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Clearing the confusion on – SOFTEX form filing need

There are instances, when Software exporting companies operating outside an export oriented scheme (STP, SEZ, EOU etc.) are advised, that there is no need for them to file SOFTEX forms. The young entrepreneurs in Startups, obviously get confused on this. In some cases, companies stopped getting SOFTEX certification done, after complying in past when they moved out of STP/SEZ schemes, owing to this advice.

There are always two parts to deal with regulatory compliance. One, the policy aspect and second, the procedural aspect. There is lot of material available on internet, on the procedural (process) part of filing SOFTEX form. And perhaps none, that explains the policy aspect.

This article is meant to clear the confusion on SOFTEX form among the Software product community by explaining the policy aspect of SOFTEX and background process, in the realm of foreign trade regulations.

Why and how SOFTEX form came in to existence?

In general exports means sending ‘goods and service’ to clients in foreign country (outside territorial borders of India) for purpose of sale. Physical goods are exported through a physical port of shipping (a sea port, airport or foreign post office) monitored by Central customs department.

When physical goods leave borders, from any port of shipment, the exporter is required to declared value of goods. In India, this was done through a form called GR form (PP form in case of exports by post office) for non-EDI ports and SDF for EDI ports, along with invoice and other supporting documents. Recently, as part of simplification of process, the GR and PP form have been substituted by a new form called ‘EDF’ (export declaration form) and SDF has been merged with shipping bill. Please see RBI circulars. RBI/2013-14/254 A.P. (DIR Series) Circular No.43 September 13, 2013) and RBI//2014-15/599, A.P. (DIR Series) Circular No.101, May 14, 2015.

This value declared is required to be accepted and certified by the customs office, at the port of shipment. This is called “valuation of export”. Once the valuation of export is complete, the value is accepted both by RBI and its authorised dealer (the exporter’s bank). RBI then monitors, the remittance of an equivalent value in exporter’s bank account.

A ‘Software’ exported on a media (CD/DVD, magnetic tapes etc.) has to pass through these steps, as it is exported physically through a port of shipment, as physical goods.

In early 1990s, when Software Technology Park (STP) scheme came in to existence, the need to export Software through data communication links emerged. Customs department had difficulty in managing this, as nothing physical was visible in a Software transmitted, as well as did not have human resources and knowhow to deal with exports through telecom links.

DeitY (then Department of Electronics) enabled an innovation in government policy and could get RBI to announce SOFTEX form as an alternative to the GR/PP forms, to suit the export of Software, through data communication links.

STPI being the administrative authority of STP scheme, became the designated authority for “Software export valuation” and certification of SOFTEX form, in place of Customs. As on date the jurisdictional STPI Directors and SEZ Commissioners are the designated authority for SOFTEX valuation.

The purpose, policy and process of SOFTEX form is same as in GR/PP (or new EDF) form.

The only policy point difference between GR/PP or EDF form and SOFTEX form is that GR/PP forms are submitted and valued, simultaneous to the exports actually happening from port of shipment. Whereas, SOFTEX form is a post-facto approval, after the actual export of Software has actually taken place.

An important policy aspect to understand here is that before the SOFTEX form was launched the Software was put at par with ‘goods’ in the foreign trade policy, as policy makers could not conceive a trade in anything that is not ‘goods’. Even today, a services export in non-IT sector does not need any declaration or export valuation. Therefore, Software (IT and ITeS) was given a special status in international trade equivalent to ‘goods’.

Valuation of exports by Customs/STPI/SEZ is a crucial part of process

As described above, there are two policy aspects embedded here,

  1. Regulation of foreign remittances by RBI against export done by exporter (the origin of this procedure and policy behind lies in the name of GR form – “Guaranteed Remittance”) and
  2. Valuation of export done by Customs officials at port of shipment (by STPI/SEZ for SOFTEX)

The second part of the process is “valuation of exports”. Exporter declares the value of exports supported by relevant documents. The designated officer in customs/STPI/SEZ considers and certifies this value and has all right to reject the value declared or examine any declaration for overtly undervaluation or overvaluation. The process is very smooth and in more than 99.9999% cases the value is accepted and certified. Rejections are only subject to a real doubt, unlawful trade happening and exporter not able to justify genuine exports. The valuation is done under the Customs Valuation (Determination of Value of Export Goods) Rules. Since there is no separate rules defined for ‘Software’ and the export oriented units (STP, SEZ, FTZ, EPZ) operate under customs bond, the same rule applies to ‘Software’. In absence of a rule for non-EOU exporters the law would rely on same rule as well.

An export of goods and software without valuation is incomplete. RBI depends on designated officers for this valuation exercise as they are the ones who have delegated powers under the constitution to do so.

A form not certified by jurisdictional designated officer is incomplete, legally.

Who should not file EDF or SOFTEX?

An exporter of physical goods has no option other than filing EDF, as goods passes through the port of shipment managed by customs. Similarly, exporter registered under STP and SEZ has no option as the value to be accounted as exports by exporter is taken from the SOFTEX forms signed in name of the exporter.

Exporters of Software (both IT and ITeS companies) not registered in STP or SEZ (or other EOU schemes) scheme should also file SOFTEX, as per foreign trade policy.

Such exporters popularly called non-STP units can file for SOFTEX with jurisdictional STPI Director.

Only those exporters whose exports are not goods or Software can escape the filing of SOFTEX. The foreign remittances received as exports proceeds, without certification of EDF (replacement of GR/PP form) or SOFTEX form will fall in two categories, either a general service or an unlawful remittance.

Exports of services that do not fall under IT and ITeS category are exempted from filing the export declarations and certification required thereof.

What is covered under the term ‘Software’ in RBI circular

The RBI circulars on SOFTEX mentions exports of ‘Software’. It implies both IT and ITeS exports. The genesis lies in how foreign trade policy evolved, ever since STP scheme was added to the bandwagon of export oriented schemes.

‘IT’ covers both Software services and Software products (including SaaS). Software services is a whole lot of things from consulting to design, development, implementation, maintenance, re-engineering of Software or a Software product.

‘ITeS’ covers all those services that are delivered to clients across borders of India using an IT driven system and process over a telecom/internet link (include BPO, KPOs, Digitization, Call centers, Data processing etc.).

What happens if exporter does not file SOFTEX (or alternative EDF) form?

If SOFTEX (or EDF in case of physical exports) form is not filed, and exports proceed is realized, the remittance received is either treated as ‘general services’ or not as an export proceed or illegal.

For general services such as management consulting, technical services there is no declaration form.

Advice for Software product including SaaS companies

For Software exporting companies not operating under STP or SEZ, it is possible to bypass and get remittances without filing SOFTEX or EDF, under the guise of a ‘service’ export. There is no immediate threat of non-compliance, unlike the exporters in STP or SEZ.

However, not getting classified as ‘software’ can create problems in future. First problem created is your exports are not ‘Software exports’. The other problems can erupt from regulations in other areas of taxation etc. Complex Service tax rules can create problem. Any situation, where an exporter will need to prove and protect herself can end up in to a nightmare.

The important part here is the export valuation process by STPI, SEZ or Customs. Once EDF/SOFTEX form is certified, your export is also certifies as export of ‘Software’, under foreign trade policy.

For Software product companies including SaaS companies, is it advisable to mandatorily file SOFTEX form or and EDF form for Software product export in physical media, even when they are not part of STP, SEZ or similar schemes.

iSPIRT efforts in further liberalization of SOFTEX \EDF

Many argue, why this documentation. The need to declare export value, monitor foreign remittances, export valuation and balance of trade & payment accounting will not vanish for a nation state. There has to be some minimal documentation and process to fulfil all these needs.

However, there is scope for further liberalization and need for an easy liberal regime for ‘ease of doing business’.

iSPIRT is aiming for a 100% “Digital” SOFTEX and EDF run under aegis of RBI, where the process can be executed and compliance completed even at single invoice level or a monthly consolidated statement level, based on various practical needs, with export declaration fully ‘dematerialised’.

This is much needed for a ‘digital economy’ and can be a boon for exporters especially in SaaS segment and startups, where orders and invoices are generated online. And online interface can be extended in to a fully ‘digital’ export declaration regime of RBI.

India to progress to a Product Nation, in a digital world, has to take some of these steps. Sooner the better.

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Key Takeaways from The Design Thinking Roundtable

When it comes to building a product, I had absolutely no experience before Pricebaba. While building Pricebaba.com I did learn many nuances and tricks for growth. I am grateful to the friends and mentors who have always helped us understand users better and how to build a great product. It was a pleasant coincidence last week when I got two opportunities to understand design better — first, I attended the Design Quicky Mumbai event hosted by 500 Startups and later in the week, iSpirt organised a roundtable session on Design Thinking. Deepa Bachu who is currently running a design consultancy firm Pensaar shared her 15+ years of experience working in the industry with brands like Intuit. Here are some key takeaways from that session.

Tracking Customer/Consumer Benefit Metric

According to Deepa, the key metric to chase / track is customer benefit metric (CBM). It’s simply how do you make your customer’s life easy. For Google, customer benefit metric would how be quickly it’s able serve the result and how relevant they are with user’s search query. This makes so much sense. If you look closely, all the updates Google has made are around that — be it with the Panda or Penguin update, to give the best result in minimal time.

