case 1-428-916

revised December 14, 2012

Business Model Innovation at TutorVista:

Personalization and Global Resource Leverage
Is it possible to turn the perceived negative socioeconomic effects of outsourcing in the US economy

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into a global value-adding tutoring service that leverages global talent? How do you convince American
parents to hire tutors from India—tutors whose accents may differ significantly from those of their children?
How do you induce these parents to set aside the perceived outsourcing stigma? How do you persuade them
to hire a tutor whom they and their children will never meet in person? Is it even possible for students and
tutors to establish a personal connection when they are separated by thousands of miles and come from

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vastly different cultures? Can tutors have a significant impact on their students’ academic performance
despite these limitations? How does a company that offers such tutoring overcome the cultural and human
challenges—let alone the business challenges of technology, demand forecasting, pricing, and training—to
convert American students and parents into satisfied customers?

Introduction
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Figure 1
Cartoon that Inspired the TutorVista Business Idea
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Source: Omaha World-Herald, Jeff Koterba

Published by GlobaLens, a division of the William Davidson Institute at the University of Michigan.
© 2010, Professor C.K. Prahalad and Professor M.S. Krishnan. This case was prepared by MBA students Alexander
Robart, Kanthimathi Santhikumar, and Rahul Pal under the supervision of Professor C.K. Prahalad and Professor M.S.
Krishnan of the Ross School of Business at the University of Michigan.

Unauthorized reproduction and distribution is an infringement of copyright. Please contact us for permissions: [email protected] or 734-615-9553
Business Model Innovation at TutorVista 1-428-916

These are all questions that Krishnan Ganesh faced as he began thinking about remote tutoring after
seeing the cartoon in Figure 1. A few years later he founded TutorVista, an Internet-based remote-tutoring
services company that seemed to be overcoming the hurdles raised by all of the questions listed above.
Ganesh had designed the right combination of factors, such as an innovative pricing model and the ability
to regularly measure and report students’ progress, to attract thousands of children and their parents to the
remote-tutoring platform.

In order to get TutorVista off the ground, Ganesh tapped into the vast human capital resources available
across India. This included teachers, highly qualified housewives, and retired teachers and businessmen
(many with master’s degrees and doctorates), working mostly on a part-time basis, from both large and
small cities. TutorVista adapted technology to connect relatively remote towns in India to the rest of
the world, enabling tutors to be hired and trained remotely, saving TutorVista on-site costs. The initial
technology platform of TutorVista enabled interactive audio sessions between tutors and students aided
by a proprietary whiteboard interface to supplement collaboration through exchange of handwritings,

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drawings, and pictures. Its employees were flexible and were trained to understand the entire organization
and its most pressing needs, enabling them to take on multiple roles and help the company grow. Ganesh
stimulated customer demand with an innovative “all you can eat” – or in this case, “all you can learn” –
pricing model. Lastly, he carefully managed demand to match the available resources.

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These factors enabled TutorVista to grow into a thriving business in the first 24 months with nearly 150
on-site employees, 600 tutors scattered across India, and thousands of customers (i.e. students) receiving
instruction in academic subjects such as math and English. Interestingly, 37% of its American customers
took English lessons. Most of TutorVista’s on-site employees were based in its Bangalore headquarters
but its remote tutor base continued to grow, with its technological capabilities to enhance the tutoring
experience improving monthly. TutorVista subsequently expanded to tutoring in other subjects including
science, physics, chemistry, and biology.
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The following case details the operations, technology, training, and other key aspects of TutorVista’s
business. It illustrates the capabilities required and the challenges faced by a company trying to satisfy
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the needs of the developed world with the resources of a developing country through the adept use of
technology.

This case looks at the challenges TutorVista was designed to overcome, its business model, and offers
a description of TutorVista’s customers and tutors. The case also provides details on the organizational
structure of TutorVista, its various functional divisions and how these divisions support one another. The
case overview on the day-to-day functioning of the core TutorVista group includes detailed discussions of
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its sales and marketing, technology, tutor relations, and customer care divisions. The case concludes with a
brief discussion of some of the critical challenges that TutorVista faced as it continued to expand.

Overview

Conception and Launch

In 2002, while living in India, Ganesh was struck when he saw an American cartoon in which a father
tells his daughter, “No. You may NOT outsource your homework to India.” This led him to question: “Why
not?” Soon after, Ganesh and his wife took some time off to tour the US and the United Kingdom. They
listened intently as their American and British friends complained about the price of tutoring for their
children, which they said ran as high as $150 an hour from businesses such as Sylvan Learning. Ganesh was
soon convinced that he was on to something.

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Ganesh already had a wealth of experience in the business process outsourcing (BPO) arena. Among
other successes, he had founded the outsourcing firm Customer Asset and later sold it to ICICI Bank. But he
knew he wanted to build a business that took the BPO model several steps further. Specifically, he wanted
a business that leveraged local Indian talent to serve global customers, but in such a way that it allowed
him to own the entire value chain. He did not just want to be a nameless B2B service provider with a small
market segment. This meant that he would have to provide services directly to consumers around the world
under a brand name, a first for an Indian technology company. He also wanted to build a business that
demanded relatively low capital expenditures—to be capital efficient, as it is known in venture capital
circles. Lastly, he wanted a business that would be easily scalable once the core had been established
successfully.

Ganesh started to consider the tutoring market as a potential business opportunity. Within this market,
he believed that a reasonable price point – which would have to be much lower than the industry standard
of $150 per session—would be important for scalability. He realized that he needed a new pricing model

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that significantly altered the economic rules of the game and allowed him to drastically expand the market.

