From Wi-Fi to Face Lifts, Ideas of High-Tech Start-Ups Wake Up Venture Capitalists

By ANN GRIMES - Staff Reporter of THE WALL STREET JOURNAL

Business Services

Fewer trends are hotter, or more contentious, than shifting technical jobs from the industrialized world to lower-cost countries. But 24/7 Customer, Los Gatos, Calif., is determined to help the outsourcers.

The three-year old start-up provides call centers for corporations needing technical support and telemarketing. The company has 2,000 employees -- soon to be 3,000 -- in two centers in Hyderabad and Bangalore, India, who answer the phones for 24/7's customers.

The company uses a combination of proprietary and off-the-shelf technology to wring delays, static and echoes out of phone calls that may originate in a U.S. state and are bounced to one of two U.S. networking centers on the East and West Coasts before winding up in India, where the calls are answered and problems solved. The company also uses voice-compression technology to fit more phone calls into the space an uncompressed call would take, says Sudhakar Kosaraju, 24/7's 30-year-old, Harvard-educated co-founder.

An even bigger selling point, Mr. Kosaraju says, is a proprietary network the company established to allow customer-service managers in Manhattan or London to track performance in India from their home bases. Telemarketers, for example, could check how many sales one of 24/7's agents is making per hour. In customer-service applications, the customers can monitor how long it takes to answer each call and how often calls are bumped up to a superior. "Like a NASA control center, they know what's happening and whether they should be asking questions," Mr. Kosaraju says.

Since launching, the company says it has signed up 10 big companies that outsource tasks like technical support and help desks. The company says it expects to hit its profit target of $30 million for fiscal year 2004.

Michael Mortiz, a partner at Sequoia Capital, says his firm took the lead in a $22 million round of funding in the start-up. Sequoia has invested in a variety of service companies, including contract manufacturer Flextronics International Ltd. Mr. Moritz says outsourcing "is a very vibrant place to invest, and 10 years from now people will wonder about companies that operate call-centers in-house."

In addition to expanding its work force, 24/7 plans to use the money to acquire competitors, of which there are many. Besides competition, the company faces growing fears of more U.S. jobs moving offshore in the current tough economy. Mr. Kosaraju says the company was asked by several of its customers -- a major U.S. bank and a major U.S. package-delivery service, for instance -- to sign nondisclosure agreements, fearing negative publicity. "Especially with the economy the way it is, many have requested these relationships stay confidential," Mr. Kosaraju says.