Once you start thinking of serving your current users better, if they are truly benefitted with your product, they are going to use your product again. This leads to increase in MAU, decrease in bounce rate. All of your other metrics will fall in place automatically. Take marketplaces for example, they are serving two kind of customers — Merchants and Shoppers. Their key to success would be to make sure Merchants sell goods regularly and efficiently. They can enable this by reducing returns, empowering logistics and customer support. Whereas on the other hand making sure users get what they want at the right price and their journey to checkout is as smooth as it can be. For us, at Pricebaba it’s quite similar to marketplaces. Our customer benefit metric would be to make sure the returns on the partner’s platform are under control (thereby making sure conversions are higher). On other hand for users it would be how effectively we help them choose the best product for their needs. On Pricebaba a user can be overwhelmed by 175 products from the same manufacturer (eg: see Samsung Phones), our advanced filters is a way to help our users narrow their purchase decision faster. However for us bigger boost comes from helping the user get the top 4 or 8 products accurately in the first fold.

Design is not art, it’s not what you see

Deepa started her talk with how India is still not there when it comes to design thinking or product innovation. We do not think Design while building our Products, she suggested. On that remark, I jumped off my seat and said “this is not true”. People are talking about design. I sincerely believed this is now a key role in the product making, which was not the case 4 years ago. But, by the end of the session I realised she was right. Amongst many missing ingredients in our startup ecosystem, “design thinking” is one of them. We admire good looking design. We love clean, plain and simple. We look at design only by its visual perspective (is it appealing to the eye?). But, we forget to see the functionality or usability. That is arguably more important aspect of design.

IMG_20160409_165323Throughout the session we had one white board on which we wrote what design means to us. We wrote apps we love and products which we consider as good examples and inspiration of good design. The participants initially thought design had a lot to do with ‘Art’, ‘Painting’ or ‘Creativity’. As we went further, our understanding evolved and ‘Emotion’, ‘Customer Journey’, ‘Elegance’ were the new keywords on the whiteboard.

Going further it was ‘Customer understanding’, ‘Outcome’ and ‘Need’. Eventually, it all boiled down to one thing — ‘Metric’. If your numbers (in our case, Consumer Benefit Metric) are not increasing, all your Dev, BD or Marketing efforts don’t matter.

IMG_20160428_105735There is this simple pyramid which is quite self-explanatory for product making. Bottom to Top it reads,

  1. Benefit I care about: What is your service about? What is that one benefit you are serving your users with. The value proposition of your product. Nail that first. Achieve excellence. For my product Pricebaba, it is how a user get the best deal of a gadget suitable to their needs.
  2. Ease: How easily your users are able to get the benefit we talked about. How are you making things simpler for them. UX has a major part to play in phase. For us, it would be how easy are the choices we offer our users to narrow down on the right gadget.
  3. Positive Emotion: This is the part where actual UI comes into play. Users Delight will be the positive outcome of great UX and UI.

To sum it up, focus on what your business has to offer. What is that one benefit you are giving your users for which they will keep coming back to you. Create a good UX to make their journey to avail that benefit easier with great UI. There, you’ve got your “Ahaa!” moment from your users.

Users don’t know what they want

While building a product we often tend to build it the way we perceive things. We build a feature / flow in a certain way we think is the best. So many times we assume we know what users want. Taking some decisions from the gut is good. But building an entire product without interacting with actual users is not. You need to validate that gut-feel by talking to users. Observe them as use your product. We did a exercise where entire company went out on streets and interacted with users. We called it ‘Project Dragon Scroll’. We gave our potential users a simple task to search best price of a mobile phone. We were surprised to see so many of our myths and biases were getting resolved. Deepa shared tons of examples with us, making us realise that it is too difficult for a product to evolve if you don’t include your users in the process. For that you need to go and talk to them. Even understand what they are not saying. Ask questions. There are tons of tools for that. Just asking them question via surveys, making sure your Net Promoter Score is high might not help. Those online activities are needed, along with offline activities too. Also, you need to see the data on interaction, deep dive into metrics, logs, analytics to get a 360 degree view of things. Taking decisions based on only one of the above factors mentioned won’t help. You need to get out there on the streets, deep dive into analytics (GA, Clevertap, Mixpanel) and use online tools to see how users interact (A/B testing, Heatmaps and Surveys).

I am thankful to iSpirit for organising such wonderful event. I learnt a lot of things from this event. Thanks to Deepa who shared her experience and tools with us. It gave a new perspective to look at Design. If you want know anything more about this, feel free to catch me on Twitter @GanatraT

Tirthesh is co-founder of Pricebaba, one of the biggest product research and price comparison platform in India. A developer at heart, Tirthesh had the pleasure of being part of a journey since 2011, where a two-person team grew into a strong workforce in a matter of three years.

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Taxation and “Digital Economy”

Background

There two precursor blogs recently published to this new article on taxation of digital economy, which are helpful in understanding the context for Software product industry in general and especially for SaaS.

  1. ‘SaaS’ – the product advantage and need
  2. ‘SaaS’ – indirect tax issues in India

Here is a brief overview.

The first blog, made a case for SaaS industry to be a formidable part of the Indian Software product industry (iSPI).

The second blog, explored the problems of double and confused indirect taxation, GST and its implications, applying a product definition as different from service and need for a clear distinction between a ‘product’ and ‘service’ or ‘digital goods’ and ‘digital service’.

This third blog is based on excerpt from representations and notes pursued with the Ministry of finance in last few months, as a solution to the problems in a larger sphere i.e. the emerging “Digital Economy”.

The Tax system if fragmented

The taxation on ‘intangible’ goods and services has been marred with double taxation, confusion, and litigations. The biggest cause of this broken tax system is that tax authorities have been giving piecemeal approach to the taxation in this sector.

Until December 2006, there was no indirect tax by central Govt. on Software. In 2006, excise duty was levied on Software and until 2008, there was only excise duty + VAT (even VAT was exempted till such date in many states) payable on Software. In 2008, Software came under the purview of service tax and for a long time until February 2010, a large number of Software product companies paid both excise duty and service tax, plus the VAT in states. This continued until the pronouncement of notification No. 2/10 No. 17/2010-Service Tax Dt. 27th February 2010, which exempted Software product companies from payment of service tax, if the excise duty or customs duty was already paid on same.

An example problem (on Service tax +VAT) of this fragmented tax system, for Software product industry, has been illustrated in previous blog, ‘SaaS’ – indirect tax issues in India.

Similarly on direct tax front, the finance act 2012 subjected income from sale of Software as “Royalty Income”, and therefore subject to TDS of 10% on every sale. A book is traded as a product (a tangible good), whereas the contents are copyrighted. So a buyer buys the book and not the copyright. Similarly in the case of a software product, the buyer buys the product and not the copyright. However, the tax treatment is as if the buyer has purchased the copyright.

In a period between 2006 to 2012, the Software product industry has been subjected to many such bottlenecks. The tax authorities acted in a piecemeal basis, to first apply a tax to increase the tax net and then had to make course correction through several patchwork notifications in multiple steps, resulting in to a fragmented tax system.

The cause of this piecemeal approach has been that Software product (being ‘intangible’ product) is not recognized and treated at par with other products. We have proposed that defining ‘digital goods’ and ‘digital services’ clearly may solve the problem.

Let us understand, why there is a focus needed on ‘digital’ and why the ‘goods’ parlance is needed.

Digital economy is about digital goods and digital services

India has rightly embarked on a path for “Digital India” in line with world economies in transforming to a “Digital Economy”. The move, in 2015 budget towards a ‘near cashless’ has been boosted with UPI launch, which will further significantly contribute to the transformation in to digital economy.

The ‘digital economy’ will be overwhelmed with ‘Intangibles’ i.e. ‘digital goods’ and ‘digital services’. Software, may not just be standalone computer program. It may work with either data, audio or video products. Similarly the audio, video, data and document products may have a software product running them. Hence Software product, sounds, images, data, and documents or combinations of them may exist as a ‘digital product/goods’.

Recognizing the tradability in ‘digital goods’ is one the most important need of a ‘digital economy’. The volume of such trade will be huge in future as the digital economy is unleashed. Anderson said, “Software is eating the world”. IoT is a reality now.

All this pointing to, a ‘digital economy’, that will be overwhelmed with trade of not only ‘digital goods’ and ‘digital services’, but also the trade of ‘right to use’ or ‘transfer of right to use’ just as there is ‘deemed sales’ or ‘transfer of right to use’ of tangible goods.

All these reflect the pervasiveness of digital in future economies, as well as inseparable pervasiveness of Software products in the digital world. The buzz word is now ‘digital’, end-to-end.

Why Digital?

Since a digital economy will be about a converged digital world where Software products will also be inseparably pervasive, taxation issues of Software product industry should be dealt in a unified ‘digital economy’ domain, where ‘digital goods’ and ‘digital services’ will be the produced and supplied.

If tax authorities just focus on Software, it will again create another patchwork and will not provide long term solution, for the evolution that is happening with greater velocity now. Focusing on ‘digital’ will provide strategic solution to the problem at policy formulation level. And hence, the issues of the Software product industry can be dealt with by clearly defining “Digital Goods” and “Digital Services” in the tax system.

