Chasm grows between Indian startups & internet body IAMAI; IT firms look to boost utilisation levels for better margins

Also in this letter:
■ Myntra launches fashion portal FWD to tap GenZ shoppers
■ India’s plan at UN cybercrime panel seeks right to ask data from nations
■ Kunal Shah’s NBFC Newtap in talks to raise $50­-70 million

Indian startups demand change at tech industry body IAMAI, accuse it of favouring Big Tech

Contending that the Internet and Mobile Association of India (IAMAI) has become a “mouthpiece of Big Tech”, Indian entrepreneurs have called for a change at the tech industry body, failing which they have sought that the grouping should be disregarded. This signals a deepening of the chasm between the interests of global internet majors such as Google and Facebook, which count India as one of their biggest markets, and that of the local internet startups over issues ranging from pricing policies to digital regulations.

What’s driving the news? In a tweet on Monday, MapmyIndia chief executive Rohan Verma said IAMAI should change to “truly reflect the voice and aspirations of India” or the body should be given no “credence”. Weighing in on the issue, Shaadi.com’s Anupam Mittal, tweeted, “It (IAMAI) appears to have become a mouthpiece of Big Tech.”

Why the allegations? Indian founders argue that recently, the IAMAI did not back domestic companies while presenting its views on key tech policy issues. Most recently, they said IAMAI remained silent when startups were opposing the implementation of tech giant Google’s in-app purchase billing system. Last week, ETtech reported that Indian startups planned to oppose IAMAI’s draft comments on digital competition law, saying they favour big tech platforms over Indian companies.

Tell me more: Local internet companies have flagged IAMAI’s leadership, represented by its executive council, to be at the heart of the industry body’s alleged pro-Big Tech stand. Currently, the council is chaired by Sanjay Gupta, country head & vice president, Google, with Shivnath Thukral, public policy director, India, WhatsApp Inc as vice-chairman. In the past, too, top executives of US tech majors like Google and Amazon have been at the helm of the executive council.

Background: Indian internet companies being at loggerheads with IAMAI is nothing new. In 2017, a group of tech startups led by Sachin Bansal’s Flipkart and Bhavish Aggarwal’s Ola formed a new organisation IndiaTech.org to lobby for Indian startups. In February this year, ETtech had reported that online gaming companies, who are members of IAMAI, had written to the IT ministry opposing views submitted by the body on new rules for the sector.

IT companies look to boost margins by increasing utilisation levels

Indian IT companies are looking to beef up their margins, and are relying heavily on increasing the utilisation rates, which dropped significantly in the past few quarters.

Jargon buster: Utilisation rates for IT companies mean the percentage of their employees working on active projects.

What’s happening? A lot of top companies, including India’s second-largest IT firm Infosys and Wipro, had called out unplanned project ramp downs and softening demand during their fourth-quarter results, which could have had an impact. “One of the primary reasons for this fall is that revenue growth for all companies has gone soft. Secondly, the onboarding of freshers and honouring the previously extended offers continue to happen. This also leads to lower utilisation levels,” said Dharmender Kapoor, former CEO at Birlasoft.

By the numbers: Infosys reported a gross utilisation rate of 76.9% (including trainees) for the March quarter, which was lower than the previous quarter. Excluding trainees (or net utilisation), the rate fell 7 percentage points to 80%, the lowest since the quarter ended March 2015.

For Wipro, the gross utilisation for the fiscal year 2023 came in at 72.8%, which was the lowest since fiscal 2020, while the net utilisation was the lowest in seven years at 81.20%. A few mid-cap firms like Coforge said they are happy at the current utilisation levels. Other players also expect the rates to rise to pre-pandemic levels as hiring slows down.

Myntra launches fashion portal FWD to tap GenZ shoppers

To attract a 10-million-strong GenZ userbase, Walmart-owned ecommerce company Myntra launched a new fashion discovery portal, FWD. The Myntra app was down for about 11 hours on Monday as the new product was being integrated into the app.

What’s driving the news? The product is aimed at GenZs – those born between 1997 and early 2012 – and has been under development for many quarters, chief executive Nandita Sinha told us. “We wanted to build an immersive shopping experience for GenZs,” said Sinha. “What we have realised is that GenZ is a very different consumer segment. GenZ discover trends mainly online and they spend about 8 hours every day online,” she added. More than 500 brands will be available through FWD, along with Myntra’s private label brands like Roadster and Sangria.