It seemed that remote-tutoring services using a Web-based platform to harness Indian labor would be
the model to satisfy all of these requirements. And so TutorVista was born. Within months of its founding
in February 2006, Ganesh was able to raise $2 million through a Series A round of venture funding from

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Sequoia Capital, one of Silicon Valley’s most esteemed venture capital firms. Ten months later, Ganesh raised
$13.25 million through another round of funding from a syndicate of firms, including Sequoia, Lightspeed
Ventures, and Silicon Valley Bank. This investment gave Ganesh the capital he needed to build the TutorVista
platform into the disruptive innovation he envisioned. In early 2009, a Series C round of venture funding
raised an additional $18 million, led by strategic investors Pearson Group and Manipal Education, two names
well-known in the education sector.
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Ganesh believed that creating a disruptive business innovation was about more than just using simple
labor arbitrage to lower prices incrementally. If TutorVista were to lower tutoring costs by 50%, it would
certainly expand the market. But that alone would likely not be enough to keep potential competitors from
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sacrificing margins to match his price cuts. He wanted to achieve a price point that fundamentally remade
the competitive landscape. Simultaneously, he recognized that with an all-you-can-eat pricing model—as,
for example, with a gym membership—customers usually stopped trying to get the most out of the service
after a short period of time, as the service became part of their monthly budget or the initial commitment
to use wore off. These realizations led him to introduce TutorVista’s revolutionary $100-per-month model,
which allowed customers to schedule as many sessions as they wanted in a given month. Compared with the
industry standard of $150 per session, this was certainly a game-changing price point.
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Ganesh recognized that the technology platform was the key to powering the TutorVista model. It
needed to be able to connect thousands of people simultaneously, while providing a unique experience
to each customer. This differed from the traditional BPO infrastructure, which usually relied on a single,
massive call center in a major Indian urban center. Ganesh wanted to connect tutors from cities all across
India, operating independently from their homes, to customers all across the US and eventually the rest of
the world. In addition to the platform, TutorVista needed to build the capabilities to hire, train, motivate,
and deploy tutors from across India to serve the students all around the world. This was far more difficult
than placing tutors in one location for easy managing. Very little face-to-face interaction was to occur
between TutorVista staff and tutors, exacerbating management challenges. So developing the competencies
to motivate and manage a highly qualified but remote pool of tutors was extremely important.

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In attempting to create a well-known consumer brand, Ganesh realized that he was trying something
that had never been established before. He recognized that if he were successful, the TutorVista brand
would present a significant entry barrier to competitors. This was in addition to the fact that any competitor
would have to raise a similar amount of capital to build a suitable competing model.

Customers
As of 2008, the core customer base of TutorVista consisted of students in the US ranging from grades 1
through 12 and college. The primary subjects that they received tutoring in were mathematics and English, but
TutorVista planned to continue widening the scope beyond these two subject areas. Students generally were
seeking help with their studies over and above what was provided to them in school. For younger children,
TutorVista acted as a substitute for parents who lacked either the time or the skills to help their children with
their studies. Figure 2 details the percentage of customers across grade levels.

Figure 2

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Customer Breakdown

Grade Level % of Total Students

Grades 1–8 52%

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Grades 9–12 28%
College 20%

Tutors
TutorVista was able to tap into a large pool of experienced and qualified tutors in India. By October
2009, TutorVista employed more than 2,000 tutors across 128 cities in India, all of whom operated
remotely. They ranged from 22 to 70 years old. The majority had never met TutorVista staff in person, but,
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nevertheless, they were excited to teach American students. One in particular was so worried about how
her performance would reflect on the entire Indian educational community that she spent the entire day
before her first day of tutoring preparing for her first session. Many were school tutors or college professors
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who were retired or taking a break from work and were attracted to the chance to continue their passion
for teaching from home. An important reason behind the existence of such a large pool of tutors was that
Indian culture places a significant value on education. Another advantage that Indian tutors provided was
their fluency in English. About 85% of the tutors were female, reflecting the large proportion of educated
women who are not employed full time in India. Average tutor utilization, which was 40-45% to start, and
grew to 70-75% over time.
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Organizational Structure

TutorVista grew significantly over its first three years, building a core staff of about 150 employees
(excluding the tutors). The chart in Figure 3 shows the organizational structure and leadership. CEO Ganesh
– who in some media is also known as Ganesh Krishnan – handled board relations, company financing,
operations and delivery, and B2B relations. CTO Sanjay Bhat, who was part of the core start-up team, was
responsible for technology development and building a scalable platform. Srini Rai, the CMO, worked on the
marketing and product management functions. Rai had worked at Amazon prior to joining TutorVista and
brought rich experience in online marketing and sales.

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Academics
The academics management team consisted of tutors who were experts in their fields of study, many
of them from the US. They closely followed US syllabi and developed in-house content based on a range
of topic-subject-grade combinations, employing approaches similar to the ways in which the content was
taught in US schools. Sample problems were developed to augment the content and facilitate the teaching
process. All tutors had access to this content, but it could be shared with the student only through
the company’s software, as a means of copyright protection. TutorVista encouraged all tutors to use this
material to prepare for sessions and to clarify any questions they might have on content.

Sales and Marketing

Arun Kumar headed the sales and marketing team, which consisted of 70 employees. They were
responsible for new customer acquisition and ensuring that demand matched tutor availability. The team
relied heavily on online customer acquisition and live sales demos—essentially free tutoring sessions—to

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attract and convert potential traffic into paying customers. The marketing team also was responsible for
balancing demand in order to better utilize tutor skills. For example, the team increased online advertising
for math tutoring if math tutors were less utilized than English tutors.

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Figure 3
Organizational Structure of TutorVista

CEO
CMO Ganesh Krishnan
Srini Rai
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Sales Tutor Customer Human
Academics Technology
& Marketing Operations Service Resources
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Srinivas Rahul Kedia Sanjay Bhat Rashmi Rama Murli

Cuddapah Arun Kumar CTO Daga Harinath Nambiar

Technology
At its heart, TutorVista was a technology company. The medium for providing tutoring services was the
Internet, utilizing a proprietary platform that was developed in-house by the TutorVista development team,
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though the platform prototype was based on off-the-shelf tools. Systems and processes were required for
tasks such as scheduling, matching customers to tutors, and selling to potential customers who were online.
The technology team developed almost all of these systems in-house. This team also was responsible for
providing technical support and addressing any technical issues that arose. Prakash Rengarajan, the product
manager, was responsible for interacting with all of the other teams and streamlining requirements.