Digital goods and service definition

It has been already illustrated in ‘SaaS’ – indirect tax issues in India the COG-TRIP test can be used to identify a Software products as different from Software service. However, in order to align with existing Indian legal system and the evolving international practices, following definitions (based Digital Goods and services Tax Fairness Act[1], a bill pending in USA) at structural level has been proposed.

These proposed definitions are just the guiding factors that can be used as a starting point by the Government of Indian in this direction.

DIGITAL GOOD – The term “digital good” means any software or other good that is delivered or transferred electronically, including sounds, images, data, facts, or combinations thereof, stored and maintained in digital format, where such good is the true object of the transaction, rather than the activity or service performed to create such good.

DIGITAL SERVICE – The term “digital service” means any service that is provided electronically, including the provision of remote access to or use of a digital good.

For purpose of above definitions, the term

(i) “Digital Goods” means “Goods” as defined in 366(12) of the Constitution

(ii) “Digital service” means a “service” and that which is not a “Digital Good”

(iii) “Delivered or transferred electronically” means the delivery or transfer by means other than tangible storage media, and

(iv) “Provided electronically” means the provision remotely via electronic means

(v) “Software” is a representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment. And, “Software Product” is a standardised set of such software bundled together as a single program or a Module that directs computer’s processor to perform specific operations, exhibiting the properties of an intangible good that can be traded.

Explanatory Note:

In legal parlance, the ‘goods’ exhibit the following properties:

iSPIRT has proposed a COG-TRIP test[2] for identifying it as Software products. The same definition overlaps with the following legally tenable definition and explanation on detailed attributes.

  1. Durability (perpetual or time bound)
  2. Countability – traded commodity can be counted as number of pieces, number of licenses used, number of users etc.
  3. Identifiability – identified as a standardised product
  4. Movability and storage. Can be delivered and stored and accounted as an inventory
  5. Ownership of the right to use
  6. Produced/Reproduced through a process
  7. Marketable/Tradable or can be marketed and sold using standard marked price (except when volume discounts, bid pricing and market promotion offers are applicable).

‘Goods’ as distinguished from services that are consumed either instantly or within very short period of time or continually coinciding with the activity of provision of service.

‘Digital goods’ exhibit all these properties plus the property of being stored and maintained digitally.

This definition of ‘digital goods’ will also imply, that their sales and purchase will be governed by same laws as for “Goods” in the constitution and various acts thereof. Hence just as ‘Goods’ are subject of ‘sales’ under article 366(29A) so will be ‘digital goods’. It is important in the context of ‘ease of doing business’ in trade of ‘digital goods’ and removing the present confusion on taxation in trade of ‘digital goods’.

The ‘right to use’ as a deemed sales of digital goods to be used or consumed at future instance(s) can also be delivered or transferred digitally. It can be a PIN or a Password or a combination of biometric and password to allow access to digital goods.

In digital economies, many a times ‘digital goods’ are stored on a remote server or maintained digitally on a remote location by a producer or its agents/dealers/distributors for use or access by clients and users.

An act of use or remote access of ‘digital goods’ by using the access PIN or password acquired in advance through a trade or commerce transaction in ‘right to use’ of such ‘digital goods’ shall be an act of trade or commerce in ‘digital goods’ and not of ‘digital service’.

Recommendations made

Following recommendations were made:

  1. Definition be introduced through a bill/finance act in future.
  2. Also a clarity be inserted that, ‘digital goods’ will mean “goods” for all purpose, including ‘tax on the sale or purchase of goods’ as defined in Article 366(29A) which also includes the ‘transfer of right to use digital goods’.
  3. Both indirect tax (in future) GST and Income tax Act, should to refer to the same definition for purpose of ‘digital goods’ and ‘digital service’.
  4. Need for a Tariff code (HS Code) for ‘digital goods’.

The future lies with recognition of ‘digital goods’ as an international standard and WTO involvement in the accepting these principles.

In the interim, India can adopt a workable solution.

At present, all that is not covered under HS Code classification as given below (mostly software/digital goods downloaded online or SaaS Software) is treated as a service, despite the fact that packaged software and SaaS is the same whether traded on a media or online as a medium.

HS Code Item Description
4907 00 30 Documents of title conveying the right to use Information Technology software
4911 99 10 Hard copy (printed) of computer software (PUK Card)
8523 80 20 Information technology software on Media

Source: DGFT HS Code Database and CBEC

A HS code classification for following categories can be issued using the last 2 digits (first 6 Digits being defined under international system) Or Until a global harmonious classification emerges a codes may be defined under chapter 98/99.

Following category of definition will solve the issues of Digital Goods

(i) Pre-packaged software (Software Product) downloads

(ii) Software Product supplied as S-a-a-S model

(iii) Sale of ‘right to use’ digital goods

(iv) Digital Goods other than Pre-packaged Software

Some countries have created a HS code under 98/99 for Downloaded Software e.g. China has a code under 980300 for Computer software, not including software hardware or integrated in products. Similarly some countries are using 9916 as a code for pre-packaged software.

Conclusion

The above proposal of definition and the measures in recommendations can solve the issues faced by the industry, help in ‘ease of doing business’, lubricate trade, ensure neutrality and fair practices as well as provide the much needed level playing field.

The proposal does not create any loop holes in system as it does not recommend the change in the tax regime. It merely recommends the changes desired to accommodate the rise of digital economy.

The Software product industry can be the biggest beneficiary of this and members in Software product industry should take up this concept with Govt. of India with full force to help in rise of India as a Product Nation.

References

[1] Digital Goods and services Tax Fairness Act, USA, https://www.congress.gov/bill/113th-congress/senate-bill/1364/text

[2] A framework developed by iSPIRT, under leadership of Shri. Bharat Goenka of Tally Solutions

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An Indian Fintech Entrepreneur’s Views on UPI

Ever since UPI (Unified Payments Interface) alpha launched on 11th April 2016, I see much confusion amongst various stakeholders. For me, the most relevant question is will UPI kill payment gateway aggregators and PSPs (payment service providers) ?

My answer is No. If you’re interested to know more, please read on…

To understand in detail, let’s understand below 5 pointers:(1) What is UPI (Unified Payments Interface) & what is it’s objective ? And who is an Aggregator /PSP & what is their objective?

For the uninitiated, UPI is a layer on top of the IMPS etc (see image above) which will work on a network of banks, facilitating account-to-account transfers in a simple and secure manner .

In other words, UPI (standalone) will just be another way of transferring funds from ones’ bank account to another without going through the hassles of adding someone as a beneficiary / IFSC / account no (NEFT) or entering MMID / mobile no (IMPS) . The objective is to simplify the payment process vis-a-vis NEFT / IMPS which didn’t reach critical mass required to make India cashless — both from person-to-person (P2P) and merchant payments standpoint.

Whereas, a n aggregator /PSP is one which continuously works towards empowering its customers aka Merchants ( in our case, mostly long-tail online merchants and individuals desirous of collecting online payments) with as many payment options possible & more. For example, debit cards, credit cards, net-banking, cash-on-delivery, IMPS, cash deposits, prepaid wallets etc. The objective is to provide one stop payment collection solution that encompasses all possible payment instruments in one bucket. But that is not all. The PSPs also supports its clients by creating new products & features to enhance their business outcome too!

Now here is what a PSP brings to the table which UPI does not today :

  • Provide other payments instruments which comprises a significant majority portion (~ 60 -80 %) of the total online payments. May be, UPI might become the new net-banking, by replacing it as a payment mode.
  • Detailed information on received payment (who paid & for what), apart from providing transaction management, reconciliation, insights etc.
  • Customisation at every level (payment options, payment page, etc) which is beyond a simple push-n-pull movement of money via UPI.
  • Trust custodian — one who provides protection against any dispute between merchant & consumer (this is completely missing in UPI today).

(2) What UPI adds to existing systems & processes?

The apps that will be built on top of UPI architecture might not only be easy to use — but the mobile first, secure & interoperable ( any bank to any bank) nature of UPI makes it one of a kind. With the learnings of digital wallets and IMPS adoption in the past , NPCI now has all the ingredients to revolutionise the the way Indians pay one another.

(3) Can UPI act as a catalyst and benefit Indian Fintech ecosystem?

We at Instamojo will add “UPI as a payment option” in the checkout page (representation image below) along with other available payment instruments and ride the wave of consumer adoption.

(4) Can UPI adversely affect anyone in the Fintech space?

Launch of UPI at this time is actually a blessing in disguise for payment agnostic players like Instamojo. Because the likely causalities of UPI will be those who have invested time & money in building non-interoperable and siloed products. Namely,

  • Digital wallets — UPI doesn’t allow interoperability of wallets on its platform today. Hence, P2P payments might shift entirely via UPI.
  • Net-banking network providers — Many players in the ecosystem had long enjoyed the relationship they had with each banking partner to put the net-banking infrastructure in place. If UPI picks up, it might become a one stop solution to get connected to all the network of banks due to inter-operability. Thus making all their hard work redundant. Now simply getting connected with UPI architecture via one banking partner will give exposure to all others banks required to process merchant payments.
  • Card network providers — If UPI is going to hurt anyone in a meaningful way, it will be the card networks like VISA/MC which will loose out of the Debit Card interchange to some degree, provided RuPay card become predominant.

Moreover, this revolutionary approach might make more consumers “online payment ready” in a very short span of time. And I hope, what Telecom revolution did for communication, UPI does the same for the Fintech space in India.

