Freshdesk Targets Small Businesses With New IT Service Desk In The Cloud

Freshdesk, which raised $7 million in Series C funding from Accel India and Tiger Global in November last year, is using some of that capital to enter the IT service management (ITSM) market currently dominated by BMC’s Remedy and ServiceNow.

The new product, Freshservice, is a cloud-based service desk solution to help customers deliver their internal IT support. Freshservice combines some of the startup’s existing capabilities in the cloud with easy-to-use features built like a gamification app.

The IT service management (ITSM) market is dominated by slow growing but established incumbents such as IBM, CA, BMC (Remedy) and HP. This market witnessed one of its first disruptions when ServiceNow was launched in 2004 by Fred Luddy, a former CTO of Peregrine Systems. ServiceNow used SaaS model to woo existing customers of its much bigger rivals, and is now expected to report over $400 million in revenue for 2013. It’s currently valued at around $8 billion.

But Freshdesk founder Girish Mathrubootham told me that there’s still room for more disruption in this space.

“We want to take ‘the boring’ out of IT service help desks with Freshservice. We already have some 70 trials going on with customers who are looking for change,” he said.

Girish, a former top executive at Zoho, founded Freshdesk in December 2010. Freshdesk started by challenging Zendesk on cost and ease of use, and has so far made some good progress by signing over 15,000 paying customers including Sony Pictures and 3M.

Freshdesk’s recent progress also underscores the rise of SaaS startups from India that are beginning to expand globally. Subscription billing startup ChargeBee, Wingify and MobStac are among such companies.

Freshservice charges anywhere between $20 to $49 per month (subject to number of users), and has already signed up some paying customers including UK-based transportation company Belville Rodair International.

“We spend 80% of our time supporting internal customers. Freshservice helped us setup a helpdesk in less than an hour, with no infrastructure and no risk,” said Claus Rasmussen, director IT of Belville Rodair in a statement.

Freshservice is hoping that by staying away from targeting bigger customers already working with the incumbents, it can quietly build a new business.

However, rivals such as Microsoft are beginning to take notice of the IT service management market. Microsoft acquired Parature, a customer service SaaS provider, for $100 million earlier this month.

“We have taken the same core functionality of Freshdesk and are entering a new market with minimal engineering efforts,” said Girish who wrote this post few days ago explaining why Freshdesk was not afraid of Microsoft’s move.

The biggest challenge for Freshdesk/Freshservice, and many other Indian SaaS startups is to build a model that can scale beyond their first few hundred users and reach revenue milestones of $50 million, and even $100 million. Building a SaaS startup in India is perhaps not such a difficult thing these days, especially with lower entry barriers and enough early seed money chasing such ideas.