The New York Times
Wednesday 31 October 2007
Adrianne Yamaki, a 32-year-old management consultant in New York, travels constantly and logs 80-hour workweeks. So to eke out more time for herself, she routinely farms out the administrative chores of her life - making travel arrangements, hair appointments and restaurant reservations and buying theater tickets - to a personal assistant service, in India.
Kenneth Tham, a high school sophomore in Arcadia, Calif., strives to improve his grades and scores on standardized tests. Most afternoons, he is tutored remotely by an instructor speaking to him on a voice-over-Internet headset while he sits at his personal computer going over lessons on the screen. The tutor is in India.
The Bangalore butler is the latest development in offshore outsourcing.
The first wave of slicing up services work and sending it abroad has been all about business operations. Computer programming, call centers, product design and back-office jobs like accounting and billing have to some degree migrated abroad, mainly to India. The Internet, of course, makes it possible, while lower wages in developing nations make outsourcing attractive to corporate America.
The second wave, according to some entrepreneurs, venture capitalists and offshoring veterans, will be the globalization of consumer services. People like Ms. Yamaki and Mr. Tham, they predict, are the early customers in a market that will one day include millions of households in the United States and other nations.
They foresee an array of potential services beyond tutoring and personal assistance like health and nutrition coaching, personal tax and legal advice, help with hobbies and cooking, learning new languages and skills and more. Such services, they say, will be offered for affordable monthly fees or piecework rates.
"Consumer services delivered globally should be a huge market," observed K. P. Balaraj, a managing director of the Indian arm of Sequoia Capital, a venture capital firm in Silicon Valley.
But globalization of consumer services faces daunting challenges, both economic and cultural. Offshore outsourcing for big business thrived partly because the jobs were often multimillion-dollar contracts and the work was repetitive. In economic terms, there were economies of scale so that the most efficient Indian offshore specialists could become multibillion-dollar companies like Infosys Technologies, Tata Consultancy Services and Wipro Technologies.
It is not all clear that similar economies of scale can be achieved in the consumer market, where the customers are individual households and services must be priced in tens or hundreds of dollars.
Then there are the matters of language, accent and cultural nuance that promise to hamper the communication and understanding needed to deliver personal services. Already, some American consumers voice frustrations in dealing with customer-service call centers in India. At the least, the spread of remotely delivered personal services will be a real test of globalization at the grass-roots level.
Even optimists acknowledge the obstacles. In a report this year, Evalueserve, a research firm, predicted that "person-to-person offshoring," both consumer services and services for small businesses, would grow rapidly, to more than $2 billion by 2015. Yet consumer services, in particular, are in a "nascent phase," said Alok Aggarwal, chairman of Evalueserve and a former I.B.M. researcher. "It's promising, but it's not clear yet that you can build sizable companies in this market."
Veterans of the business offshoring boom predict an emerging market, but most are not investing. Nandan M. Nilekani, co-chairman of Infosys, said there is "definitely an opportunity in the globalization of consumer services," and he listed several possibilities, even psychological counseling and religious confessionals. But, he added in an e-mail message, "This is just 'blue sky' thinking! We have no business interest at this point in this direction."
What the offshore consumer services industry needs, it seems, is a solid success story in some promising market.
A leading candidate to watch, according to analysts, is TutorVista, a tutoring service founded two years ago by Krishnan Ganesh, a 45-year-old Indian entrepreneur and a pioneer of offshore call centers.
Concerns about the quality of K-12 education in America and the increased emphasis on standardized tests is driving the tutoring business in general. Traditional classroom tutoring services like Kaplan and Sylvan are doing well and offer online features. And there are other remote services like Growing Stars, Tutor.com and SmarThinking.
Yet TutorVista, analysts say, is different in a number of ways. Other remote tutoring services generally offer hourly rates of $20 to $30 instead of the $40 to $60 hourly charges typical of on-site tutoring. By contrast, TutorVista takes an all-you-can-eat approach to instruction. Its standard offering is $99 a month for as many 45-minute tutoring sessions as a student arranges.