(5) What happens if UPI takes off massively?

Most digital wallets will lose relevance in the P2P payments space and will ultimately phase out and die like good old pagers . However, there can be a counter argument that in a winner-take-all or winner-take-most market, the digital wallet provider with largest merchant acceptance network might win due to inter-operability as consumers would gravitate towards the player which provides max fungibility for one’s wallet balance.

So, merchant payment collections via net-banking and wallets will be replaced by UPI. VISA / MasterCard will loose it’s share of revenues from debit card processing since RuPay (India’s own VISA/Mastercard) will share the interchange nuggets which is part of UPI now.

However, aggregators and PSPs will still be central to a Merchant, since such players bring other modes of payment collections too e.g. credit card, unified reconciliations of orders with payments, integration & APIs, customization, industry specific pricing & features, data and analytics and possibly discovery — apart from UPI enabled payments too!

On top of above, an online Merchant who is shifting from NEFTs / Cheque / Cash to PSPs for their payments need, will still turn t o the PSP as the pain-points still remains the same , with or without UPI coming into play i.e.

  • Integration & APIs
  • Order and transaction management
  • Unified reconciliations — orders with payments
  • Refund management
  • Dispute resolution
  • Customization — at every level
  • Industry specific pricing & features
  • Data & analytics
  • Support management
  • Risk management

Even if UPI solves all the above issues for an Online Merchant, they will still solve a portion of their payment collection needs, as UPI does not support VISA / Mastercard led credit card processing which stands at 20–25 Mn active users in India today.

Conclusion

It is evident that UPI is a boon and might be the much needed catalyst to increase the digital shopper base of India and in the process, might take a stab at the real enemy — CASH or unaccounted money exchanging hands; thus hurting the progress of our economy!

Hence, UPI is working very closely with banks under the guidance of RBI. In turn, banks are partnering with various players to take this new payment instrument to merchants & consumers.

Footnote:

  • For an aggregator/PSP , it will all be the same — only the graph of the credit card processing will dip while a new segment will rise.
  • Lastly, if someone thinks that banks will themselves act as an aggregator and offer UPI directly to the Merchants. W ell , they tried that before by offering IMPS to merchants which did not work . For argument s sake if one says it failed because of the complex MMID etc and now with a simpler process it will work, it won’t work for entire suite of payment instruments that a merchant needs.
  • And finally, if one believes that banks would offer a bundled solution of Cards + UPI — well I would say its will be a good debate to be a part of but end of the day, even banks know what they are good at i.e. retail banking / CASA / lending & deposit arbitrage!

Credits:

Guest blog post by Sampad Swain, Instamojo. The original article can be accessed here

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Design is about Love and Empathy towards the customer

The Design RoundTable last week lead by Deepa Bachu and Rajan, was not what I expected. By and large, design to me was either a part of an application (UI / UX) or a concept which i did’nt know much about. But, when we went in depth with Deepa, I realized that design is an integral part of who we are and what we see around us.

Through detailed discussions, we were made to think about what design is and what design meant to individuals, communities, startups as well as our customers.  The first task started with a a simple question, what is design? One can come up with several ways to describe it and the audience described it as – Design is something that solves a need, brings convenience, humanizes products (i.e. bringing human touch to products), explores empathy, understands customers and is about continuous learning.  What stood out for me was that design is all about Love and passion in order to bring out the best products/services to address a customer need, in a manner that creates value with ease and convenience. This would enable the users to be at ease and fall in love with what it represents. If a design is thought through with love, compassion and empathy, the user’s journey and experience improves.

The first task in the workshop was to work in a group and explore design features (good vs. bad designs) both within and outside a room. This enabled us to look at things from a design lens. The group came up with very interesting insights of how people dry their clothes in modern buildings differently from those who dry clothes on their balconies or how badly the electric poles in India are designed or how cobbled streets are an interesting design element than traditional tar roads.

IMG_20160409_145508This experience made us understand and be aware of the small and subtle difference between good and bad design. I was able to realize and conclude how crucial it is to be empathetic to customer needs and when, where and how they experience a product / service. Hence, it is essential to understand things from the customer’s perspective which eventually helps us improve the utility of the product and services that one offers.

This applies to all our products and services. We are all trying to build a product around enhancing the customer experience and thinking through each aspect from the users point of view is crucial. How does a user discover your product or hears about you? How do you ease the process of sign ups? How important is the design of your website or application? What does the product do for the customers and what are the benefits of it? These are just few examples of how we can think from the customer’s point of view. By allowing ourselves to think from the customer’s perspective, we are enabling us to re-imagine the product and user’s journey through various channels to engage and enrich with the user.

Another interesting insight was around humanizing products as consumers are humans. Adding a human touch to design can make an experience great. For example, addressing consumers in emails by their names or to have a real person to sign off at the end of an email.

There were many other aspects we covered in our conversations. We discussed the importance of elegance in design and a belief that “UI without UX is Superficial”. We also discussed the importance of creating that WOW factor or customer delight in making customers your brand ambassadors. For creating customer delight, one has to first answer what benefits a customer will get and how one can create customer experience through positive emotion. The combination of these simple three stage processes will help us to think through the various customer delight experiences that we can design.

Another tool that Deepa spoke about and is quite helpful is an Empathy Map. It is a 2×2 matrix to understand the journey of a customer. Four questions need to be asked.

1) What do customers say about your product,

2) What do they do while experiencing your product,

3) What are they thinking while they use the service and

4) How do they feel over all.

This is an experiment which should be done periodically with various sets of customers which can make each member of the team sensitive to the customer journey. An interesting point learnt is that every time we have an insight on one of the four touch points — Say, do, think and feel , we could use this as a starting point. For example, while booking a flight online, how is the customer journey when they first login, are they looking for the cheapest price if so what do they say about that experience, what do they think while looking for the cheapest price (will they get the cheapest price on this website and will the price change later) and what do they feel (lets pay it by it before it changes).

By following some basic templates we can rethink our products and imagine the customer journey in a manner that we could live it on a daily basis. The love / empathy towards our customers, which results in benefits for the customer and eventually helps in designing the WOW (delight) moments are what makes a lasting impact and creates a bond between the brand and the customers.

Hence, design is one of the main pillars of building a successful product and I hope we all can make design an integral part of the organization. Our thinking should bring compassion and love to customers through Design.

Thank you Deepa and Rajan for wonderful session on Design thinking

Deepa is a design and product leader who most recently worked at Intuit as the Director of Design and Product Management. Deepa’s passion is to transform customers’ lives by creating products that solve their biggest unmet needs.

Deepa has 20 years of experience in the Tech industry where she has played a variety of roles across Product Development, Experience Design, Product Management and General Manager. Deepa’s experience has given her expertise in creating and taking global products for both emerging markets as well as developed markets across multiple domains.
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What is Design (Iteration 1)

Iteration1
What is Design (Iteration 2)

Iteration2

What is Design (Iteration 3)

Iteration3

What is design iteration4 ?

Iteration4

Team-Designthinking

Guest post by Gaurang Sanghvi

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Innofest in Jaipur.

Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.
William Pollard

And that is the change that we are looking driving as part of Innofest. Innofest recently held as part of Rajasthan IT Day in Jaipur saw 3000 people visiting about 15 stalls including the Honourable Chief Minister of Rajasthan Sri.Vasundara Raje.
Innofest1-jaipur

As part of this we had some grassroot level innovations on display including Makersbox setting up a pop-up Makerspace. A mini makers area…

 

Gesture Hardware workshop by Balaji Lakshmanan who runs imakerobots saw very disciplined younsters taking their seats in time for the sessions with their laptops ready to code..His self balancing minibot created a riot running around and making friends with other robots.

Some of them got to build their first robots… using just the following, Styrofoam Cup, a Motor, A Fan, Some Wires, and a bit of Jugaad, spreading the message that everyone can innovate and build.

Workshop on  Open Source Hardware 101 – What is an Arduino, What is a Raspberry Pi – how do they work, can I build something, let’s build a sensor that reacts to sound, to light, to plays music.

And workshops on

3d Printing 101  – What is 3D Printing, what can 3D Printing do – can I 3d Print, what all can I make with it. Experience 3D Printing, and take home your first 3D Printed accessory

Must say were very well received with people, students especially queuing up to take part and waiting patiently for the classes to begin.

Innofest2-jaipur

3d printers built by Aha3d printers their own prototype was on display and gliders, on road vehicles, drones that were not flying but so that people can see and experience the same.

We have heard of vending machines which dispenses cola, but ever heard or seen of vending machines that can dispense papers and files which is very much needed for college students. Ankit and his band of college students did just that and hoping refining the product going forward.

Jaipur Belt which supports the back for long working hours of construction workers was also on display. Jewelry that can keep the track your loved ones safe was also on display. Content Kiosk that can be displayed offline especially in areas with no internet and chairs that can be put together by even a child was on display.

Innofest will come to a city near you.. If you are running a makerspace, or built an innovative product or know of someone who has built an innovative product.

Reach out to me at

@inno_fest

@parthibhasastry

Or just apply at

http://innofest.incubatehub.com/#incubator

Follow our community on Facebook

https://www.facebook.com/Innofest.in/

 

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Every Product Needs A Good Teardown

(originally posted here)

Last Saturday in Chennai at the SaaSx3 I had the privilege of participating in my first “Product Teardown”

A Product Teardown, “or simply teardown, is the act of disassembling a product, such as a television set, to identify its component parts, chip & system functionality” – Wiki

In the context of the teardown of my company, Hummingbill, a Software as a Service (SaaS), it involved a deep dive into the company’s Idea, Discovery Process, Landing Page, Sign Up, and its “Wow” experience.

