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The sheer size has perhaps not been comprehended. Why else would a market that’s larger in potential than the entire IT industry size just sit around silently, waiting to be tapped?

A remote village in Gujarat. Farmers deliver their share of milk to a milk collection center nearby. For a good three to four hours every day, they haggle with the officials at the collection center on the quality and exact quantity of the milk delivered. Given the cumbersome calculations involved, payments came in only after 10 days. And even then, the farmers are not sure about the reliability of these estimates.

Fast forward to the 22nd century. The farmer flashes his plastic card at the counter. It is read electronically and the identification number transmitted to a personal computer. The milk is weighed and the accurate result displayed by the PC.

Next on the agenda is sampling and the fat content is determined in just a few seconds. The fat content is displayed to the farmer and communicated to the PC. The computer calculates the amount due to the farmer on the basis of a rate chart that indicates the price for milk with different levels of fat content. The total value of the milk is then printed out on a payment slip and given to the farmer, who collects the payment at an adjoining window. Total time required for the transaction—30 seconds.

A farmer in Bagadi village in the Dhar district of MP logs on at the neighborhood information kiosk to check the prevailing market rates for potatoes. He finds that at the Indore Auction Center, potatoes are being traded at Rs 400 per quintal compared to the Rs 300 per quintal being offered by the local trader. He hops on to a truck and makes Rs 4000 more for his 10-quintal potato crop.

Kal Singh from Gunawad village in Madhya Pradesh refuses to compromise on the price of his Jersey cow. He advertises his cow on a net-enabled software called Gram Haat (village market) from a nearby kiosk. His message is posted to about 32 other villages in the vicinity and after some e-haggling, he gets a buyer from Dilwara village.

Mohan Patedar, a soyabean farmer from Tirla, Dhar, sold his last crop at the district market for Rs 700 per quintal. This was after checking the rates in different markets on the Internet at his village cyber kiosk. A few years ago, Patedar used to endure a 30-minute backbreaking journey to the wholesale market in Dhar just to find out the crop prices. Besides, the middleman who arranged for picking up the crop would charge Rs 50 per quintal as his commission. Next year, Patedar plans to rent and ferry his crop to Baroda mandi, more than 300 km, because he will be getting a yield of over Rs 900 per quintal.

The 10 octroi checkposts on the Gujarat border have been computerized. The moment a truck enters Gujarat, its weight gets recorded on a computer and the number-plate of the vehicle is video-graphed. The audiovisual information is instantly accessible at the central control room in Ahmedabad. The net result- it is no longer possible for local officials to cut their own deals and record a lower weight against a bribe. The income from octroi receipts quadrupled over the past year from $13.95 million in 1998-99 to $58.13 million in the year 2000. This is not bad considering that the implementation of the project cost a little under $4.10 million.

Sounds like the India of the future (sigh) or the US of the present? Well, this is India, right now. Maybe not as rapidly as the telephone revolution that set of a proliferation of PCOs (public call offices) even in remote Indian villages, but the beige box too is striding into the Indian heartland. And as the ‘other India’ rapidly realizes that this swanky machine is much more than a ‘TV screen and a typewriter’, remarks like "Is machine ne hamari zindagi badl di (This machine has changed our lives)" are becoming common across the length and breadth of India.

So, is this another sugary story about bridging the digital divide? Not really. While reams have been written about philanthropic IT initiatives posed to change the world, let’s look at the flip side–the business opportunity that reaching out to the masses would offer.

Look at current state of the domestic Indian IT industry. Most companies have recorded flat or single digit growth. While this is largely because of the slowdown, the real problem lies elsewhere—market saturation. According to an IDC India survey, the existing IT market is strongly dependent on the contribution of the six major Indian cities and every player is targeting the same set of customers trying to eat into someone else’s share. The obvious fallout of this is undercutting. Given the saturation in the market, companies have no alternative but to turn to the B and C class cities to scout for growth. The small and mid-sized businesses in the smaller cities typically take longer to adopt IT, but the IT spending in such markets is likely to go up in future.

