08 Dec, 2012 10:10 IST
The Data Route To Millions
A clutch of entrepreneurs is making big bucks by sourcing, analysing and marketing data
Kumar set up Value Research, a mutual fund research company, in 1990. His timing was perfect — in 1991, the government allowed public sector banks and institutions to set up mutual funds. While collating the data was not so difficult, getting users to pay for it was. Kumar started a mutual fund scorecard and tied up with The Economic Times. “I used to make around Rs 3,000 a month, which was not great, but enough for an individual at that time. For the first couple of years, we simply did not make money. But I decided against borrowing,” says Kumar. Also, there were no venture capital or debt funds to support him.
In fact, getting even a fixed line phone connection was tough. Kumar got a friend to transfer his connection to him. “While collating data is not too difficult, making money out of data is difficult; you need to have a reputation,” says Kumar. And that takes time.
Almost a decade later, the Internet emerged as a great tool. That’s when R.K. Thukral, who had brought out a data digest, UP At A Glance, in the early 1990s, joined hands with Madan Bahal, managing director of the Mumbai-based Adfactors group. In 2000, the two of them set up Datanet India, which collects, collates and compiles socio-economic data about India and its states and makes it available online. It started out with one website Indiastat.com. Today, with 60 employees, it offers India-, state- and sector-specific data across 720 websites.
Unlike Kumar, Thukral’s timing was off. Soon after he started operations, the dotcom bubble burst. “For a little over two years, we had a small team based out of South Extension in New Delhi that just compiled all the data that we could locate,” says Thukral. That paid off when Thukral got an email from the World Bank seeking data. That was followed by the Indian Institute of Management (IIM), Ahmedabad, signing him up. The venture achieved break-even in 2005 and started to make profits the next year. Today, Datanet’s clients include Harvard University, Stanford University, Massachusetts Institute of Technology, the London School of Economics and all the IIMs.
Around the same time, in 2000, Laveesh Bhandari, then a senior economist at Delhi-based think tank National Council of Applied Economic Research (NCAER) founded Indicus Research. The focus was on creating data products. Operating from an office in central Delhi, Indicus provides products that include district-level GDP figures, details of the Indian consumer market and data on towns and rural blocks. Clients include Samsung, PepsiCo India, Bharti Airtel, Apollo Hospitals, the Reserve Bank of India and ICICI Prudential.
Kumar, Thukral and Bhandari are among a bunch of entrepreneurs who are making millions selling data. Unlike earlier, consumers are now willing to pay a premium. For instance, Kumar has estimated annual earnings of around Rs 10 crore. While Thukral is unwilling to provide figures, it is estimated that Datanet makes close to Rs 5 crore annually. However, none of these data entrepreneurs is flashy. Even Dhiraj Rajaram, who runs India’s largest data analytics firm Mu Sigma, with annual revenues of $100 million and over 2,000 employees, drives a second-hand Land Rover.
The Data Rush
Increasing volumes of data being generated by the government, leading companies and industry associations is what is driving the data rush. According to a McKinsey report, during 2010, India alone stored 50 petabytes of new data (1 petabyte = 1 million gigabytes). The world added 3,500 petabytes. This is the inventory that companies are targeting.
Thukral aptly sums this up: “Data is the new oil.” As the years go by, the demand for data is rising phenomenally. And customers are willing to pay for it. Thukral points out that an institutional customer that paid just Rs 2,000 for data in 2007 now pays Rs 1 lakh for a suite of data services. That’s the market these companies are looking to tap. The Indian data market is estimated to be worth Rs 250 crore. Market research would add another Rs 100 crore.
Each of these ventures caters to different verticals of the data business: those that process public data for clients; or corporate data for quick decision-making; and then those that create their own products. There are also data analytics firms and the captive analytics wings of large corporations such as IBM, Dell and Accenture. Most data companies publish priced reports, magazines and newsletters, which give them additional marketing reach.
So is data mining the next big thing? While the demand is there, it is unlikely to generate as many jobs as, say, the IT or BPO industries.
The global rush into data mining began in the 1960s when Robert McNamara, then CEO of Ford, demanded data on virtually everything. Today, companies regularly take key decisions based on data generated and analysed. The Indian data story began in 1951 when the government set up the Central Statistical Organisation (CSO), which is now a wing of the National Statistical Organisation (NSO).
Says Pankaj Rai, director, global analytics at Dell: “The Vs — variety, volume and velocity of data — have changed significantly.” Adds C.K. Guruprasad, principal, global technology and services, at consultancy Heidrick & Struggles: “What we are seeing is not a fad. Large corporations are realising that data analytics plays a key role. So companies are looking at how to leverage or approach it.”
India’s biggest data company, Mumbai-based Centre for Monitoring the Indian Economy (CMIE), was set up by economist Narottam Shah in 1976. Also in Mumbai are Accord Fintech and Capitaline that focus on corporate data. A recent entrant is IndiaSpend, a data journalism venture of former journalist Govindraj Ethiraj. Delhi-headquartered Icra too has Icra Online. The data analytics play revolves largely around Bangalore. The biggest in the fray is Mu Sigma, followed by Chennai’s LatentView and Gurgaon-based AbsolutData and Fractal Analytics, all with 250-300 employees.
As important as data is the medium used to deliver it, and the current medium of choice is the Internet. Says Mahesh Vyas, managing director and CEO of 400-strong CMIE: “The changes effected by technology have been dramatic. We were the first to deliver databases electronically. Strange as it may sound today, it was revolutionary in 1988 when we did that.”
For the past decade or so, data was accessed primarily on PCs or in the form of CDs and printed publications. But, like everything else, data too is going mobile. Starting next year, Thukral will provide data across operating systems — iOS, Android and Windows 8 — on the cellphone. That could well be the future of data.