Prouct-Teardown-1024x576

(image courtesy of Suresh Sambandam of Kissflow)

But before getting into the details of the teardown I want to make mention of the audience in front of whom I presented, and the panelists who judged me. This teardown event was among several sessions during this year’s SaaSx – a conference cum meet up of India’s best-in-class SaaS founders, among whom in the audience were Girish Mathrubootham, founder of FreshDesk, Avlesh Singh, founder of WebEngage, and Pallav Nadhani, founder of FusionCharts. And as impressive as the audience was, so too were the group of panelists critiquing my company. They were, Shekhar Kirani, partner at Accel Partners India, Suresh Sambandam, founder of Kissflow, and Bharat Balasubramanian, director of Design at Freshdesk. The entire experience was an honor, to say the least.

So! how did it all go down?

The panelists had me up on stage with a projector showing our website, and we started with Shekhar and Suresh who was requested a description of the Idea of Hummingbill, which included a snapshot of the problem, solution, and our characteristic customer and user.

Our Idea:

(bear with my plug!) Hummingbill is a Gmail plugin that automates accounts receivable management for organizations that track hundreds of unpaid invoices from hundreds of customers. Our characteristic clients are SaaS and advertising companies. Currently, these companies use QuickBooks Online, Tally and Zoho to manage their invoices, but the problem is that these softwares make invoices inaccessible to those who need them most – sales reps and account managers who are among many things also responsible for payment collection. Today, the only window accounts and sales staff have into Accounts Receivable is a manually generated, manually distributed weekly aging report sent from the finance team.

Second, we discussed the Discovery process of Hummingbill:

or how businesses find us on the web. Because Hummingbill is more of a direct sales organization at-the-moment, we were let off-the-hook on this one, but for any disciplined SaaS company, they must be extremely conscientious of the “keywords” they use on their website to make their website more likely to be found by their target customer on Google. This is called Search Engine Optimization. By identifying those keywords – e.g. “Invoice Management” and “Accounts Receivable” – and carefully placing those keywords into their website, businesses can improve their performance ranking on Google which allows them to be more easily found by their target customers.For an example of a highly search-engine-optimized website, have a look at Hiver. They are one of my favorite examples of a company that carefully updates its website over and over again to improve its performance for specific keywords within its category.

Then, after discussing discovery, Bharat critiqued us on the Design of our website

A lot of learning happened here. Some of the key takeaways were:

  1. If you have big customers like we do, put them up at the top of your webpage. This helps build trust in your product.
  2. Use the most accurate language possible on your landing page for your target users. Don’t be generic. During the event, the title on our landing page was “Get Paid Faster” – Suresh pointed out that this title  would be an empty statement for our target users, CFOs and Heads of Finance. Instead we should use more accurate language like “Reduce Days Sales Outstanding”.
  3. Add a second Sign-up button at the bottom of your landing page. This makes it easier for people to sign-up for your product .. .which is just good for everyone.

After the Design step, Bharat walked us through the Sign-Up process

or onboarding experience of Hummingbill. This step is where new users enter in their contact information and preferences, and then are guided through the software product.  If you’re not familiar with SaaS, then you should know that this step is the first impression customers have of your product, so it can “make or break” a business. It’s the reason why, for example I didn’t use Ola cabs, a very popular taxi service in India, for a whole year – I found their sign-up process clunky and time consuming, so I immediately switched to their competitor taxi service. And similarly to how I fell-off of Ola, SaaS founders need to be conscientious of their target customers’ patience, less they lose them at the first step to using their product. Building a fluid and intuitive sign-up process takes significant discipline to decide which information to collect from users now vs. later, and which features of the product to show now vs. later.  For inspiration on great onboarding experience, check out UserOnboard.com to see examples of how some of the best tech companies in the world  sign-up their users.

And last but not least, the product teardown ended with the functional Wow of Hummingbill. The functional Wow is simply the moment when users experience the 1 or 2 features of your product that fulfill the value they were seeking and found on your website. This is where products can close the deal and why it’s important for companies to get to that functional Wow delivered as quickly as possible. For example, if a company has a CRM product, then the functional Wow would be something like guiding the new user to creating a “prospect” customer in their sales pipeline, enter in the prospect’s details, and then move the prospect to becoming a “lead” in the CRM. For Hummingbill, we like to Wow users during onboarding by getting them to: 

1. Generate an Invoice 

2. Track the invoice in Accounts Receivable

3. Receive an email aging report

This functional Wow helps confirm to the users why they signed-up for your product. Seeing is believing, so the best practice here is to show your users the functional Wow ASAP

All-in-all the Product Teardown was an excellent learning experience for my team and I

As a public forum, it forced me to look more carefully at Hummingbill through the eyes of my target customer. Because SaaS is very much a numbers game – about driving as much traffic to your website, then trying to convert as many visitors to becoming users of your product, then trying to convert those free users to becoming paid users – SaaS is all about constantly iterating your website and customer onboarding experience to improve those conversions. Do teardown your product yourself. Though it’s an exhausting process, do it with a potential-user who can be honest with you and give their feedback in real time as they visit your website, sign up, and try your product for the first time. Best of luck in this process and keep doing it because it’s the only way for early stage companies, apart from marketing, to ensure they will have a constant growth of new users.

– Adam

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Rajasthan – The Next IT & Startup Hub of India

Enabling Startups to apply for Govt. Projects

Over the past few years, the startup ecosystem has witnessed exponential growth within the country, with a positive impact on the startup framework as well as the economy. Information and communication technology (ICT) has profoundly changed almost all aspects of society. It is now central to how people communicate, interact, make decisions and do business. This includes the way governments operate and deliver services, and startups providing out of the box approach to utilizing Information Technology.

We, with the vision to achieve Good Governance and facilitate inclusive growth, harnessing ICT and evolving eGovernance with improvement in services, bridging the digital divide and evolving Digital Rajasthan, are committed to provide efficient, reliable and transparent government to help startups and grow IT/ITeS, ESDM and Robotics in Rajasthan.

Rajasthan_ITstartupRajasthan intends to play a pivotal role in various dimensions of the startup ecosystem, with the main focus on promotion of Startups and making Rajasthan the Startup, Incubation and Entrepreneurship hub of North India. We, through Rajasthan IT Day on March 21, 2016 forged the inception of a new era for making Rajasthan a platform and destination for Information Technology in India.

Rajasthan is aggressively moving on the path of being the IT Hub of India – ensuring an environment which is dynamic, supportive and reliable for development of IT as a sector.

We are creating IT standards and benchmarks on three pillars – Confidentiality, Integrity and Availability.

Rajasthan has proved to be the trendsetter in eGovernance initiatives, ensuring the maximum ease to residents till the last mile in connecting with the Government as well as getting benefits at their doorstep.

We are the first state in the country to have implemented an integrated and unified eGovernance Framework, ensuring a world class coherent environment of integrated platforms – maximizing utilization and minimizing investment for betterment of eGovernance initiatives in the state.

We are moving aggressively towards making Rajasthan the dream destination of IT investment and promotion in India and SAARC. We are committed to translating our vision into reality, utilizing initiatives like Digital India, Smart City, Smart Grids etc. along with the finer points of Governance – citizen centricity, service orientation and transparency.

We expect the IT Sector and Startups to assist, advise and partner with us in this journey towards achieving the Technology vision with seamless integration between departments and optimal investment encouraging innovation.

The formidable and enlightening support of IT industry shall act as a catalyst for our mission of bringing Information Technology achieve new heights in Rajasthan with an absolutely dynamic IT environment.

At the IT Day, our diverse and dynamic group of speakers and panelists provided in-depth insight, as well as, actionable and practical tools of engagement models, methods and mechanisms (3Ms); and were able to share how the 3Ms could be utilized to promote the IT sector in Rajasthan to become more effective in the on-going efforts of Government of Rajasthan in the sector.

With the aim to fulfil the commitment of promoting startups in Rajasthan, Be Startup – Rajasthan program is envisaged to be initiated by Department of Information Technology & Communication and RajCOMP Info Services Limited, which will ensure providing a platform for Startups in Rajasthan to showcase their skillset and talent, and give ample opportunity to get associated in eGovernance projects benefitting not just themselves, but also the state in the lager perspective.

To further our effort, Government of Rajasthan is initiating the “Be Startup – Empanelment Platform” providing enormous opportunity for the IT Startups to get engaged and work for the Government, getting experience as well as boost to grow. The details for the same are available at our Startup Promotion Platform website: http://itstartup.rajasthan.gov.in RISL envisages obtaining inputs and feedback on the draft RFP for the said empanelment from Startups and Entrepreneurs who intend to get engaged with RISL for its projects.

You are requested to provide your inputs/feedback on [email protected] by April 15, 2016. The same would be evaluated and considered with the final document pertaining to the empanelment.

I urge the IT industry to rise, participate and support whole heartedly to this endeavour of promoting Digital Rajasthan. I assure of our commitment to bring about this evolution in Rajasthan.