TutorVista also stands out for its well-known venture backers, its scale and its ambition. The two-year-old company has raised more than $15 million from investors including Sequoia, Lightspeed Venture Partners and Silicon Valley Bank. TutorVista employs 760 people, including 600 tutors in India, a teaching staff it plans to double by year-end. Its 52-person technical staff has spent countless hours building the software system to schedule, monitor and connect potentially tens of thousands of tutors with students oceans away.
"Our vision is to be part of the monthly budget of one million families," Mr. Ganesh said.
It is a long-term goal. To date, TutorVista has signed up 10,000 subscribers in the United States, and its British service, rolled out in September, has 1,000.
Further gains will depend on winning over more customers like the Tham family in California. Since he was in elementary school, Kenneth has had stints of conventional tutoring, often in classroom settings with up to 10 other students. At times, this cost the family up to $500 a month. Last year, Ernest Tham, a truck driver, noticed a reference to TutorVista on a Web site and suggested his son give it a try.
"Kenneth was apprehensive at first, and I wasn't sure how it would work," Mr. Tham said. "But, shocking to say, it's gone very well."
Kenneth said he initially found it "very unusual, not seeing another person. You get used to it, though. It's not a problem." He schedules one or two sessions nearly every day, mainly for English and chemistry. With a digital pen and palette, he writes sentences and grammar exercises, for example, and his work appears on his computer screen and on the screen of his tutor. They discuss the lessons using Internet-telephone headsets.
"You can also get help with homework problems," Kenneth said, "but they're not supposed to do all your homework for you."
In a year with the TutorVista service, Kenneth has improved both his grades and standardized test scores, his father said.
Ramya Tadikonda has tutored Kenneth Tham, among many others, from her home in Chennai, India. To achieve its ambitions, TutorVista must recruit, train and retain thousands of tutors like her.
Ms. Tadikonda, 26, is a college graduate who had previously worked as a software and curriculum developer for a math Web site for students, but left to raise her children. Earlier this year, she joined TutorVista, took the company's 60-hour training course, followed by tests and practice sessions for two months. She now works about 24 hours a week as a math and English tutor and makes about $200 a month.
Ms. Tadikonda says she enjoys tutoring and the flexible hours. "You can have a career and still spend time with your family," she said. "I never thought I could do that."
The timing is right for global tutoring, according to John J. Stuppy, TutorVista's president and a former executive at Sylvan Learning, the Educational Testing Service and The Princeton Review. Improved Internet technology and the ability to tap of vast pool of educated instructors at low cost are crucial ingredients. "It becomes possible to make high-quality, one-on-one tutoring affordable and accessible to the masses," said Mr. Stuppy, who joined TutorVista last year.
Steve Ludmer, 28, and his partner Avinash G. Samudrala, 27, are betting the time is right for another kind of global consumer service. They left lucrative jobs in management consulting and private equity to start a remote personal assistant service, called Ask Sunday, which began in July.
The company is based in New York, but its work force is mostly in India. It is one of a handful of startups trying to create a business in offshore personal assistant service. Some, like GetFriday, charge hourly rates of $15 or so, but Ask Sunday has a per-request model, $29 a month for 30 requests a month or $49 for 50.
The requests can be unusual. A few subscribers had Ask Sunday search online dating services for short lists of people who meet their criteria. But the requests are mainly to help busy people like Ms. Yamaki, the New York management consultant, free up time and outsource hassles.
During a late meeting at the office recently, Ms. Yamaki said, she sent a one-line e-mail message from her laptop that told Ask Sunday to order her usual meals from her favorite Manhattan restaurant, for delivery at 9:30 p.m. When the meeting ended, her take-out food was waiting.
To handle such personal chores, Ms. Yamaki has handed Ask Sunday a wealth of personal information, including credit card numbers, birth dates of family and friends and phone numbers for doctors, car services, favorite restaurants and others. She finds the convenience well worth it.
"The service is great in a pinch to make your life a little smoother," Ms. Yamaki said. "And it's available 24 hours a day, which is more than you can expect from a personal assistant at work."
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