Tutor Operations
Headed by Rashmi Daga, the 20-person tutor relations team was responsible for hiring, training, and
engaging the more than 2,000 tutors throughout the country. The team also was responsible for ensuring
the proper distribution of tutors, but neither Daga nor her staff met the majority of the hired tutors in
person. Most of the tutors were remotely hired in their own cities and towns. Daga’s goals included planning
a portal for the tutors so they could interact with each other more freely, communicate ideas, post concerns

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and issues, and seek solutions. The team also was responsible for developing hiring and training processes
as well as tutor monitoring and feedback and interacting with the technology team to define improvements
to the systems for the automation of tutor-relations processes.

Customer Service
The 15-person customer service team, led by Rama Harinath, was responsible for two main tasks: 1)
monitoring tutor sessions to ensure quality and 2) following up with clients to ensure customer satisfaction
and, hence, repeat business. For example, this team followed up with any customer who had not recently
taken a class to ensure that the client still wished to continue using the service.

Human Resources
A small human resources team in Bangalore helped with hiring at headquarters. Most of the managerial
talent was attracted to the company by the reputation of its founders, particularly Ganesh, who had
a number of successful past start-up ventures. This team included Jarrod Brown, a US-based business

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development specialist who initially served as TutorVista’s academic director. Each year, he spent nine
months in the US and three months in India. He was responsible for business development and partnerships
with US-based organizations along with curriculum and module development.

Business Operations

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While much of the day-to-day operations took place to organize the service behind the scenes, from the
student’s perspective the tutoring process involved three steps:
• Scheduling and analytics
• Collaboration/tutoring
• Feedback mechanism
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Scheduling and Analytics
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Once a student purchased the service, he or she could log on to the platform at any time, day or night,
to request a tutoring session. There were two ways to schedule the session, prior scheduling and on-demand
scheduling.

When students chose the prior scheduling method, they could schedule a session to start anywhere
from 30 minutes up to two weeks hence. Students typically made their appointments between two and 48
hours in advance. On the scheduling tool, they were shown a list of available tutors for their chosen grade
and subject along with the available tutoring time slots. The prior scheduling option enabled students to
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select a preferred tutor. About 94% of all student requests for preferred tutors were met during appointment
scheduling. If the student did not join the session within five minutes of its planned start, the slot was
freed up so the tutor was available for an on-demand session.

Students who wanted a tutor on demand could go online and choose “connect now” and they would
be immediately assigned to a tutor for their grade and subject. If a tutor who had previously been chosen
by the student as a preferred tutor was available for on-demand calls, then that tutor was assigned to the
student. If not, another available tutor for the subject was assigned.

Because on-demand scheduling was used by students more often than prior scheduling, TutorVista
used the on-demand traffic to dynamically assess student needs. In 2009, with the highest demand being
for mathematics and English, the on-demand scheduling tool was available only to students who requested

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tutoring in these two subjects. For all other subject offerings, students were required to use the prior
scheduling option.

To support these two scheduling options, TutorVista needed to forecast not only the number of students
who might require tutoring at any given time, but also the subjects. Hence, scheduling tutoring sessions
became one of the most highly complex processes carried out at the firm. TutorVista requested information
about the grade level and subject/topic that the student wanted to cover. Based on this information, over
a period of time the firm analyzed the trends in student demand and developed a tutor-requirement chart
that laid out how many tutors were needed for each subject at any given time. The scheduling team then
assigned tutoring hours based on this and tutor availability. Although this entire process was automated, a
team monitored the scheduling process to ensure that all tutor requests were fulfilled and all students were
fully satisfied. If there was excess demand for tutors, special requests were immediately made for tutors to
work overtime sessions.

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Collaboration/Tutoring
Once a tutoring session was scheduled, the student logged on to the online portal to connect with
the tutor. Each tutoring session lasted one hour, with 45 minutes of actual tutoring plus 15 minutes of
initial setup and final feedback. Students and tutors used TutorVista’s proprietary collaboration platform for
communication. The platform offered a combination of chat, whiteboard, voice, and file-sharing features to

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support rich communication and collaboration.

The tutor was given five to 10 minutes of setup time up front to ensure smooth and glitch-free
communication. The tutor also could use this time to go through a detailed report of the previous five
sessions taken by the student. The report contained a session summary of the subjects and topics covered
during the previous sessions and internal tutor notes. The tutor notes were qualitative comments entered by
the previous tutors on the skill level of the student and any other behavioral or academic points that might
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be of interest or concern for future tutors. This helped ensure continuity in the tutoring process across
multiple tutors. Following setup, the tutors spent 45 minutes explaining concepts and working through
practice problems. At the end of the session, students had the option of replaying all of their previous
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sessions if they wanted to review particular concepts or a past problem.

As noted earlier, students also could choose a particular tutor as a preferred tutor and TutorVista
would try to schedule accordingly. TutorVista encouraged students to consistently use their preferred
tutors because, after multiple sessions, these tutors would be more aware of their students’ strengths and
weaknesses and be able to tutor them the most effectively. Students could choose different preferred tutors
for different subjects.
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Feedback Mechanism
Every month progress reports were sent to both the student and the parent/guardian. The reports
detailed the number of sessions, subjects and topics covered, and a brief summary of the student’s progress in
assessment tests. Tutors recommended students take assessment tests after they completed a certain number
of sessions. The onus was on the student to take these tests so that TutorVista could then chart out a learning
plan for the student. The learning plan was a highly customized action plan jointly developed by the student
and the tutor. TutorVista developed intelligent systems to analyze test results, identify students’ weak areas,
and generate automatically a customized learning plan for each student.