Akhil Arora, Secretary & Commissioner, Information Technology & Communication, Government of Rajasthan

Message from the iSPIRT Policy Team:
“We would like the Software Product Companies to share their view on the above RFP process which should enable buying from Product Startups. Please do also feel free to reach out to [email protected] for any comments/thoughts which you may have on the above.”

 

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How to scale your startup successfully and make it Virat !

An iSPIRT Playbook round table

Virat-KohliSo India won against Pakistan in the world cup match….again. I’m sure none of you would have missed it for the world. As you watched every ball with your heart in the mouth, you would have noticed some players performed while others faltered. But in the midst of it, one man stood tall. Virat Kohli, once again proved that he can perform in the toughest of conditions against the best of teams. So what makes Virat Kohli click where other great batsmen stumble ?

Similarly, you see some startups stagnate while others scale consistently. Is there any method to this madness ?

Successful startups who scale are ones who continuously try to improvise, holding on to their strenghts while improving their weaknesses. They build a process driven organisation fixing bottlenecks as they grow. Virat Kohli also worked hard to improve as a batsman, mastering his weakness against the short ball, and learning new strokes even though he was successful without them. Every player starts his international journey with a few apparent flaws. While some work diligently to remove them, others work around them. Then there are those who become victims of their own flaws before they can eliminate them. Similarly, startups who take early success for granted, fall and ultimately perish.

So how do I successfully scale my startup ? When do I know that I’m ready to scale ? Which countries and verticals do I expand?

Should I grow organically or inorganically ? Is enterprise selling important ? How do I build a successful sales team with predictable pipeline ? How does channel sales work? All this many such pertinent questions must be bothering you when think of scaling your startup !

This is why a bunch of successful startup founders met to discuss and understand the process to scale. The 63rd iSPIRT round table on “Scaling Revenues” was led by Aneesh Reddy, CEO Capillary technologies on 13th March, 2106 at Knowlarity, Cybercity office. Ambarish Gupta CEO Knowlarity was the host and also a participant. I was fortunate to participate as an iSPIRT volunteer and met some of the great startup founders there.

RT-Atendees

The list of attendees are as mentioned below:

  1. Ajay Chauhan @salezshark.com
  2. Anand Krushnan @exclusife.com
  3. Aniruddh Jain @salespatron.com,
  4. Bishal Lachhiramka @drishti-soft.com,
  5. Dinesh Gupta @busy.in,
  6. Sachin Bhatia @drishti-soft.com,
  7. Sakshi @posist.com,
  8. Vishal Bansal  @zenatix.com,
  9. Tushar Bhatia @empxtrack.com,
  10. Kushal @fareye.in,
  11. Subrat Kar @vidooly.com,
  12. Samit Arora @salespanda.com,
  13. Rajat Harlalka @iSPIRT volunteer
  14. Ketan @Mettl

RT leader Aneesh Reddy@capillerytech.com

Host &  Ambarish Gupta @knowlarity.com

Lets look at some of the key points discussed in the round table on “Scaling Revenues”

One of the first fundamentals you want to know is that when do you know you are ready to scale ?

Every startup goes through establishing its niche or the product market fit, wherein you get your first 100 paying customers who are not your family and friends. These are customers who know that you are addressing their painpoint and yours is not just a good to have solution. It is very important to ensure you get it right else all your scaling efforts will be futile. Like ‘Steven Covey ‘ in his book 7 habits of highly effective people says “ If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place – faster.”

Now that you are ready to run, faster than the fastest, which market do you expand. India being an easy access, most SaaS founders start with India unless they have a cofounder in US or some associates. So is India the right market to start with ? There are multiple schools of thoughts here. Like Ambarish from knowlarity mentined that they built the company with clients from India and scaled it to a level where their core sales team and processes were established. The initial days of scaling are tough so if you have good acess to clients it can be really useful. Knowlarity then expanded to similar geo’s like Phillipines, Singapore and Malaysia which are english speaking and have similar business culture like India and other ASEAN countries.

Others like Aneesh from Capillary, Tushar Bhatia from Empxtrack and Sachin Bhatia from InsideSalesBox, prefered pitching to US clients first as they see a higher demand and buying maturity in clients there. One of the common observation the group had was that in US you will see only genuine prospects engaging with you so while the pipeline might take time to build, the conversions are better if the value proposition is right. Indian and ASEAN clients are more open to discussion with longer cycle times and lower conversions. Beyond the ASEAN and US, Sachin Bhatia also shared his experience of selling to African clients. He having travelled to 34 countries is quite qualified to write a book on this subject…May be “Selling SaaS to Nomads” or something around it J

Another interesting aspect of selling to US clients came up from Abhinav from Innovacer (watch out, innovacer might be the next mu-sigma in the making ! ) who have mastered the art of leveraging US based events to build a pipeline. Abhinav shared how they build an US events calendar and take up nominal booths there to meet larger base of prospects there. Its well planned and meetings are lined up with delegates much in advance. Event particpation helps in spending time with prospects away from office workload wherein the clients are also in a frame of mind to evaluate options. But you need to ensure, enough homework is done and meetings are planned in advance. Sachin Bhatia also shared similar experiences and vouched for importance of event participation to reach US clients.

The next question was the importance of enterprise sales and larger deals. How do you increase your average deal size and sell higher to enterprise clients?

Lets admit it. Everyone likes enterprise clients. They have the apetite to invest big and also act as a testimony for your product to scale. Aneesh shared his experience around selling to enterprise customers. The deal ticket size can be increased in multiple ways . First – you scale horizontally ie you can upsell and cross-sell. Which means you need to build multiple product modules which can be sold to same clients over the years increasing the account revenue. Next you can scale vertically by intially selling to a pilot base and then expanding into the account. For eg you can sell it to 10 retail outlets and then expand to 200 later or sell to one office and then expand to other locations. Enterprise selling needs you to have the scale or options built into your value proposition. Build new complimentary offerings every year.

RT-attendees2Channel Management was the another crucial aspect discussed. Dinesh Gupta of Busy software(www.busy.in) led the discussion. Busy competes with Tally as a market leader. They built and scaled a product in a market where tally is a houseold name amongst Chartered accountants their key evangelists. Couple of important points amonst many pointed by Dinesh are here. Firstly, Identify partners for whom your product and revenue are substantial part of their business. In other workds they need to have their skin in the game. Otherwise you’ll end up having a lot of channel partners but no sales. The other important aspect of channel sales is to educate the partners. Education helps twofold. It creates a buy-in amonst the partners who can then sell better. Plus it helps them put the value proposition better in front of their customers. The group also discussed channel margins and how much to pay. While it was a long discussion, the crux of it was that you should pay partners well , may be more in initial days to get a foothold in new markets. It has to be enough of a motivation for them to sell. Subrat Krar from Vidooly also shared his experience on how they are leveraging marketing agencies as channel partners to expand their video analytics software.

The team also spent some time discussion the sales team structure, hiring VP of Sales and how to build a scalable predicable pipeline. From what I gathered, it seemed that setting up an inside sales team is no brainer. It’s a must have. How to ensure it delivers is a larger discussion for which you might want to talk to an expert amounst people above who have scaled or to Sachin bhatia who has a product in the same space. But to build a sustainable pipelines, you need to also put the right metrics in place for the sales team. Eg the inside sales team should be measured on fixed demos, the sales team on closures. Few participants discussed sales quotas for sellers ranging from 1:4 to 1:10 of the CTC. Tushar from Empxtrax and Ketan from Mettl also shared their insights and metrics on hiring costs and metrics.

Depending on the product and brand pull it may vary. Ultimately it should not be so much of stretch for the seller that he does not even feel like trying nor it should be so easy for him that he does not get the aldrelin rush while closing a deal. You need to find your sweet balance.

RT-atendees3Premium/Free Trial vs no pricing mentioned on website was another aspect discussed. Different people have different models but largely the group agreed that most are moving away from freemium and those targeting enterprise do not prefer to display the price on the site at all as it varies by scale and need of clients.

Aneesh also shared his views and experience on attaining inorganic growth. Capillery having recently acquired MartJack, an esablished online ecommerce software company was best placed to answer it. Aneesh mentioned that any new startup takes 1.5 to 2 years to establish their product market fit and then to scale to a level where they are ready for enterprise sales. If you want to continuously increase your client revenue share and grow the market, inorganic acquisitions help you in cutting the time to the market. This then helps you focus on other aspects of scale.

Overall another wonderful round table by iSPIRT. Need to thank our man Avinash for arranging the round table. He is like Tendulkar, silently but strongly delivers what his fans wantJ. Special thanks to Ambarish for hosting us at Knowlarity and for his insights into scaling startups. Finally, many thanks to Aneesh and Anant from Capillery for leading such an interative round table and sharing deep insights from their business.

Okay, enough of insights and tips. Lets get down to basics. What do you think is India’s chance to win this T20 world cup ? Fine, we lost to New Zealand in Nagpur but the same thing happened in 2011 (when India lost to South Africa in Nagpur) and we went on to the win the World Cup. We are now on a high after beating Pakistan. As Pakistani team would say “Goli se daar nahi lagta sahab, Kohli se lagta hain (Pakistan don’t fear bullets, they fear Kohli)” (courtesy Sehwag commentary)

But you guys have nothing to fear. Take the leap of faith as you step forward to take your startups to new heights.

