Emerging businesses are tapping into the opportunity to provide a first rung of solutions in a country that is likely to be the second largest contributor in Asia, next only to Japan, for detection of fraud by 2018.
The solutions are targeted at companies that cannot afford to consult a regulatory policy advisor for an end-to-end solution or has no compulsion to do so in accordance with the Companies Act 2013.
"Though medium and large companies generally work with global vendors, the Indian boutique solution providers can work with smaller companies which need affordable solutions. They might not be fully equipped to investigate a fraud or in collecting evidence. However, investigations can be carried out by working backwards with the data provided by the boutique companies," said Arpinder Singh, partner and national leader, fraud investigation and dispute services, EY India.
Though key provisions of the act are mandatory only for listed firms, the high bets placed by private equity and venture capital firms on entrepreneurial ven tures in the country have ensured that startups and growth stage companies backed by investors fall in line.
"We work with a services firm and a logistics company which are backed by institutional investors. Depending on the relationship of investors with the investee company, some of the companies are required to implement the policy even after the deal is closed," said Yatish Mamniya, co-founder and partner at Mumbai-based bootstrapped venture Integrity Matters. The company incorporated in August 2013 provides third-party services for enforcing whistleblower services and ethics hotlines to enforce a "vigil mechanism" for internal reporting of fraud.
"One of the requisites for setting up Integrity Matters was to dissuade employees from posting their complaints on public forums. At the end of the day, the efficiency depends on the tone and tenor of the top management," said Mamniya, who works across five sectors currently and has a target of signing on 50 companies by end 2015.
The threat of losing intellectual property (IP) to competition due to online fraud is gaining traction. "For online businesses such as e-commerce, job portals, matchmaking services and classifieds, content is an asset and they are wary of losing out to competition. Even traditional businesses which have large amounts of data online need protection. While there is intent, the awareness about prevention mechanism is low," said Pavan Thatha, co-founder and CEO of Bangalore-based Shield Square, which provides cloud-based security solutions against data theft.
Incorporated in March 2014, the company is working on a line of freemium solutions for startups in 2015 and devising a solution to protect theft of realtime stock market data.
There is a growing market in medium and large companies that depend on third-party analytics providers for speedy detection of fraud.
"In case of external facing businesses, especially in the BFSI (banking, financial services and institutions) sector, it becomes easier to detect fraudulent claims using analytics," said Mohan Kumar, co-founder and CEO of Bengaluru-based Trendwise Analytics, incorporated in 201.
"Apart from insurance and finance companies, telecom is emerging as a sector for this service due to increase in incidence of SIM cloning. However, majority of the target market is based outside India as traction among Indian companies for these services is low." Trendwise Analytics works with 50 clients across geographies and is looking to break even by 2015.
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