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Session Quality Maintenance

TutorVista placed significant importance on providing each student with a high-quality learning
experience. To maintain this level of session quality, the Air Traffic Control (ATC) team was created. The ATC
team monitored recorded and live student-tutor sessions selected at random. The team evaluated tutors on
communication and teaching style, response time, subject knowledge, and expertise in handling the student.
Tutors received additional training sessions if they performed poorly during the monitored sessions.

The ATC team also requested feedback from long-term customers. Team members closely reviewed feedback
forms from students to identify patterns in the TutorVista experience. If negative feedback was received, ATC
immediately contacted the student to understand the cause for concern. Once the issue was resolved, ATC
monitored the next tutoring session that the student scheduled to ensure that it went well and met the
student’s expectations.

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ATC also closely monitored sessions to check for tutor impersonations. In this remote service with no
video, there was the need to ensure that the hired tutor was actually the individual participating in each
session, not an impersonator. ATC also tried to ensure that no ethical violations occurred, as some students
requested tutors to complete their homework for them. TutorVista strictly prohibited this kind of behavior and
monitored sessions to ensure that such acts were not encouraged by tutors.

Sales & Marketing

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TutorVista provided tutoring services almost exclusively in the US, where there were nearly 60 million
K–12 students. The company also provided some services in the United Kingdom and South Korea, but those
were generally trial programs. The US K-12 and college student market was TutorVista’s focus for the near- to
medium-term.
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TutorVista offered tutoring primarily in mathematics, English, and the sciences, but also in more
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specialized topics if requested, particularly for college students. When niche tutoring opportunities arose,
they were treated as value-added services offered to satisfy and retain existing customers. This also enabled
TutorVista to try out new services. For example, the company investigated creating a summer tutoring
program on topics such as astronomy and dinosaurs aimed at educating and entertaining US children during
their summer vacations. It also piloted preparation tutoring for tests such as the SAT and GMAT. As with
its other more specialized services, it did not market this service externally. However, the firm increasingly
viewed test preparation as a major growth area in the future, particularly as it planned to expand its services
in Asia.
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With TutorVista being a relatively new venture with limited brand awareness, customer acquisition was
one of the company’s largest expenses. TutorVista’s sales and marketing organization was made up of 70
people—65 salespeople and five managers. In order to accommodate US customers, the sales staff worked
two shifts. They relied almost exclusively on online customer acquisition. The typical sales process involved
a combination of online marketing to generate leads and a live product demo to convert leads into paying
customers.

Online Marketing
TutorVista relied heavily on generating leads via Google. Google provided both organic traffic through
its search engine and paid traffic through its AdWords online advertising program. TutorVista used search-
engine optimization tactics to ensure high rankings in Google searches for relevant keywords. In addition,

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it purchased over 25,000 relevant keywords and phrases. For example, “help with English” was the most
expensive key phrase it purchased. AdWords spending was highly cyclical month to month, depending on
the US education cycle. The summer months tended to have low traffic and low conversion rates, while
January had much higher traffic and conversion rates. In January 2008, TutorVista spent between $200,000
and $300,000, roughly divided as 40% for math, 35% for English, and 25% for the sciences.

Two people handled the Google ad-bidding process for the AdWords campaigns. In addition to the
analytics provided by Google, they used a third-party analytical tool called Efficient Frontier that helped
them dynamically optimize their ad expenses. They were given a monthly budget and a large amount of
flexibility in how they allocated that budget, experimenting with new combinations of words and allocations.
They made adjustments to allocations weekly and sometimes daily. These rapid changes allowed them to
spend their money more effectively. It also made it more challenging, however, to perform a rigorous long-
term analysis of keyword performance.

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In addition to online traffic via Google, TutorVista generated between 10 and 15% of its online traffic
through affiliates. It had 15 affiliates, including NDTV.com, an Indian news site aimed at nonresident
Indians; math.com; and education.com. The compensation structures of these affiliate partnerships varied.
Some revenue-sharing mechanisms were based on a percentage of the lifetime value of a customer, some
were cost per click, and others were sales conversion-based. This variety of compensation structures

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was driven by an opportunistic approach to identifying affiliate relationships, but TutorVista planned to
implement a more strategic approach to establishing affiliate relationships and a streamlined compensation
structure in the future.

To improve conversion rates, TutorVista experimented with multiple iterations of its landing site and
the information it required from leads to participate in a sales demo. It went through approximately four or
five iterations in a year. Over the course of these iterations, it improved the bounce rate – the percentage of
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users who leave immediately after arriving at a site – from 70-90%. Then, to lower the bounce rate further
and encourage sign-ups, it lessened the amount of information it asked from a user prior to the sales demo,
eventually allowing users to participate in a demo without providing any personal information.
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Live Demos
Live demos were the primary sales tool TutorVista employed. Once a lead entered the site, he or she was
encouraged to try a demo. Once the individual chose to try a demo, he or she communicated with a sales
agent through the tutoring platform. After the agent determined the desired grade level and educational
area, the agent brought an appropriate tutor into the conversation to begin the tutoring demo.
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The sales agents were full-time employees who received additional compensation in the form of a
commission for each lead they converted into a customer. This commission varied month to month because
it was easier to convert customers during specific times of the year. The agent would get a commission on
the sale only if the lead converted immediately after the demo, because management had no process set up
to track the customer back to a particular agent.

For the demos, TutorVista assigned its best tutors, identified from student feedback and session
monitoring. They were chosen for their strong communications skills and ability to use the whiteboard
collaboration tool well. Tutors received a 40% commission on any sales conversion, while the salesperson
received the remaining 60%. Since the live demo had been implemented, conversion rates had improved
six to eight times.

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However, there was an additional complicating factor in the sales process. The students who used the
TutorVista service were generally not the customers who paid for the service. Parents generally paid, so
they had to be brought into the sales demo. It was typically the student who proactively searched for tutor
services. At the beginning of the demo, the sales agent would ask the student if a parent was around and
could sit in on the demo, because involving the parents tended to increase conversion rates.