Take your wings and set on to fly

You might stumble but that’s only when you try

Don’t just give up if you face a few bump

Coz harder the conflict the more glorious is the triump

Happy Scaling guys ! And India will surely Win the T20 World Cup !

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BPO Talent To Be Groomed For Inside Sales In SaaS India

With ongoing expeditious advancements in communication, social media, cloud, mobility and related technologies – sales is on a continuous path for digital transformation. This is going to place inside sales teams at a strategic position in sales and marketing process, in terms of significance. A shift is being observed from field sales model to inside sales model which is attracting field sales guys towards inside sales jobs. Therefore, the Inside Sales industry is moving towards a revolution worldwide.

Inside Sales Teams to Play a Greater Role in Sales

Inside sales is quite strategic to India’s GDP growth. Indian BPO industry alone contributes 1% of India’s GDP where professionals are majorly involved in B2C processes including inside sales. IT/ITES and software companies have been early adopters of Inside Sales process for B2B leads generation. With digital sales transformation happening for the digitally dependent buyers, the inside sales teams are going to play a greater role in sales process, as more tasks of the marketing and field sales teams have come under the scope of Inside Sales teams.

SaaS India – Early Adopters of Inside Sales Technology

SaaS, Technology and Professional Services companies in the western world are the first ones to acknowledge a digitally connected buyer by adopting Inside Sales Technology. The traditional businesses like manufacturing companies in US are exploring how Inside Sales tech may add value to their sales process.

However, in the Indian market, mainly SaaS industry is at the forefront on trying their hands on advanced Inside Sales Technology for accelerated sales. The others in the technology industry are going to follow this trend in near future in India. Traditional industries are going to take some time to change their sales processes as their buyers are slowly becoming internet savvy for business purchases.

Inside Sales to Play Significant Role in SaaS India

As per Google Accel SaaS Report 2016 – SaaS India is expected to grow to $50 billion in next 10 years while Indian SMB SaaS is expected to rise from current $600 million to $10 billion in the said period.

SaaS_projection.png

Source: Google Accel Report – SaaS India, Global SMB Market, $50B in 2025

SaaS industry has a strong need for inside sales professionals. As per the report, strong workforce in the BPO sector gives access to talent pool of around 6,20,000 Inside Sales professionals, out of which 1,20,000 are inside sales ready and 5,00,000 are skill ready.

Workforce-1.png

Source: Google Accel Report – SaaS India, Global SMB Market, $50B in 2025

I personally believe that 6,20,000 from the BPO sector, who are assessed as ready for SaaS as per report, need to be groomed for making them sales skill ready as only telecalling skills don’t make a professional acceptable for Sales Development Rep’s role in SaaS Sales.

Inside Sales Talent – A Key Challenge for SaaS India  

SDRs are expected to understand the Sales Processes. They should have the knack of using Inside Sales Tools like Social Media, Email, Phone, CRM and other smart selling tools. The working environment of B2B Inside Sales teams is significantly different from BPO scenario, where the reps are much more controlled, the jobs are temporary, the performance metrics are more around calls numbers and talk time, the customer engagements are very short lived, and end consumers are served with products & services.

This vast difference would require a complete psychological shift in the skills of a BPO professional who aspires to work in the SaaS sales space. They would need to be trained on Inside Sales function from scratch to be helpful, empathetic, B2B marketing and sales process oriented, B2B product/services domain expert, and digital sales intensive to successfully become an SDR. SDR will progress to become an account executive with quota around end closures and finally managing SDRs.

Aspirants looking to fill Inside Sales Talent Gap

There is a need to align the professionals by training for B2B Inside Sales function to serve the evolving SaaS industry in India.

I am associated with AA-ISP, American Association of Inside Sales Professionals as the President for India Chapter. The mission of AA-ISP is to advance the profession of Inside Sales. AA-ISP Gurgaon and Noida Chapter is supported by Inside Sales Box to create an ecosystem for Inside Sales professionals for businesses.

If you are a BPO/ Inside Sales/ Marketing and Sales professional or a Technology Entrepreneur, who is aspiring to stay abreast with best IS practices, discover digital sales tools & technologies, and explore jobs and business opportunities locally and globally – I welcome you to be a part of AA-ISP India.

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Digital India: What Is eSigning & How It Works

Digitising India is the only sure-shot way to reach the benefit of growth to India’s masses and that then will create the multiplier to ensure the target 8 to 10% sustained GDP growth… [Digital India is] certainly the most appropriate call for transforming India into a vibrant and strong global economy.

– Pramod Saxena, Chairman & MD, Oxigen Services.

And we agree. Digital India has the potential to become one of the most meaningful reforms for Indian businesses in recent history.

As we’ve mentioned in the past, India can fulfill the promise of reaching a double-digit growth for businesses in the near future. But, as the Doing Business reports keep not-so-subtly pointing out, our infrastructure moves like a burdened elephant, rather than a ferocious tiger.

If we want to compete with the swift eagle (U.S) & the nimble dragon (China),we need to adopt tech-savvy practices which help us speed up business in every way – like digital signature certificates to attest the soft copies of documents & invoices. Yet, for many business owners, such practices are either too time-consuming to implement, or have little accessible information about their benefits for them to be understood well.

This is where Digital India can help. Last time, we had a chat about the DigiLocker service, and its possible benefits to Indian SMBs.

This next service which we address today birthed from a realization that digitally signing documents is an important basic amenity in the 21st century. But, it can’t be scaled if the plan calls for a billion people to be provided their own USB pen drive – which is what was required with the Digital Security Certificate system.

This week, let’s talk about eSigning.

This article will answer the following questions:

  • How does eSigning work?
  • How does it differ from regular Digital Security Certificates (DSCs)?

We will continue our conversation on how this impacts businesses in India in the next article of this week.

What Is eSigning?

Before we get into the ‘how’, we need to clear the ‘what’. And no – eSigning is not the same as getting a digital signature from a government-approved authority.

An eSign is an electronic signature which requires no prior paperwork, as long as you’re a registered Aadhar user. It can be instantly applied for, and approved for, a single-use validity of half an hour.

This differs from an issued long-term Digital Signature Certificate,which has a validity of one to three years, and is usually carried around in a dedicated USB device.

If you’re a user of eSign, this is how the process will seem to you:

  • You sit at a regular computer terminal, or a specific one installed by the service provider if you want to provide biometric data.
  • You verify your biometrics through the hardware installed by the provider, or through a One-Time Password (OTP).
  • You instantly receive a single-use eSignature to affix to whichever document you wish, as long as you use it within the next half an hour.
  • That’s it. You’re done. No, we’re not kidding.

Unlike the usual use of the term ‘eSigning’, however, the eSignature services launched under the Digital India campaign do not refer to a traced, handwritten signature on a digital screen or pad.

Instead, these eSignatures are highly regulated, legally binding, valid identity proxies which are issued only after the confirmation of biometric data such as fingerprints or iris scans, or through OTPs sent to the mobile number registered to the user’s Aadhar card.

Of course, there’s a lot more which goes on behind the scenes.

How eSigning Works

The biggest advantage of eSigning as a technological tool is that it’s absurdly simple to use for the end-consumer. However, since it’s a highly regulated service, the behind-the-scenes machinations are significantly more complex.

In the beginning, the architecture of the system is heavily derived from the Application Service Provider (ASP) which is choosing to provide this service to its users. One example of such a service is eMudhra’s emLocker service, which is currently allowing its users to eSign their documents. Another is the Indian government’s DigiLocker.

When a user accesses the eSignature service, the ASP creates the application interface – which acts like an application form. This API is used to access a partner eSign Service Provider (ESP), which is a government-approved entity that is registered as an eKYC authentication user under the UIDAI.

When this connection is established, the user provides an authentication of their identity based on the information saved under their Aadhar profile – either through fingerprint or iris scans, or through an OTP verification code sent to the mobile registered to their Aadhar. As soon as this information matches the saved KYC information in the Indian government’s database, a Certifying Authority – another government-regulated and approved entity –issues a temporary Digital Signature Certificate (DSC). In cases of entities like eMudhra, the Certifying Authority may also be an ESP.

A key pair is generated for that DSC, and an audit trail containing the authentication response and timestamp are created. The ASP finally receives the eSignature from the ESP, which can then be attached to the document. Once received, the user can now fix the signature to the document, and the key is then automatically destroyed after a one-time use.

What Does This Mean For The Future? In Closing

What this means for the future, Ladies & Gentlemen, is rather simple. Imagine a future India where the small-time farmer can self-attest documents online to receive faster access to government services and programs, or where his buyers sign and return invoices online to speed up his receivables due.

Imagine a future where, instead of having to attest twenty copies in thirty different departments when setting up a business, small-time entrepreneurs can simply save their documents on DigiLocker and attest them using eSign services – thus saving them days’ worth of physically running around, eventually helping them set up faster.

Imagine a future where a mistyped document submitted for a business visa would no longer require another appointment and a day at the relevant authorities. Instead, you self-attest the correct document online and send them a link.

Or an India where eInvoicing becomes the norm, like so many developed and developing countries in the world. Psst, by the way, eInvoicing can help cut as many as five days from the invoicing process, and so get you paid much faster. But more on that later.

Getting back to the point, that India isn’t so far ahead in the future. In fact, with eSigning and Digital Locker integration within services such as emLocker and DigiLocker, that India is already at our doorstep.

