Finding the right IT vendor is a big pain point for companies and the process could take months. On the other hand, several small and mid-sized IT vendors find it difficult to reach out to companies due to constraints such as low marketing budgets.
VendorFrog, a Mumbai-based startup, hopes to address this problem.
Vishal Rathod, the founder and CEO, thought of the idea when he faced such a problem during his stint as IT manager at Essar Steel. He recalls it took him more than a month to zero in on an IT vendor but the task was reallocated to the company's human resources department as he failed to finalise the vendor eventually.
"At that moment, I wished I had one portal where I could type my requirement and start getting proposals from vendors," said Rathod, a computer engineer from Mumbai University and an MBA from New York Institute of Technology.
How does it work
Started on August 1 this year, VendorFrog is an online B2B technology marketplace that connects companies and IT vendors.
Users with a company e-mail ID register on the site. They then fill in their requirements. Users can also attach documents, set vendor criteria, the last date of response and submit. The requirement is shown only to those IT vendors who fit the criteria.
Based on the response, which is brought to the users' notice via email notifications, users can analyse the response and contact the vendor accordingly.
Rathod said there are about 10,000 registered IT companies in India and almost 9 lakh companies overall. Nearly every company has some form of IT requirements â€“ be it software, hardware, IT staffing or IT training. That is the market VendorFrog can tap into.
Industry group Nasscom estimated the value of India's domestic IT services market at $13 billion for 2014-15 and IT services exports at $55 billion.
Industry observers feel that the primary consumers of IT services are chief information officers and that engaging them will be a challenge for VendorFrog.
"CIOs of large enterprises do not buy online or on phone. It's an in-person transaction and contracts are as per each enterprise's needs. These kinds of portals end up being discovery and listing sites only with transactions happening offline," said Sanjay Mehta, an investor and member at the Indian Angel Network. "As an investor, if it were to evince interest, I would like to see CIO community engagement," he added.
VendorFrog divides its target customers in two segments â€“ large companies and small and medium enterprises. "For CIOs, which fall under the category of large companies, we are soon launching VendorFrog Corporate Services that will focus on their needs," said Rathod.
Funding and traction
Started with promoters' money, the company claims to have achieved significant traction. Since its launch, VendorFrog has seen registrations from 70 IT vendor companies and 14 customers that include the likes of PwC, GSK Pharma and Paladion. Research firm Gartner has recently tied up with VendorFrog as its official online media partner.
"So far we have facilitated closure of five projects, where we received an average of three to four proposals," said Rathod.
The company claims to have been approached by some investors and discussions have crossed the preliminary stages. However, VendorFrog is in no hurry to raise funds, according to Rathod. "I am currently focused on building the brand and value addition rather than playing the valuation game," he said. "However, a business cannot be bootstrapped forever."
Monetisation model, growth plan
Currently, the service is free for both buyers and sellers. Vendors will be charged after a few months, though it will remain free for the users.
The company also plans to offer vendor consultancy services in the future. "We will help vendors increase their success rate in terms of converting their proposals into projects through the consultancy services," said Rathod.
After growing its operations in India, VendorFrog hopes to establish its presence in international markets and the US is on the company's immediate radar. According to Rathod, the CEO of a Texas-based company has shown interest for a possible collaboration. "This will help Indian IT companies get projects from US-based companies as well," he said.
The company is looking at horizontal expansion as part of its long-term plan. It hopes to achieve this by bringing in more categories like medical technology, engineering technology and construction technology.
VendorFrog will remain a facilitator rather than the actual service provider, though the company has not ruled out the option of introducing transaction capabilities for basic IT jobs in the future.
Rathod leads a team of five. VendorFrog has a co-founder in Rakshit Shah, an IIT-Bombay alumnus who has dabbled with startups that include Redmelon Design, BlakBuck and BollyMedia. He also acts as an accelerator where his work revolves around concept ideation, UI design and formation of marketing strategy.