Marketing Metrics
Cost per acquisition (CPA) averaged around $25 to $50; however, it varied dramatically by time of
year and marketing channel. Conversion rates also varied dramatically and TutorVista experimented widely
with different offers to test their effects on conversion rates. For example, at one point it offered a 75%
discounted trial subscription of $25 per month. However, it found that existing users were signing up for the
discounted subscriptions under new accounts rather than renewing their existing contracts. Despite this,
the company constantly tested new offers and packages and compared price points and conversion rates.
It regularly used “bucket testing,” displaying two alternatives on the site and comparing conversion rates

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between the two, typically a baseline offer and a test offer. Numerous variations of features and design
choices, such as site color, were tested using this approach to determine their impact on conversion.

Offline Marketing Activities

While TutorVista primarily focused on online marketing, it still engaged in some offline marketing

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activities. CEO Ganesh played the role of TutorVista’s evangelist, using his relationships with educational
organizations in the US to promote TutorVista. He sought partnership opportunities and raised awareness of
TutorVista’s brand and services. TutorVista also employed a US public relations firm with traditional public
relations activities. The firm helped TutorVista get coverage in multiple Western news outlets, including
NBC and BBC.

One of TutorVista’s few offline marketing activity areas was the expansion of its presence in US libraries.
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The firm had nine library customers paying a fixed rate for services. However, significant barriers hindered
expansion of this presence. The leading US tutoring providers were well entrenched and outsourcing fears
made it extremely challenging to convince US public libraries to switch to an Indian tutor service.
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TutorVista hoped to become a trusted tutoring brand, akin to Google and Yahoo in online search. Its
plan was to first build TutorVista into an extremely high-quality service and let the service itself attract
customers to build the brand. The company wanted to focus on the more proactive and expensive brand-
building activities once it had established a wider customer base.

Technology
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TutorVista offered students high-quality tutoring on a broad range of subjects in the comfort of their
own homes at a time of their choosing at a very low cost. Such a business model had not been executed
successfully before. Technology was the key enabler.

Business Context
TutorVista had the following three key business needs that drove its technology infrastructure
development:
1. Global virtual service. Carefully developed technology was critical for providing the core benefits of
low cost, quality, and flexibility to students around the world. The key technology component was
the collaboration platform. A number of off-the-shelf collaboration tools were available, ranging from
the free Yahoo! Messenger to the licensed WebEx. However, no technology platform existed that was
designed specifically for providing online tutoring services.
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2. Decoupling expenditures from operational scale. To support its distributed supply of Indian tutors
and global demand of students, TutorVista required the combination of an advanced technology
platform and usage policies that automated service delivery. Automation, in turn, allowed the entire
value chain to quickly scale to large numbers of customers. Without automation, costs would spiral
out of control. A well-integrated and effective enterprise resource planning (ERP) system formed the
backbone of the company’s operations, allowing the business to easily scale. The company designed
this system to meet its unique requirements.
3. Business model level experimentation. Success in a very competitive and fast-paced Internet industry
depends on quickly finding what works and what does not, based on continuous experimentation.
Technology and a well-integrated ERP system enabled experimentation with tutor-payment models,
subjects covered, seasonality, and pricing models. Successful execution of such experiments required
changes to the entire value chain.

Technology Platform Evolution

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TutorVista began with no proprietary technology. It used commercial off-the-shelf products instead.
The company owned a simple landing Web page with information about its service offerings. From this
page, prospective students were taken to a chat session with a salesperson, which relied on third-party
chat software. For tutoring, the company initially used WebEx, a leading enterprise-collaboration software
tool with voice and chat. With this system, tutoring sessions had to be scheduled manually. For payments,

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initially a third-party payment engine called trustcommerce.com was used. Thus, the business was piloted
with minimal custom-technology development.

However, this off-the-shelf combination imposed several limitations on TutorVista. First, the conversion
rate of its Web traffic into paying subscribers was poor. Sampling the service was painfully cumbersome.
Prospective students were required to download the WebEx client, which added a tedious step to the user
sign-up process. Additionally, the off-the-shelf solution limited TutorVista’s ability to collect usage metrics
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of online operations.
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TutorVista soon exhausted the capabilities of off-the-shelf technology. As business scaled up, manual
scheduling became a bottleneck, so the company built a customized software module that automated the
scheduling process. TutorVista then wanted the ability to monitor live sessions for improving quality, which
was not possible with WebEx. So the company gave up WebEx and developed its own monitoring technology.
Monitoring live sessions went on to become an important way to ensure service quality.

TutorVista later added the capability to minutely track customer behavior. It began to use technology
to collect valuable data that were analyzed to learn about customer use and needs. In the future, this
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information could enable the creation of new pricing packages. For example, TutorVista could charge for
access to the educational content as part of the tutoring service or it could introduce an hourly “pay-as-
you-go” payment model. To experiment with different payment models, it integrated custom-developed
payment software into its collaboration software.

Over time, TutorVista created flexibility in experimenting with its business model, which would not
have been possible if it had continued using WebEx. WebEx would not have allowed access to customer
usage patterns and the integration of the payment tool. TutorVista thus began building and integrating
software required for all parts of its operations, from customer acquisition to customer support and from
billing to tutor payments, into a single, unified technology platform.

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Technology Platform
As depicted in Figure 4 and explained in the following sections, the technology platform included
multiple modules.

Figure 4
Technology Platform

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Collaboration Module
The collaboration module was central to the entire value chain, allowing real-time interaction between
tutors and students. A screenshot of this module is presented in Figure 5. It included a whiteboard tool,
which was used to explain ideas through the use of graphs and charts. It also included chat features and
student-tutor session playback. The company continuously enhanced features by observing student-tutor
communication. It later updated the module with features such as math diagrams and graphics.