But then, we are but one voice. How helpful do you believe eSigning to be in the larger picture? Let us know in the comments section below.

with Inputs from Aniket Saksena 

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SaaSx3 2016: Sun. Water. Sands and Conversations!

You work hard all year long to ensure your businesses become successful or stay successful, but everyone needs a break to relax and reflect. Don’t feel guilty about heading to the beach this summer. It’s that time of the year when the league of the eXtraordinary SaaS hackers meet. Yes, you read it right! SaaSx3 is here in Chennai once again.

SaaSx has been making waves every year and this time, it’s by the bay, on the 2nd april 2016 at Ideal Beach Resort, Chennai. Who says you can’t have focussed discussions in a session that takes place under the open sky? There is something ethereal about the waves of the sea. I believe, that there’s no other perfect environment for learning, deep contemplation and a chilled-out time with the leading thinkers of the Indian startup ecosystem.

 

In its 3rd year, SaaSx3 is a lively mix of startup founders and  entrepreneurs from all over India coming together to celebrate entrepreneurship. This brainchild of iSPIRT is a steadily growing movement, that aims to facilitate a community for Indian entrepreneurs to nurture great relationships.

This year, SaaSx3 assembly is impressive. With a tightly curated guest-list, it’s one great opportunity to:

Be mentored by proven leaders from the startup ecosystem
Discuss and share  what’s hot in SaaS market
Exchange ideas with peers
And of course! networking too!  I can’t wait to experience the unconference vibe –just a perfect way to loosen up relax and learn.

They say, each wave is different, and so is every entrepreneur’s experience. To become a great surfer, one does not have to wait to ride the perfect wave. Don’t keep yourselves at bay,  save the dates . Meet you at SaaSx3 to  listen to those adventurous tales of incredible startups!

 

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Nuts & Bolts of Marketing & Selling in US for First Timers: A crash course playbook!!

After releasing recently SoftALM and SoftAgile (Agile Project & ALM Tools), we at JamBuster were trying to decide on how to sell these tools in US.  We had sold software services in US earlier, but selling software product to US from India is new to us. So we were looking for some help!

They say- we start seeing things, when we start looking for them.  I noticed an email from Avinash Raghava, the co-founder of iSPIRT Foundation, about a PlayBook on Nuts & Bolts of Marketing & Selling in US for First Timers, in Hyderabad on 27th February. It was to be led by Suresh Sambandam of KiSSFLOW.

Playbook Roundtables are the small, intimate and intense experiential learning sessions that iSPIRT have pioneered.  Suresh is a iSPIRT maven, meaning trusted expert who pass knowledge to others in a pay-forward model. Suresh is a kind of celebrity in selling products or productize services in US from India! He led KiSSFLOW to have more than 10,000+ customers across the globe, in less than 3.5 years. That is absolutely phenomenal success in SaaS world, doing it from India!

Looking at these credentials, I registered for the event and got a quick reply from Chaitanya Chokkareddy of Ozonetel.  Ozonetel was to host the event. Ozonetel offers CloudAgent -a Cloud Call Center Solution that was already successful in India and was also starting on their US go-to-market strategy.  On Saturday morning I met with Vikas & Aditya from FirstHive, who have recently introduced a customer engagement SaaS offering.  I could see this was going to be informative.

Suresh’s presentation was logical, down to earth, like him. He started with timing or relevance of this phase (after Product-Market Fit), followed by knowing your customer through B2B Customers Characterization.  Next focus was on Product, inversion of selling model, freemium vs free trial, and the price.  This is then followed by digital marketing toolset, such as website, SEO, Adwords, Content writing and email marketing. Similarly, Suresh went through step by step in sales, founders and each and every aspect, as available on following presentation: https://www.slideshare.net/mobile/ProductNation/nuts-and-bolts-of-marketing-selling-saas-products-to-us-customers-from-india-for-first-timers

Few quick take aways:

  1. SaaS is a tough business, even when done correct.That is evidenced from the fact that 1st $1MM in revenues is almost impossible, while first $10MM is improbable, but if you do pass $10MM, then $50MM is almost inevitable. Hence the lure.
  2. SaaS models lends itself to simpler applications and focus is on
    SOHO / VSB  : no touch
    SMB & Midmarket : low touch
    Enterprise : high touch
  3. For SaaS, traditional model of marketing, sales and products gets inverted. The marketing’s job is to bring horse to pond, the product is the water and sales is understanding what the horse did with water.

I think the success of Playbook was in small size (8-12 companies), along with focus on making it relevant to your business.  While some topics may feel dry on slide, Suresh made them very interactive by first sharing his experience and then asking participants to chip in their experience.  Suresh used these chip-in opportunities for people to get honest feedback. He suggested to Sainath Gupta of AnythingAI to who go through Product Market Fit analysis for his offerings of AI Platform along with Data Science Team as service. In our case, SaaS turns out to be not a path for now, as our solution focuses on end-to-end Agile Application Development platform for teams of 25-2500.

An interesting contribution here comes from Avinash Raghava, who is walking encyclopedia of Indian Software Product ecosystem, its history.  He is focussed on making this even successful from back end, but during the event, he is the source of amazing information on who’s who, what and when!

While registering, I had asked for payment getaway, Chaitanya mentioned that it was a free event. He was surprised that someone from Pune was traveling to Hyderabad for essentially a six hours long workshop.  For me the timing of it and Suresh’s experience was an immense draw.  Turned out the open discussion with fellow product or productize services companies on their way to sell in US and Suresh guiding with refreshing openness really made it icing on the top.

Thank you Suresh for sharing the blue print, that took you 1-2 years to discover through sheer hard work. Thank you Avinash for the event and the fellow product entrepreneurs for such a debates. Thank you iSPIRIT for building this wonderful ecosystem!

I highly recommend all entrepreneurs, whether you are about to or already started or even successful selling in US to attend this and other Playbook Roundtable. I thought these 6 hours saved me at least 100 hours of discovery work. Even more importantly, it is making Indian Product Ecosystem come alive!!!

Guest post by Satish Kamat, Jambuster Technologies

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Reactions from #iSPIRT to the Union Budget presentation

iSPIRT is happy to note the Union Finance Minister, Mr. Arun Jaitley’s thrust in the direction of boosting the digital infrastructure in the country with specific reference to the Aadhar.

Aadhar powered by India Stack will allow people to offer presence less, cashless paperless service delivery to millions. Also digital literacy will also provide a big impetus in the rural areas.

The second initiative of iSPIRT which has been positively impacted by the Union budget is the ease of doing business in India and therefore the incentive for companies to Stay-In-India through the capital gains incentives where there will be no capital gains tax applicable if the funds so received are invested in a notified fund of funds by individuals in specific start-ups. The other major step is the decision to tax the Royalty Income from Patents developed and filed in India at only 10%, this we believe will certainly encourage companies to file more IPR in the country.

That said, we are disappointed with no attention being given to easing taxation norms of software companies where there is significant friction, the confusion on “goods” verses “service” tax on online downloads, TDS on sale of Software products and competition from foreign selling B2C products without any tax in India.

iSPIRT continues to work closely with the Government of India to enable the software product companies and start-ups to make the next leap with incentives from the Government. The Union Budget just presented is semi-sweet with specific sops being given to the start-up community in continuation of earlier policy announcements made by the Prime Minister Mr. Narendra Modi. There is a lot more that could be done to incentivize innovation and specifically ease the TDS conundrum which start-up and product companies find themselves adversely caught in.

Here are some specific comments from the iSPIRT team:

According to Mohandas Pai, Advisor, iSPIRT, “The Government continues to incentivize the start-up ecosystem as we have seen in the recent budget pronouncement. I am glad that the Government clearly recognizes that start-ups can be powerful problem solvers for the myriad issues facing the country and in turn generate employment as well. The Government’s decision to allow for 100% deduction of profits for 3 out of 5 years between April 2016 and March 2019 is certainly a welcome step that will boost start-ups.”

“While there are no major sops announced for the software product industry, the Government must understand that incentives to this segment of the industry will result in an exponential leap in exports and place India in an unshakable position on the world software product stage. That said, the decision to tax the Royalty Income from Patents developed and filed in India at only 10%  is a good move by the Government and will certainly encourage companies to develop and file more IPR in the country ,“ says Vishnu Dusad, Co-Founder & Governing Council member of iSPIRT & MD, Nucleus Software Exports Ltd.

Sharad Sharma Co-Founder & Governing Council member of iSPIRT says, “Start-ups in the country will certainly benefit from the budget announcement of amending the Companies Act to announce easier and swifter registration of companies. Another positive announcement from the budget speech by Mr. Arun Jaitley has been the focus on Aadhar for subsidy delivery. The Aadhar powered India stack from authentication to exection, coupled with the open API policy in India, can certainly transform the way in which digitally focused companies can reach the masses quicker and more effectively.”

Says Jay Pullur, Governing Council member of iSPIRT & CEO & Founder of Pramati Technologies.“The Government through the Union Budget has done well to do away with capital gains taxation if the funds so received are invested in a notified fund of funds or in specific start-ups. Of course, a lot more can be done to ease working norms for the software industry by looking into issues like dividends from overseas subsidiaries and a clearer and unambiguous definition of digital goods and digital services from a taxation point of view.”