together that in a way 5 years ago would have been impossible.
One of the interesting things is the blurry lines between these categories. Many SaaS companies are collecting massive amounts of data. They store the customer data of their subscribers and as those data stores grow and there is value in those databases that can be realized in additional revenue streams.
SM: Assuming the customers agree.
BJ: There are privacy issues and licensing issues. SalesForce.omc has more sales data on their servers than anywhere else on the planet. They have not got permission from their customers to use it in any other form, but we know of other SaaS companies that are already thinking about how they want to use this data eventually. They can provide it back to their customers in the form of benchmarking, best practices. There can be value to the customer to allow those uses. We are also seeing information service companies who are recognizing there are applications they can provide to take advantage of the data they are already selling to their customers. There are lines blurring between these categories.