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Figure 5
Collaboration Module Screenshot

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Tutors, the sales team, and the customer-support team used the collaboration module. A common
technology platform facilitated easier communication among team members and quick resolution of
cross-functional issues. It also allowed for rapid allocation of resources across different functions. For
example, some tutors could act as sales agents because sales software was very similar to the tutor-student
collaboration software. The product-development employees could play the role of customer-support
providers and learn about the product usability issues firsthand. And technology updates were instantly
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available to all team members.
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Payment Module
As mentioned earlier, TutorVista initially used a third-party payment solution called trustcommerce.
com. However, it then developed its own payment module, which was tightly integrated with the customer
database. The integrated payment module allowed customer-service agents to tackle various kinds of
situations that could arise during a tutor-student session. For example, power failure was a common problem
in India. If any service-delivery problem occurred through no fault of the student, a customer-care agent
could issue bonus hours or refunds.
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The payment module also enabled the company to experiment with different pricing models. Without
integration of the payment module with the overall technology platform, such changes would be impossible.
For example, in a pay-as-you-go model, students could pre-purchase certain tutoring sessions. In such a
payment model, the amount of consumption is an input to the payment module.

Academic Services
Academic services included a vast online repository of academic concepts, practice tests, and solutions
for each subject offered by the company. A screenshot of this module is shown in Figure 6. It had multiple
uses. It was used for training tutors, tracking a student’s progress, and finding a student’s expertise level.
Students used it for offline learning and practice. It was categorized by geography, subjects, grades, topic,
and subtopics. This content was developed from existing educational textbooks and was continuously
updated and expanded based on feedback from tutors and students. It was offered free to subscribers, but
TutorVista believed it had the potential to become a core revenue source in the future.
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Figure 6
Academic Services Module Screenshot

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Customer Support
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The company built its own customer support module, leveraging the open source “Eventum issue
tracking” system. This is shown in Figure 7. As with others, this module was tightly integrated with the
customer database, collaboration module, and payment module. A customer-support agent could seamlessly
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switch from Eventum to learn about the issue history, to the collaboration module to interact with a
customer, and finally to the payment module to provide either refunds or discounts. TutorVista’s customer
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support team provided 24/7 customer support via online chat.

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Figure 7
Customer Support Module Screenshot

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ATC Monitoring Module
The Air Traffic Control (ATC) monitoring module allowed a quality-department employee to join a live
session as a silent observer. Students and tutors both knew when someone had joined. The observer ensured
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that tutors were providing quality services to the students. A snapshot of this module is presented in Figure 8.
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Figure 8
Monitoring Module Screenshot

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Calendar Module
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The calendar module showed students and tutors the sessions that they had signed up for through the
scheduling tool. In addition, this module showed specific academic programs and new announcements from
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TutorVista. The primary objective here was to create a convenient tool for both students and tutors.

Tutor Operations

As described above, the 20-person tutor relations team was responsible for staffing, recruiting, and
engaging the 2,000-plus TutorVista tutors throughout the country. The following describes each of these
processes in greater detail.
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Tutor Staffing Process

Tutor staffing was based on the activity forecast for the coming months, which was determined by
search-engine marketing spending levels and also subject- and grade-mix requirements. The key criteria that
TutorVista used for tutor hiring were access to broadband Internet connection, prior teaching experience,
relevant educational qualifications and subject knowledge, and strong communication skills.

Although these were the most important criteria for selection, there were differences in their relative
importance depending on the type of student for whom the tutors were being recruited. Broadband connection
and prior teaching experience were mandatory qualifications for all tutors. But in hiring tutors for college
students, more weight was placed on a tutor’s subject knowledge. When hiring tutors for students in high
school or below, the emphasis was more on communication skills.

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Besides the four primary requirements above, there were several secondary criteria. TutorVista began
aiming for tutors younger than 40 because they tended to be more tech-savvy and easier to train in the
American style of tutoring. Younger tutors also were generally more flexible in their work hours. Although
TutorVista operated 24 hours a day, the peak demand time was 4 a.m. to 11 a.m. Indian Standard Time, so it
was important for tutors to be willing to work early morning shifts.

Another secondary criterion was the city from which a tutor was hired. As mentioned earlier, tutors
had been hired from more than 100 cities across India. These included cities in the Tier 1, Tier 2, and Tier 3
categories (Indian cities are assigned to tiers by the government based on per-capita income). Tutors from Tier
1 cities, the wealthiest of the three categories, were more tech-savvy and faced fewer Internet connectivity
issues in comparison with tutors from Tier 2 and Tier 3 cities. Moreover, when a network connectivity issue
arose, the problem was resolved much more quickly in a Tier 1 city. Rapid issue resolution was of primary
importance to TutorVista, as students could not be kept waiting because their tutors were unable to access
the session due to technical difficulties. On the other hand, tutors from Tier 1 locations had much higher

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salary requirements and additional perk expectations in comparison with tutors from Tier 2 and Tier 3 cities.
TutorVista worked at hiring a reasonable proportion of tutors from each of the tiers so that salary expenses
were optimized.

Tutor Recruiting Process

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The recruiting process for tutors involved the following steps:
1. Application for employment: Prospective tutors reached TutorVista at [email protected] or
through the online portal by giving their name, qualifications, phone number, and e-mail address.
Using either the chat tool available on the portal or the phone, a representative from TutorVista
contacted the applicant with additional job details. The prospective tutors were then asked to take
a test over the phone or online.
2. Academic interview: A 90-minute academic interview was carried out by an experienced tutor.
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Questions for these interviews were continuously refreshed.
3. Accent and communication check: The prospective tutors were asked to read a passage out loud to
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verify their accent and communication skills and ensure that students would be able to understand
them.
4. Background check: TutorVista carried out a quick verification of academic qualifications and
references.

Once these steps were completed to satisfaction, an offer letter was provided that outlined the salary,
work requirements, and other details of the tutoring role. After TutorVista was well established, 70% of
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tutors worked on a part-time basis (four hours a day) and the remaining 30% were on a full-time basis
(eight hours a day). Tutors had the option to choose the number of days per week they would be available
to teach.

