PATHBREAKER: eTrain to Success

Think bureaucracy! An'Internet start-up in a garage' will certainly not be
your first or your last thought. Now even if you have had this crazy thought, it could have been as to 'how bureaucracy can kill the garage start-ups'.

However, this year the company, which has been the unanimous choice of the Dataquest Jury started from a garage and also has the stamp of bureaucracy.

The Indian Railway Catering and Tourism Corporation (IRCTC) is the winner of the Pathbreaker Award 2004.

Forget the name, which certainly is a misnomer, as it gives no indication as to why the Jury members nominated the company for the Pathbreaker Award. And of course, Dataquest is not moving beyond IT to the catering and tourism domain to consider IRCTC for an award on those business lines.

So why the award? Well, this is
the same company which has made
a big impact on the Internet. The company has proved that the Internet also has a business model and that ecommerce in India is possible. And it has taken them less than three years to achieve it.

The Genesis

Flashback to 2000. This was the time when about 10-12 top IT firms were giving presentations to the Railway Board for their online ticketing strategy. Says MN Chopra, managing director, IRCTC, “The vendors were talking heavy language and asking big money. We thought we could do it better.” None succeed in bagging the contract. It was not the lack of skills on the part of the IT vendors, but the sheer 'inertia' on the part of the Railway Board. This kept going on for more than a year, when four senior functionaries of the Railways decided to try their hands on the project. So in Oct 2001, they made a presentation to the Railway Board regarding various business options and suggested to the Railway Board to let them get on with the project. Hence started an experiment with entrepreneurism by the Railway Board. And in true Silicon Valley style -in a garage. Since the Board had no other place, they offered a garage to kick-start the operations.

Comments Chopra, “Garage or no garage, we were very excited about the place.”

“Now we were four people coming from the bureaucratic setup and we certainly needed assistance as we endeavored to go on a quasi private mode,” adds Chopra. Finding a consultant was the first concern of the team. And the company went back to it parent's tendering way. Given the tendering process, the team felt that they were lucky to get Accenture as the consultant. Accenture was given a month to make the project report, suggest future course for tender process, and also to assist in searching partners for software development. This process took over a month, given that the delay was on the part of the team as they were few changes in the spec. Finally, Accenture, along with the report, presented them with a list of 4-5 major giants in the country who could do the software development. In came the tender again and finally they narrowed down on the US-based company, Broadvision (working out of Bangalore), was chosen given its L1 status. By this time, the team had moved ahead-from a garage to a verandah. Clearly, ticketing on the net was not the 'hot' priority for the Railways and hence the lackadaisical attitude. In fact when the team went to the railways and asked for few people with printing and distributing experience, the request was turned down, as there were no vacancies in that particular area. Left to a beg, borrow or steal situation, the team looked around and found a huge talent of retired people who had worked in the reservation system and CRIS offices.

With the software and people in place, the company also side by side looked at hardware. Without any experience on hardware buying, the company again looked out. While there was a huge buying of hardware within the Railways, the team turned to the Delhi Metro Railway Company (DMRC), which was deploying its own ticketing system. DMRC agreed on a 1% commission basis. All set and ready to go. In a period of little over six months, the team was ready to roll out the system.

It was heartening that in the first month, the company did a business of about 3,000 tickets.

One might ask, what so special about IRCTC? Here is a company which is in a monopoly business and was assured success from the word go. Well, given the situation in which the team started, from garage to verandah, lack of people, etc, it is praiseworthy that the venture has moved beyond the pilot stage, like so many other government projects.

Comments Chopra, “We came from a bureaucratic setup where for every officer we have four other support people like stenos, inspectors, etc.” To break this mould and work without these privileges and yet make the business successful in the same set-up certainly calls for some applause. Today, the Internet ticketing is available in over 120 cities across the country.

owever, the bigger story is the usage of Internet beyond the A and B class cities. Ever heard of places like Izat Nagar, Tumkur and Aluva. They are all places in India. To get such cities/towns on the Indian Internet usage map is indeed a noteworthy feat for any company. As per data available, the top 10 cities accounted for about 91% in April 2003 and declined to 83% by April 2004. The decrease in the percentage of the top 10 is due to the smaller cities/towns getting on the Net. Interestingly, this has not happened because of a huge advertisement spree by the company. 'The system works and the tickets are couriered at home' is the word of mouth message that has spread from individual to individual to city to city to India and beyond. Today, even NRIs are booking over the Net.

However, for IRCTC and its IT team, the journey has just begun. They continue to focus on a single purpose-'how to make the ticket booking queues vanish'. When credit card security was a tricky perception to handle, the company started giving tickets with inter-bank transfer mechanism. Given that the bulk of business comes from the top 10 cities, the company saw a pattern in booking tickets-heavy booking on weekdays only. The company realized the limitations Internet posed and moved on to the next level of adding other delivery channels rapidly. Next target-mobiles. Already telcos like Reliance and Hutch are offering services to book tickets on mobiles. Given the huge mobile population, the IRCTC mission certainly looks achievable. But for the team, this is just one more step in the their journey. Next on the agenda-landlines, call centers and eTicketing (print you own ticket).

Today the company boasts of one of the largest B2C e-commerce websites in the Asia-Pacific region. And it all began in a 'garage'. Its revenues have also leapfrogged from Rs 27 crore in 2002-2003, to a record Rs 110 crore in 2003-2004-a growth of 307%. Its business has grown rapidly from selling 112 tickets a day in the beginning to over 3,000 tickets a day by end of March 2004.

The company has been helped to do away with the long queues and helped empower ordinary citizens to go online and transact. Today, the company has a network in over 120 cities and citizens can now book tickets from the comforts of home and office with assured delivery of the tickets. However, the big story is that the company has made Internet usage a reality in cities ranging from Anand to Benaras to Guntur to Shimla to Shillong.

For the company, the game has just begun. For successfully implementing online ticketing and scripting an e-commerce success story, the award for Path Breaker of the Year 2004 goes to the Indian Railway Catering and Tourism Company, IRCTC Ltd.

Yograj Varma in New Delhi

Major Milestones

October 2001 Final discussion with Railway Board

November 2001 Railway Board gives approval

April 2002 Operation center up and ready

August 2002 Formally inaugurated by the Railway Minister

August 2002 completes one month of operation with an average of 112 tickets per day (in the NCR region only)

March 2003 Service spreads to 40 cities

April 2004 1 lakh ticket per month crossed

July 2004 14 banks with inter-account facility and three payment gateways active

September 2004 Mobile reservation service launched with Reliance and Hutch

October 2004 Service spreads over 132 cities