Startup

George Varghese finds his calling in the cloud, builds a profitable IT company

Vishal Krishna
25th Feb 2017
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ET Marlabs has grown into a $3-million IT solutions business by implementing cloud-first strategies for small and medium businesses

George Varghese is not your average 40-something IT guy. He moonlights as a magician and an Ottamthullal — a traditional Kerala folk dance — artiste and performs with his troupe in many countries in his free time. He loves to read and is inspired when he reads autobiographies of great people. If all this weren't enough, he is an Art of Living teacher as well, loves motorcycling and runs half-marathons.

And while he does all this, he has also managed to build a $3-million IT solutions business by implementing Salesforce solutions. George's company, called ET Marlabs, is based in Bengaluru and began its journey as Extentor Solutions in 2012. It was founded to capture the growth of cloud-based solutions among Indian corporates.

“Cloud has essentially changed the industry by bringing a level of fairness and value like never before. The best software applications and products are now affordable even to small companies in a new commercial model, which is to pay as you use rather than incurring huge capital expenses,” says George, who is the MD of ET Marlabs.

George Varghese, MD of ET Marlabs

In the cloud, there is no need for physical version upgrades because the complexities (infrastructure, networks and hosting) of IT are abstracted. Businesses can focus on their core competencies and this helps IT departments focus on the business needs rather than technology challenges. Zoho, Freshdesk, Zendesk, Helpshift are some of the companies that are changing the way IT is delivered to small and medium businesses. However, Salesforce still remains the leader in cloud services, raking in $6.6 billion in revenues, a clear indication that cloud is here to stay and that it is slowly changing business models of IT services companies and corporations.

According to Gartner Inc., IT spending is steadily shifting from traditional IT offerings to cloud services (cloud shift). The aggregate amount of cloud shift in 2016 is estimated to reach $111 billion, increasing to $216 billion in 2020. Cloud shift rates are determined by comparing IT spending on cloud services with traditional non-cloud services such as business-process-as-a-service, infrastructure-as-a-service, platform-as-a-service and software-as-a-service.

"Cloud-first strategies are the foundation for staying relevant in a fast-paced world," says Ed Anderson, Research Vice President at Gartner Inc.

So it is here that ET Marlabs took its bet on India.

The beginning

After 23 years of working for IBM, Hitachi and Infosys, in regions like Japan and Australia, George quit corporate life in 2010. After taking a break for a year he decided to be back in the thick of action. He realised that although organisations wanted to move data faster and make it accessible to their sales teams across regions, they were unable to do so. So in early 2012 Extentor was born and the company signed up with Salesforce.com to implement its cloud solutions in India. The early sales cycles were long, as clients would implement solutions and then ask George about the value of the cloud. Says George,

“I firmly believe that the client is my only boss and everything I do revolves around that. At ET we consider a project complete only when the customer is smiling.”

This mindset caused losses in individual projects in the initial stages. But a turning point came when customers started seeing value in cloud-based projects, leading to more business and more references. The early business was built by delivering value at every stage of the work. George had invested his savings of Rs 1 crore to build the business and the company began to forge partnerships.

About two years later, a mid-size IT company, Marlabs, brought a minority stake in Extentor, and gave it access to global markets such as the US.

To refresh, implementation of the cloud means that an organisation works with a completely new IT system for its sales teams, and this is hosted in the cloud. The applications are accessed by the entire sales force across each region through any device, essentially equipping them to report to their area managers on the fly. As a result, the entire sales organisation works seamlessly.

“Sales team decisions are fast and integrated. ET Marlabs has helped us with predictive delivery,” says Sudhir Rao, CTO at Pearson India, which uses ET Marlabs for forecasting on-ground business.

ET Marlabs today has over 100 customers.

The business

The company is now on a growth path, with the likes of Flipkart, Cleartrip and Narayana Health as its clients. For companies that are looking to find a solution that can integrate thousands of sales members and dealerships, finding the right IT partner is imperative. ET Marlabs typically works with Indian mid-size businesses (Rs 100-1,000 crore) that are in no position to take business to the likes of Infosys and Wipro where the average contract size exceeds $10 million or Rs 70 crore. Besides, ET Marlabs, others that are pushing cloud applications include Zoho and Zendesk.

In the classic IT services business, revenue comes from billing clients for time spent on integration as well as for annual maintenance and delivery. Cloud-based business models typically generate margins up to 25 percent at a gross level.

According to George, cloud is about delivering value to businesses with IT rather than just capturing information like in legacy systems. ET Marlabs is poised to take Salesforce.com to several SMBs with a turnover of Rs 100-500 crore, which is where the opportunity lies. There are over 1,000 SMBs that are engaged in large-scale exports and have a large domestic business. They still work on legacy systems and will explore moving to cloud-based applications in the coming years.

ET Marlabs is a 105-member team and will continue to scale as its projects grow, informs George.

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