Pay was based primarily on availability and grade level. On average, tutors for high school and below
earned $250 a month, while college tutors earned $500 a month. These were in line with the market
rates for tutors in India. Moreover, TutorVista tutors were spared other duties such as test scoring and
administrative responsibilities, which were generally expected from school or college tutors.

Tutor Training Process

Once a tutor came on board, he or she underwent academic, systems, and cultural training. Academic
and systems training were carried out by experienced tutors. The academic training primarily consisted of
familiarizing tutors with the American academic syllabi and style of tutoring. Systems training consisted
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of using a training portal to familiarize tutors with the various technological tools available for their use.
In training, three to five trainees worked under the guidance of one trainer for three to four hours per day
for five days. Mock tutoring sessions were carried out during this period and the trainees were given the
opportunity to practice exchanging knowledge with each other. Cultural training was provided to accustom
tutors to the US mode of learning, to the way in which American students speak, and to other “dos and
don’ts” of American culture.

In the end, the trainees were graded in multiple areas such as communication, writing, punctuation,
academic ability, and online interaction with other tutors. A certification test was conducted by a seasoned
tutor to provide a final validation of the hiring decision. Once a tutor completed all of these training
examinations, he or she was eligible to start work. Tutors were then given two more weeks to practice with
the platform before they began live tutoring sessions. Those who failed to pass initially, but were close,
were given an additional week of training. If they still were unable to pass with adequate grades, they were
asked to leave. The entire recruitment and training process took anywhere between seven and eighteen

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days.

Tutor Motivation
TutorVista used many methods to increase tutor loyalty and motivation, some more developed than
others. The most important programs being tested were the following:

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• Student feedback: Any time a student sent positive feedback about a tutor, it was immediately
conveyed to the tutor. This helped tutors gain confidence by knowing that they were helping students.
• Monthly appreciation e-mails: Every month, e-mails, including the names of tutors who had been
specially recognized by students, were sent to the entire tutor community so that tutors gained
visible recognition for their work.
• Financial bonuses: Tutors who performed consistently and exceedingly well earned financial bonuses.
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• Tutor suggestions: TutorVista constantly sought suggestions for improvement. Every time a tutor
suggestion was implemented, the tutor was informed by TutorVista. This showed the tutor that he
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or she was considered valuable by the company and offered proof of the impact that he or she could
have.
• Career advancement: Providing additional roles and responsibilities, such as interviewing and
mentoring, helped tutors view TutorVista as more than just a provider of part-time work.
• Tutor community: Improving the engagement among the tutor community helped tutors feel more
connected to the company, fellow employees, and other tutors. TutorVista worked to improve the
tutor portal, encouraging tutors to take part in discussion forums, wikis, and fun contests.
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• Offline meetings: Considering the remote nature of work for the tutors, TutorVista also attempted
to organize in-person meetings for tutors to create a stronger community and increase tutor loyalty..

Tutor Career Paths

Over time, as tutors became more experienced in online tutoring, TutorVista provided some of them
with opportunities for advancement. Some of these additional responsibilities included:
• Recruiting new tutors
• Mentoring new tutors
• Developing academic content
• Monitoring tutoring sessions
• Sales and marketing

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To be eligible to take on additional responsibilities, tutors were typically required to tutor for a minimum
of six to nine months with good feedback from students and good quality reviews from the ATC team. When
a slot opened up in any of the additional roles, an e-mail was sent to all tutors detailing job responsibilities
and experience requirements. Those who applied were assessed in their expertise as a tutor. If they were
selected, they were provided with the requisite training to perform their new role.

Tutor Retention
The average length that a tutor worked with TutorVista was one year. There were a number of reasons
for this short retention rate. First, tutoring was a seasonal business. Tutor demand was very lean between
June and August and also in December. Hence, TutorVista encouraged tutors to take their vacations during
these low-demand periods. Some tutors did not return after such periods.

The second reason for low retention was that most tutors considered their job at TutorVista to be
part-time work that they carried out when taking a break from a full-time job. Eventually, they generally re-

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entered the workforce with a full-time position. Exit interviews with tutors revealed that the inconvenient
timing of sessions was one of the primary reasons tutors left. Unfortunately, little could be done to improve
this element of the TutorVista experience. As a result, TutorVista worked to hire younger tutors who seemed
to be less bothered by the inconvenient scheduling.

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A third reason tutors left was their lack of company loyalty resulting from the absence of community. The
vast majority of tutors never met another TutorVista employee. Loyalty to TutorVista was difficult to build in
such an environment. Most tutors used the TutorVista platform as just a technological interface for them to
reach out to students around the globe. Their primary motivation for becoming tutors was satisfaction from
helping students master subject concepts and from positive student feedback. Considering that a significant
amount of effort was carried out by TutorVista to train tutors and to consistently monitor their performance,
it was imperative for TutorVista to build a more tangible community to generate employee loyalty. This
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would provide a face behind the technology platform and improve tutor retention.
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Customer Service

The customer service team was an in-house operation that used a case-based approach. Every new
issue raised by a customer was opened as a new case and followed to closure using a case-management
module. Students could access customer service either through the customer-care button available on the
collaboration tool or through the company website. The issues were addressed through an interface that
consisted of a chat window where customer-care representatives could chat with customers. The most
common customer-care issues were inability to schedule a session with the preferred tutor and tutor non-
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responsiveness.

To better resolve customer issues, customer-care representatives had access to customer data such as
the names of students and their parents, grade, the number of sessions scheduled and number of no-shows,
and any previous customer-care issues. To identify if a tutor was experiencing a technical issue, data were
collected on a session, from appointment scheduling information to the number of mouse clicks.

