WATCH: Software company Subex's journey from the brink of disaster to targeting $100 million in revenue

When its losses were spiralling out of control, Bengaluru-based Subex decided to revamp operations to remain relevant in the digital world. Under CEO Vinod Kumar, it put the focus on IoT and security and has ushered in a new era of business support systems for telcos. Here’s how they did it.

In the digital world, the enemy is no longer at the gates. The enemy is inside devices, buildings, and systems, working to steadily bring down critical assets. Bengaluru-based Subex knows this, which is why it is focusing on the future of IoT security.

At a lab in an obscure location, Subex is trying to attract the internet’s worst scum. The lab has multiple ‘honey pots’ for ‘black hats’, hackers who break into secure networks to destroy, modify, or steal data, or to make networks unusable. These include hackers who steal information and work to destroy a nation dependent on a network to run their energy and water supply. Sasys Vinod Kumar, CEO of Subex:

“This lab is under lock and key at all times and is open only to a handful (of people) from Subex."

The company uses the knowledge gained from these honey pots by exposing home and industrial devices to millions of rogue bots to fight the enemy.

Vinod Kumar, CEO of Subex

The enemies are mostly black hats paid by State and non-State actors to bring down whole nations dependent on digital information. Attacks on India originate from Europe, China, Pakistan, the US and the Middle East.

So, how do the honey pots trap the hackers? Every time a bot contacts the black hat’s command and control centre, Subex is able to figure out the location of the attack and understand the kind of information the hackers are after. The hackers can’t trace the source of the honey pots because the IP addresses of the devices keep changing.

Also read: IoT in India: devices will soon run your life, at work or home

Honey-trapping hackers

The honey pots are part of Subex’s Horizon Two strategy, which is a year old and already has an order book of $5 million. At present, this service garners $1 million for the company annually.

After this success, Subex is readying to build next-generation products to fight cybercrime, which is sure to attack a world dependent on connected cars, offices, and homes.

Subex works in three segments. Horizon One, its old business, is still growing at 25 percent and comprises fraud analytics and revenue assurance for telecom companies. Horizon Two, which focuses on security analytics and IoT products, helps track and protect networks from cyberattacks.   

Over the last 12 months, the company has experimented with everything, from security and fintech to e-retail and telco services. These experiments, which include honey pots that gather information and protect devices with anomaly detection using AI, are part of Horizon Three.

The experiments have led to deals with an original equipment manufacturer (OEM) in the US for a connected car service, and for a connected oil and gas rig in Mexico. Subex also claims that one-fifth of the global telco traffic goes through it. Clearly, the company is well poised to touch $100 million, from its current turnover of $50 million, in three years under the management of Vinod Kumar, who took over as CEO in April 2018.

Subex, which set out to become a huge Indian product company in 1999, finally seems set to achieve its goal two decades later, without the founders and the funds that started this journey.

Watch Vinod talk about Subex's turnaround .

Also read: Why it's time for India's IoT startups to pick up the pace

A quick history

It is not easy for a company to reinvent itself in four phases over three decades, but Subex seems to have done it and is well on the road to recovery. It has, in many ways, learnt from startups.

In its first phase, 1992-1999, Subex was a trading company, selling telecom products. The technology journey began in 1999 when the company began to build fraud prevention and revenue assurance products for the telecom industry.

Between 1999 and 2008, it became one of the fastest growing product companies in India and had gone global, with revenues of $55 million. The founders of Subex, Subash Menon and Alex PJ, were celebrated in Indian entrepreneurial networks for building one of the fastest growing product companies out of India.

But an acquisition was all it took to shake the foundations of Subex. It acquired four companies starting 2004; in 2007, its fourth acquisition was a company called Syndesis, which was acquired in an all-cash deal worth $165 million, for which it had to leverage itself. Unfortunately, the acquisition coincided with a global stock markets collapse, and Subex could not pay up as its stock price nosedived from Rs 300 to under Rs 30 in a year.

By 2013, its debt had spiralled out of control to $165 million and the founders departed after they could not repair the damage. The company had to revamp operations and claw its way back. By 2015, it was completely run by management; by 2017, it was debt free.

Also read: Internet of Things (IoT): how to tap the $12 billion market in India

Taking inspiration from startups

“It’s a fresh start; it’s a lot of new ideas and I believe our experiments are paying off,” Vinod says.

He adds that their experiments in CrunchMetrics, an anomaly detection startup, incubated within the company, and the IoT business (an unnamed incubated startup) are going to add to a large part of the company’s revenues going forward. 

The legacy business, or managed services, which includes monitoring networks, and managing software patches, applications, and security levels, remains the bread and butter of Subex. All this comes under partner settlement, revenue assurance, and fraud prevention.

The CEO believes that with its IoT and connected devices-based security services, Subex will become a business leader in the future. “Digitising telcos is big business and our universe is as big as the 700 large telcos out there in the market,” Vinod says, adding that the strong points have been assuring customers that the company will deliver values and win with the customer’s transformation on their digital journey.

The company is now actively looking to partner and acquire startups. It has created a formal plan to scout for ideas that can carry it forward in the next wave of digitisation through IoT and security services.

It has been making clever partnerships in the IoT and M2M communications, and has signed up with Pod Group, which designs platforms for the connected world. Some of the platforms include billing, connectivity, and security services for IoT companies across a wide variety of sectors along with enterprises and operators for millions of devices globally. Pod Solutions reduces the complexity and accelerates the adoption of IoT applications.

The partnership with Subex will enable Pod Solutions to develop advanced security services, allowing customers to rapidly create, deploy, and bill mission-critical IoT solutions with maximum security and resilience. Alistair Elliott, CEO, Pod Solutions, says:

“Today, the security of IoT applications is one of the issues causing most concern and is one of the biggest barriers to IoT adoption. The Subex IoT solution, Subex Secure, allows us to scale towards providing the most cutting-edge security solutions to millions of IoT devices, providing us with a competitive advantage.”

The company will sell its products through telcos, system integrators (like Wipro and Infosys), OEMs (like Fujitsu and Honeywell), and resellers.

Subex believes its transformation is complete. Vinod, who has been with the company for 22 years, through the highs and lows, knows they have made the right moves. Perhaps it takes an insider with deep knowledge of the past, the present, and the future along with his young team to turn the tide. Now, all Subex needs to do is work at moving the needle on profitability and stock price.

Also read: 10 Indian IoT startups that we need to watch out for


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