Deeper into the forest
But hold on. Let’s look even beyond this market opportunity. The SME (small and medium-sized enterprises) and SOHO (small office-home office) segments form a huge market and could be the growth engine of many companies, but there is scope further ahead. As per the 1991 census, 74% of India’s 846 million-population, is in rural areas. While not disputing the poverty levels in Indian villages, the fact remains that agricultural development and the virtual absence of agricultural income tax have led to disposable incomes. Modern modes of communication and the mobility of jobs have successfully ushered in the awareness about urban lifestyles into rural homes. Not surprisingly, these aspirations are reflected in the radically changed consumption patterns in rural India, an aspect FMCG companies have promptly factored into their overall marketing strategy.

So, can it be the same for the IT industry? Yes, there is an opportunity, a HUGE opportunity, that the industry needs to grab.

As NASSCOM president Kiran Karnik says, "Just like the FMCG companies have realized that there is a great market opportunity in the rural hinterland, the IT industry too will realize the same." Here’s a quick look at the current state of IT in the ‘developmental’ segment. This encompasses not only the rural market, but little explored areas like education in the urban areas as well.

There has been a pocket of technology deployment primarily in e-governance related projects like Gramdoot and Gyandoot.

Then there have been experiments in wired villages like Warna. So how big is the market? India has 5,79,688 villages. We can safely assume that at least one kiosk is deployed in each village and each kiosk brings in a monthly revenue of Rs 3,500-4,000. Then, look beyond the corporate market in the urban jungle. According to data available on Indiastat.com, there are over a million educational institutes waiting to be tapped. Even if one estimates that only 50% of these buy an average of seven computers, the demand for PCs would exceed 3 million units, nearly 150% of the current PC market.

Consider the educational services angle. IYCworld recently deployed an ASP solution for New Delhi based Venketeshwara College for about Rs 3 lakh per annum. Just think of the opportunity is deploying similar projects in over a thousand of colleges across the country. The same could go for the multitude of Residents’ Welfare Associations (RWA’s) in our cities.

Add the cost of automation in ration stores and retail shops and the figure exceeds more than two or three times the current domestic IT market. Points out Sandeep Srivastava, CEO, IYCworld, "The potential in the non corporate segments in the urban market itself is mind boggling. But it is a tough market to penetrate."

Mind you, we have still not considered the government spending or the IT potential in the SME/SOHO segments. But before IT’s mandarins bring out the bubbly, here’s word of caution from Rajiv Mody, chairman and CEO, Sasken Communication Technologies, "In order to sustain and scale a solution, one needs to have a clear business model behind it."

Driving Miss D
There is no disputing the fact that the opportunity exists. And who’s cautiously moving in to have the first mover advantage? Certainly not the big IT players. The market has primarily been driven by the government carrying out its mandate of bringing IT to the masses or smaller players out of the sheer need to move out of the clutter. The need to expand their target market dominated by the bigger players and the hope of grabbing the pot of gold at the end of the road has kept these small companies going so far. Besides, this market is still in its infancy. And it will be a while before the various developmental segments translate into real business opportunity. These segments need to be nurtured to actualize their potential. The government, obviously, has to take the lead. So, if the government does its bit, revs up its IT spend automates its departments, it will be another major growth story for the IT vendors. But without this endeavor, the going could be very slow.

At the next rung would be the multitude of small local players along with the NGO sector that would drive the rural folk to use IT applications. There is already a sprinkling of such endeavors. Companies like Drishtee, IYCworld, Simputer, nLogue, Midas Communications, Tarahaat, Digital Partners and MIT Media Labs Asia are spear heading the movement to make a difference and for some - money as well. Comments Dr. Bishnu Pradhan, Director Technology Development, of MIT Media Labs Asia, "It gives tremendous satisfaction to see the positive effect one can have on peoples’ lives."

"We started with three kiosks in Dhar and now have a 132 spread over 14 districts. We broke even a long time ago and have grown 10-fold in FY 2001-02," says Satyan Mishra, CEO, Drishtee. Another example, nLogue’s Internet kiosk using the wireless in local loop technology called corDECT cost about Rs 40,000 compared to the 30,000 rupees for installing a single telephone line. No wonder, most villages without telephone connectivity and in need of connecting to the Net are using this technology. These entrepreneurs are proving that these technologies are sustainable and profitable. Agrees Professor Ashok Jhunjhunwala, department of electrical engineering, Indian Institute of Technology, Chennai, "For the time being, this market space is restricted to small players and entrepreneurs. But the big players will come in later."

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