Besides issue resolution, the customer-care team played a major role in monitoring common issues that
students faced and then developing and implementing solutions. For example, the team found that students
were experiencing difficulties configuring the audio using the written instructions provided. The team
worked with the technology team to develop a “configure audio” demo that helped to significantly reduce
customer problems with audio configuration. Customer-care feedback was collected at the end of every call.

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Conclusion

While this case describes many of the keys to TutorVista’s success, its model is not without challenges.
Selling a service, which is a fundamentally intangible thing, is difficult. It is not like a product that a
customer can inspect before purchasing or return if unsatisfied. The fact that TutorVista was an Indian
company produced an extra set of challenges on top of what was already a difficult selling process. In the
words of Ganesh, “Convincing someone in Mississippi to shell out $100 to an Indian company providing
a service on the Internet is challenging.” At $100 per month, TutorVista was far cheaper than its brick-
and-mortar competitors, but it still represented a significant portion of many consumers’ monthly budgets.
Lastly, scaling up customer acquisition in a cost-effective manner was a constant challenge, requiring a
significant portion of TutorVista’s resources.

The TutorVista story is all about creating a disruptive business model that addresses the problems and
challenges in traditional business models. The case illustrates the importance of both the strategic capabilities

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necessary in discovering a new business model and the implementation capabilities needed to successfully
execute that model. The sources of innovation here are the aspirations of the senior management and
employees and the culture of experimentation supported by transparent operations and analytics. However,
the TutorVista business model is still evolving and is bound to face challenges from new competition and
other market forces both on the demand and supply side. The emergence of new digital platforms such as

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iPads and similar tablet devices is enabling new ecosystems for learning the educational services market.
Free access to content and the not-for-profit approach of initiatives such as the Khan academy by Salman
Khan may present new challenges to the TutorVista business model. A new platform called Gooru developed
by Dr. Prasad Ram aspires to transform the K-12 education model through an engaging platform that enables
a personalized learning ecosystem among student communities and teachers using wide range of lesson
plans and other resources available globally. While TutorVista certainly disrupted the traditional tutoring
model, ubiquitous connectivity and digitization of content open a plethora of possibilities in education
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business models. TutorVista’s capacity to spot new trends early, and to respond rapidly, will determine its
ability to cope with challenges. For example, how will the emergence of new tablet technologies change
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the TutorVista platform? TutorVista also may face new entrants to this business model from established
education companies. What should be TutorVista’s strategy in this context? How can TutorVista leverage
open/free access education services such as the Khan academy? These are some of the questions that need
to be answered with clarity in the evolution of the TutorVista business model
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Appendices

Appendix 1
Founder’s Bio

With four successful ventures under his belt, Krishnan Ganesh was one of India’s most successful
entrepreneurs. He studied mechanical engineering at the University of Delhi and graduated in 1985 with an
MBA from the Indian Institute of Management in Calcutta. He then joined HCL, India’s leading computer
firm at the time and one of the early pioneers of high-quality IT-enabled education software and services.
In 1990, he became the co-founder and CEO of IT&T, which he launched with five partners, all former
colleagues from HCL. The firm specialized in maintaining and integrating computer systems. By 1996, it
employed 400 people in 16 locations across India. Ganesh became the nonexecutive director in 1998, taking
it public in 2000 before parts of the firm were purchased by iGate.

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In 1998, Ganesh took over as CEO of Wipro British Telecom, a struggling VSAT technology company
that eventually became Bharti British Telecom. In two years, he brought the company from near-bankruptcy
to break-even. By April 2000, his entrepreneurial bug began to itch again and he started Customer Asset,
one of the first business process outsourcing (BPO) companies. Within two years, he had grown Customer

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Asset to 2,200 employees. Soon after, ICICI acquired it for $19.3 million and renamed it ICICI One Source.
Ganesh continued to run the firm for the next year, doubling head count before leaving to begin exploring
his next entrepreneurial opportunity. He also was the nonexecutive chairman, angel investor, and mentor
of Marketics, a high-end data analytics start-up that was acquired by NYSE-listed WNS within four years of
inception in 2008.
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Appendix 2
Transcript of an Interview with a TutorVista Tutor

Interviewee’s profile:
Name: Rene Mary Verghese
City: Hyderabad
Age: 34
Education: MA, BA in education
Subjects taught: English
Timings: 4:30 a.m. to 8:30 a.m. Part-time
Other jobs: None; housewife

Q. Why did you join TutorVista?

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I was a teacher for five years prior to joining TutorVista. My health condition pushed me to find a “work
from home” job. I heard of a few companies that were TutorVista-like. I saw an ad from TutorVista and
applied. This was 2.5 years ago. I have been with them ever since.

Q. Is it working out well for you?

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TutorVista was a small company then. Training was exciting. We had a small team of tutors reporting to
a team manager. We don’t interact the same way today.

Q. Could you tell me about the training you received from TutorVista?
Training was interesting. I had no computer skills and they helped me with the challenge. In the initial
days, we had to prepare our own docs for the lessons. Now, we have prepared docs for most lessons. The
training was for 10 days. We have occasional refresher courses.
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Q. Could you tell us about your first lesson?
I still teach my very first student after 2.5 years. He is an adult from Taiwan and he wants to improve
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his English. He has made very good progress over the years. I will lose my first student one of these days.
[She laughs.]

Q. Could you tell me more about your U.S. students?

They are from 9–12 grades. Most of them are focused, polite, and quite satisfied. A few are demanding
(asking me to help with their homework, write essays, etc.). About 60% of my students are Indian American.
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Q. What aspects of your job do you like the most?

Apart from flexibility and the opportunity to work from home, I like taking the challenge of working on
last-minute sessions, the variety of the topics I teach, the change in both the topics and students, and the
fact that it is so individualized.

Q. What would you like to see improve at TutorVista?

The number of new regular/repeat students seems to be going down. Perhaps the economy has
something to do with it. Also, I have been here for 2.5 years and there is no ladder to climb. I am like any
new tutor who joined, say, in the last month.

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Notes

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