Online fast-fashion space expanding: Myntra’s FWD will face a clutch of online fashion retailers targeting young shoppers riding on funding from venture investors. New fashion startups including Newme, Virgio and Stumbl are all in the market for GenZs, looking to differentiate themselves as an alternative to incumbents like Myntra, Reliance’s Ajio and Tata Cliq.

Read ETtech deep dive: Last month we wrote on how a new wave of companies were looking to build an ecosystem in India from scratch. The new fashion startups are trying to differentiate themselves as an alternative to incumbents like Flipkart-owned Myntra, Reliance’s Ajio and Tata Cliq. Read the story here, Building India’s Shein: why investors are backing a new wave of fashion ecommerce startups.

At UN cybercrime panel, India seeks right to ask data from nations

India has proposed to a UN ad hoc committee in Vienna that all signatory members be allowed to request phone, email and other subscriber information as well as traffic data of their residents to speed up specific cybercrime investigations and proceedings.

Details: “A state party may request another state party to issue an order compelling a service provider in the requested party’s territory to produce specified and stored subscriber information, and traffic data in the possession or control of the service provider, which is necessary for the party’s specific criminal investigations or proceedings,” India’s proposal read.

Why is this needed? According to a senior government official, the idea behind the proposal was to develop a process which could help in cybercrime investigations and provide speedy access to data given the increasing pace of cybercrimes globally. The proposal is in a preliminary stage and may not even make it to the final draft, the official added. This will be in addition to the mutual legal assistance treaty (MLAT) between nations that allows for such exchange of data.

Swiggy shuts gourmet grocery delivery service Handpicked

Swiggy has decided to shut its premium grocery delivery pilot Handpicked, according to two people aware of the matter.

Fresh obstacles: The Bengaluru-based company is facing fresh obstacles as it ventures into grocery delivery and ecommerce. The launch of its new ecommerce platform, Maxx, featuring home goods, pet supplies, and stationary among other categories, is a recent example of this push. Additionally, Swiggy has renamed and restructured its essential delivery service, Supr Daily, to Insanely Good.

What was Handpicked? Products sold on the platform included Coca-Cola’s Cherry Cola, which is available in markets like the United States, Kombucha made by local startups in Bengaluru, and Methi Khakhra from Gujarat. Spreads and ready-to-cook meat across Italian, German and Mexican cuisine, were also available on the platform.

Quote unquote: “At Swiggy we’re continuously experimenting with new propositions in line with our vision to enable convenience to consumers. Handpicked was being piloted in a few zones in Bengaluru and we have had several positive learnings from it,” a Swiggy spokesperson said, while confirming the development to ETtech.

ET Ecommerce Index

We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.

Kunal Shah’s NBFC Newtap in talks to raise $50­-70 million

Kunal Shah-owned Newtap Technologies, which owns the non-banking finance company (NBFC) Parfait Finance, is in talks to raise $50- $70 million, three sources in the know told us. The company may rack up a valuation of around $250 million, these people said. Cred’s existing backers like Silicon Valley’s marquee venture capital firm Sequoia Capital and Singapore’s sovereign fund GIC are expected to infuse the funds. Cred owns around 20% stake in Newtap.

Why is this significant? If this funding round goes through, it will bolster Cred’s revenue generation capabilities since it will be able to take a bigger chunk of the personal loans being disbursed through its own books, therefore opening up better business margins.

Moreover, the fact that Cred’s existing investors are participating in this round shows their confidence in Cred’s business model and its ability to scale its credit play. Last year, GIC pumped in $80 million into Cred, while Sequoia is one of its early investors. Launched in 2018, Cred helps users pay credit card bills easily and earn rewards.

What’s next? If the equity capital comes in, Parfait Finance can step out and seek debt funding from larger NBFCs and banks. Once they can raise debt at favourable interest rates, the company can offer competitive pricing to their customers and also scale their books significantly.

Last week, we reported exclusively that neobanking startup Jupiter has secured an NBFC licence from the country’s central bank, a development that will help it dole out credit from its books.

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