“We realized that the

transaction-based model
was actually sensible, and
that its profitability would be
higher compared to ordinary
box sales.”
SAMIR DHINGRA, MANAGING DIRECTOR,
NETSPIDER INFOTECH

T
HIS IS do-or-die.
It’s hard to be certain if
that’s exactly what was going
through Samir Dhingra’s mind,
but it wouldn’t be too far off the mark.
It was 2002, and as the managing
director of a start-up, Dhingra had just
pitched a OCR software and scanners’
solution at the Reserve Bank of India—
and he needed it to work. The problem
was that the deal wasn’t exactly going
his way. The RBI wanted this solution
but didn’t want to dole out the capex
necessary for the project.
It did, however, offer Dhingra the
deal if he was willing to take an unusu-
al route: A transaction-based model.
At that point, such a model was
unheard of, says Dhingra, who remem-
bers having to mull of the approach.
“It would mean that we would own the
solution and the customer would only
pay to use it. We realized that the mod-
el was actually sensible, and that its
profitability would be higher compared
to ordinary box sales,” he says.
Part of Dhingra’s decision might
P H OTO BY K A P I L S H R O F F

have had something to do with the

need to keep his company solvent. But
whatever his primary motive was, one
thing is clear: The transaction model
has since made his company, Netspider
Infotech, a lot of money.

Living on a
Today, Netspider Infotech is one of
the largest system integrators to offer
transaction-based digitization solu-
tions to government departments.

TRANSACTION
Much of its success came after Dhingra
took the formula he worked out with
the RBI and offered it to other govern-

A transaction-based model calls for sizeable ment departments.

“In 2005, we saw a major break-
investments for partners. But as Netspider Infotech through when the government of Odi-
sha decided to collect student data for
shows, it’s a profitable business. state fund allocation on a transaction-

30 INDIAN CHANNELWORLD NOVEMBER 2012


based model. This ‘e-shishu’ project
received the Prime Minister’s Award
in 2006-07. In 2007, the Ministry of
Defence awarded us with a huge digi-
tization project. It required handing
about 20 crore documents for provi-
dent fund and pension disbursement
across India. Post 2007, a number of
customers including the Controller
General of Accounts, the government
of Rajasthan, the Ministry of Minor-
ity Affairs, the NIC, and Sahara India
have all engaged us to digitize their
documents using a transaction-based
model,” says Dhingra.
In the last year alone, Netspider In-
fotech, which has over 45 government
departments on its customer-list, has
quadrupled its customer base, and it’s
also doubled its revenues every year.
WHAT MAKES IT CLICK?
Would you buy an entire five-star hotel
just to enjoy the luxuries it provides?
Or would you pay for a room and get
the same experience? That’s the logic
Dhingra gives his potential custom-
ers. In addition, he points out to them
that the service he offers allows his
customers to capitalize on Netspider
Infotech’s expertise, something they
would have to build—and maintain—if
they were to go on their own.
“In most cases, the customer is not
an expert in managing large-volume
scanning. The opex model could be a
little expensive for them in the long
run, but if you consider the discomfort
customers have to go through if they
used a capex model, it’s actually cheap-
er,” he says. “Our logic is: If a customer
has got a very expensive car, but one
he doesn’t know how to drive, he could
crash it.”
For customers, the transaction-based
model eliminates a lot of the baggage
that a traditional on-premise model
comes with. With an on-premise model,
the customer tends to face a lot of chal-
lenges with respect to troubleshooting.
It also calls for a lot of involvement and
know-how. “On the other hand,” says
Dhingra, “the subscription model gives
more customer satisfaction. Addition-
ally, all our processes are quite mature
and ISO-certified.”
The governments sector forms a
big part of Netspider Infotech’s busi-
ness and it also focuses on large-scale
WHAT TO EXPECT
If you want to offer
transaction-based services you
should be prepared…
v For High investments. You’ll
need to find the capital to
fund the infrastructure that
your customer doesn’t want
to buy. Also, be prepared for
the cost of refreshes.
v To be Patient. A transaction-
based model like the
one Netspider Infotech
uses is popular with the
government. But payments
could often be delayed.
v Build expertise. In a
transaction-based model,
the customer not only
passes the risk of owning
a solution to you, but also
the job of finding and
maintaining the skills
needed to run the solution.
Understand that you need
to create attractive, but
simple, pricing models.
v Create mature and standard
processes. Like any paid-for
offering, customers expect
high levels of service.
Netspider Infotech, for
instance, got its process ISO
certified.
scanning projects, where the volumes
are very high. Over the years, it has
achieved a high level of expertise, and
customers trust the company enough for
them to outsource all their digitization
requirements, says Dhingra. Netspider
Infotech scans its customers’ documents
and hosts it as a Web-based document
and content management system, pro-
viding customers with a single solution
for all their digitization needs.
GROWING BUSINESS
For those who want to follow in
Netspider Infotech’s footsteps, it’s
important to be aware that a transac-
tion-based model calls for a lot of in-
vestment initially. Netspider Infotech
invested in infrastructure—servers on
NOVEMBER 2012
COVER STORY n
which it hosts the document manage-
ment system—and a huge number of
scanners and specialized equipment,
as it has to address various customer
requirements.
In addition, because most manufac-
turers only provide standard support,
Dhingra says that Netspider Infotech
has had to invest significantly in
skilled manpower as well. Besides that,
there are on-going investments needed
to manage the infrastructure. It’s
also important to note that Netspider
Infotech chooses to invest in equip-
ment that are long-lasting, giving it a
sizeable window before it undergoes a
hardware refresh.
The investments it has made into the
business have been worthwhile, go-
ing by the company’s healthy revenue
growth. “We are recovering the in-
vestments we made in equipment and
software. We have, in fact, recovered
the cost of critical equipment,” says
Dhingra. “Initially, profits were quite
high. Currently, though the profit per-
centage is not very high, the volumes
are huge.”
Competition, be it from traditional
resellers or players with similar model,
is tolerable, he says. Dhingra says he of-
ten stumbles upon traditional resellers
who propose on-premise solutions. But
it isn’t a struggle to convince customers
of the advantages of an opex model.
Principals that Netspider Infotech
works with are also bullish on the
model. In the last few years, they
have been very diligently promoting
an opex-based model, Dhingra says,
through their Indian service providers.
Another thing that works for Netspi-
der Infotech are the government rate
contracts that it signed up for. These,
says Dhingra, allows it to work with
government sector customers without
getting into tenders.
Dhingra believes the government
sector is a literal gold mine of digitiza-
tion opportunities. “The large digitali-
zation projects, which are our core fo-
cus, come mainly from the government
sector. We are planning to stay put, as
our money is safe, though delayed, with
government sector customers. Besides,
digitization processes in the govern-
ment vertical is never-ending. It gives
us constant business,” he says.
Do-or-die? More like wager-and-win. n
INDIAN CHANNELWORLD 31