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Yahoo! India in a revamp mode

Nandini Lakshman

It's time for change at web portal Yahoo India. And like most young things, the two-year old domestic offspring of Yahoo Inc is also shedding flab. Last week, about half a dozen people quit the portal and more are believed to be on their way out. It's all believed to be part of a drive for a leaner and meaner Indian operations.

The hi-tech world has been buzzing with rumours that Yahoo India was on the verge of downing shutters, but company officials say the recent spate of resignations is part of a restructuring process. That's hardly surprising, especially at a time when revenues are under pressure for almost all Internet portals. But what has raised eyebrows is the departures of top executives like country head Deepak Chandnani and Arun Gupta, associate director, business development.

Others quitting include sales and back-end people from across the country. This when almost one-third of Yahoo-India's 70-odd employees are in the portal business. The rest are affiliated to its software development centre in Bangalore, which caters to Yahoo Europe, Asia and the US.

The glib talking Chandnani, a Citibank and Hindustan Lever veteran, says his departure (he signs off today) is just a coincidence. So is Yahoo in a mess? The industry has also hinted at misappropriation of funds?

"I can categorically state without a shadow of doubt that there has been no misappropriation of funds by anybody at Yahoo India. We are completely transparent," says Chandnani. He claims that the company is restructuring like any other major corporate like GE or Citibank. "You review the company at the end of a financial year to make it more efficient, so there is nothing different about Yahoo," he adds.

So beginning this month, the new country head for India is Darren Gosher, the Sydney-based regional finance director of Yahoo south Asia which also includes Australia.

"My priorities for India are clearly to drive the business, grow our already successful media and mobile businesses and capitalise on every opportunity to build strong relationships with our key telecom customers. We have realigned our resources to improve productivity and profitability," he says.

In fact, India was part of AustralAsia, which largely consisted of English speaking countries like Singapore, India, Hong Kong and Australia. When the head of AustralAsia quit about six months ago, the entire region was attached to South Asia, with S I Lee at the helm. Lee who is credited with making Yahoo the number one portal in Korea is an old India hand, having worked with Pepsi here in the early '90s.

Helping Gosher with ground operations is Neville Taraporewalla, 38, who joined Yahoo in May this year from Mid-day Multimedia. He's been an Internet man since 1996, helped set up Bennett Coleman's Indiatimes before moving on to Raj Koneru's Indiainfo. Taraporewalla, who joined Yahoo as head of sales has been re-designated director sales and business development.

"Every business has to look at its overall business opportunities and realign as the market forces demand. I think that's what Yahoo-India has done," says Taraporewalla.

The new lineup at Yahoo India is taking place at a time when portals are grappling for online advertising, which continues to be a trickle. And going by the prevailing economic environment, getting clients to spend more on the Internet is going to be wishful thinking for a long time to come. No wonder then, despite industry projections of a Rs 200 crore (Rs 2 billion) online advertising business two years ago, it is barely pushing Rs 50 crore (Rs 50 billion) today.

Yahoo does not divulge figures, but industry estimates peg its Indian revenues at around Rs 15 crore (Rs 150 million), most of which accrued from advertising. Globally, advertising accounted for 90 per cent of Yahoo's revenues in 2000. Today, it is down to 60 per cent. But while advertising constituted almost all of Yahoo India's revenues until last year, this year, in keeping with the global standards, insiders say it is down to 65 per cent. The rest is accounted for by its mobile business.

Today, Yahoo might have a varied range of properties, but insiders claim that 80 per cent of traffic and 75 per cent of ad revenue is directed to just three properties. These include Yahoo mail, messenger, chat and to a very small extent greetings. In fact, it is this communication platform that Yahoo is looking at leveraging.

Its second revenue stream is mobile services introduced in September 2001. It has tie-ups with cellular companies in different places including Orange, Escotel and Oasis for SMS services. Says Taraporewalla, "What we have done over the last six months is looked at our essential marketing solutions, a programme where we can show the differentiators between us and our competitors." Adds Gosher, "We will continue to build our existing strong revenue steams and of course explore newer avenues to grow our business."

But why hasn't Yahoo begun e-commerce in India, especially when it is a big revenue earner for it globally? Despite the initial misgivings, even its competitors here are swearing by e-commerce. Today, Bennett Coleman's Indiatimes talks about a $10 million revenue. It claims that with Rs 15 lakh (Rs 1.5 million) to Rs 20 lakh (Rs 2 million) transactions a day, e-commerce contributes one-fourth to the topline. They say that it is likely to grow substantially over the next two years. Or consider Rediff, which claims that 75 per cent of its revenues come from e-commerce.

Yahoo has planned an e-commerce foray next year. The reason says Chandnani is because the actual transaction revenues that come in are still very small in this segment. "I am not running down e-commerce, but I'd reckon that the percentage of transaction revenue is just a small part of the money made on e-commerce sections of websites in India. It actually comes from advertising. That's the way I look at it," he says.

Till that happens, it is getting aggressive on the media sales front. Already, media buying outfits claim that Yahoo has become more client friendly. Earlier, advertisers say that Yahoo India only offered ad deals based on cost per 1,000 impressions (the number of banner exposures on the site). But today, if a client insists, it has no qualms charging at cost per click. This means that a client pays only if a customer interacts with the insertion, says an advertiser.

Today, Taraporewalla says: "Innovation is a big thing for us." Yahoo is going out to offer customised solutions to its clients.

It isn't going to be an easy ride. Already, advertisers say that Yahoo India's main competitor is not the other portals but its very own parent Yahoo USA. That isn't a new problem, especially in countries where they have individual properties, says Chandnani.

He claims that in an English speaking country, the mother brand is up there and the local brand has to build itself up. "It takes time for the local Yahoo to be able to differentiate itself in the minds of the world at large. So what are the concerns? "Our biggest challenge is to sustain our presence and work towards growing this audience," says Gosher. Taraporewalla is more down-to-earth.

As he puts it, "There is a conviction amongst us that Internet advertising works, but it is a challenge to communicate and demonstrate that to a client. The key thing is to give the client what he wants."

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