Sequoia leads venture into Indian call center

San Jose Mercury News--July 25, 2003

Silicon Valley venture capital firm Sequoia Capital has led a $22 million investment into Indian call-center firm 24/7 Customer, another sign of the growing importance of India as an outsourcing center for U.S. companies.

Like other well-known regional venture firms, Sequoia usually invests in high-tech companies in the valley and is famous for backing technology giants like Yahoo, Oracle, Cisco Systems and the hot private company Google.

Michael Moritz, the Sequoia partner who led the investment, said his company doesn't invest in many service companies but makes exceptions when the market is large and ``lends itself to automation,'' like this one. He said 24/7 is at the ``beginning of a trend'' of Indian service companies catering to large corporations, especially in the United States. Because Indian labor is cheap, outsourcing can help U.S. companies save 35 percent to 60 percent in costs, the company said.

India has recently emerged as a center for outsourcing other functions like software development and chip design, spawning large companies like Infosys and Wipro.

Already, 24/7 employs 2,000 workers in India and handles 2 million customer calls a month for 10 large corporations, mainly from the United States.

The new funding will help 24/7 hire more workers and expand by buying another call-center firm employing about 1,000 people, according to Chief Executive P.V. Kannan.

The investment is just the latest of a series of partnerships by Sequoia's Moritz and Saratoga angel investor Ram Shriram.

Shriram was also an early investor in Google and Plaxo, two other companies in which Sequoia's Moritz became an investor.

Shriram said large U.S. companies spend about twice the amount of money on business-processing services -- which include things like call centers and merchant billing and verification -- than they do on information-technology products like computer hardware, routers and software applications. ``This is one area for improvement,'' he said. ``It can be done better, cheaper and faster.''