Yes, you can outsource your homework to India
Indian entrepreneur Krishnan Ganesh is out to prove that consumer services can be outsourced just the way business services are.
NEW YORK (Fortune) -- Few large corporations need to be convinced of the benefits of offshore outsourcing. Many U.S. companies have fully embraced the outsourcing of customer call centers, software troubleshooting, and even medical diagnoses to workers in India and other emerging markets as a way to cut costs and take care of business when most of America is asleep.
Now, Indian entrepreneur Krishnan Ganesh is out to prove the advantages of outsourcing to a different and more skeptical audience: American parents and students.
Ganesh, 45 years old, is founder and chairman of TutorVista, an online education company that provides struggling students with 'round the clock tutors - who just happen to be scattered throughout the Indian subcontinent. For $100 a month, students get unlimited help with various subjects. The company also provides preparation for major standardized tests. All the potential pupils need is a computer and Internet connection.
Since its launch 18 months ago, the company has signed up some 2,200 students worldwide, roughly 2,000 in the U.S. That's a fraction of the students served by companies such as Educate Inc (Charts)., the parent company of Sylvan Learning Centers, or test prep giant Princeton Review.
And Ganesh himself is quick to point out perhaps the biggest challenge his company faces in trying to crack the $2.5 billion-a-year private tutoring market in the U.S.: "How do you get a parent in rural Mississippi to spend $100 a month on tutors from a company in India, of all places?" Ganesh said in an interview this week during a visit to the U.S. "Will they trust us?"
Ganesh already has earned the trust of one key constituency: the financial world. In January, TutorVista closed on a second round of financing, attracting close to $11 million from blue-chip venture funds Lightspeed Venture Partners and Sequoia Capital India.
Investors are no doubt impressed with Ganesh's track record. He founded his first company, a company that fixed computers and other technology for Indian corporations, at age 29. He took that company public in India, then took over as CEO of a troubled telecom joint venture of outsourcing giant Wipro (Charts) and British Telecom (Charts). He then founded one of the first call center outsourcing operations, CustomerAsset, which Indian bank ICICI acquired, and next helped launch Marketics, a data analytics firm that did work for large U.S. corporations. WNS Limited (Charts) acquired the Marketics earlier this year in a deal valued at $65 million.
Ganesh says his mission is to use local Indian resources to serve global markets. "The idea that you can create services around the world with Internet and telecom connections, that you can do virtually any service, fascinates me," he says. He says he also likes to be a pioneer in any field he pursues.
TutorVista is indeed plowing fresh territory: While Indian companies such as Wipro and InfoSys have thrived by selling services to businesses, no Indian company has built a successful consumer services company. "They all work behind an American consumer brand," he says of the Indian outsourcing giants. "There's an opportunity to create a direct consumer play from India."
In India, too, TutorVista is trying something new: its tutors all work from their own homes, not a centralized call center. This allows TutorVista to hire experts throughout India, including retired professors who are using computers for the first time thanks to their TutorVista employment.
Full time tutors with the company make about Rs 12,000 to Rs 14,000 a month ($299US - $349US). A typical teacher's salary might run closer to Rs 9,000 ($224US) a month, Ganesh says. All the company's tutors go through a training and certification process.
Though Ganesh likes to be first, he is hardly alone. New Delhi-based Educomp says it is looking to make an acquisition as a way into the U.S. tutoring market. Sylvan also offers online tutoring.
Whether online tutoring (outsourced or otherwise) really works is a subject of hot debate in education circles, but Ganesh insists that TutorVista essentially is democratizing one-to-one education.
Some tutors charge more than $60 an hour, putting them out of reach for most families. "At $40 to $60 an hour, you're not really measuring whether a child is learning, you're watching the clock," he says. TutorVista's all-you-can-eat plan for $100 a month certainly is more affordable, and more plans for cost-conscious customers are coming: He says the tutoring company plans to begin offering new pricing plans - including fees for one-time sessions - sometime this year.