The Hindu Business Line : Cybercafes chase growth in non-metros

Mumbai, Aug. 5 A vegetable vendor in Sivaganga, a school student in Jalandhar, and a housewife in Nashik are among the potential customers that cybercafé chains in India are keenly eyeing as the demand for accessing the Internet through cybercafés in metros tapers off.

In early 2000, cybercafés had become ubiquitous in Indian metros with one at every nook and corner. However, as the demand in the metros dwindles, the next frontier of growth for the cybercafé market will be from non-metros, says Mr R. Ramraj, ex-CEO and co-founder Sify.

Urban decline

In the past, 50 per cent of the cybercafés in India were in the top four metros, according to Mr Balendu Srivastava, Research Director, IMRB. Currently, the same cities account for only 25 per cent of the cybercafé market, he added. Industry observers attribute the decline in urban areas to high rentals for retail space and dwindling demand in metros.

“The fixed costs of a cybercafé business are rent, bandwidth, electricity and a café host. Except the real estate costs, all other factors are the same,” said Mr Vivek Srinivasan, Head Operations, e-Port, Sify Technologies, contrasting the urban and rural cybercafé business model.

Lower PC penetration in the hinterland has also meant higher cybercafé usage in the non-metros. Sify runs a 3,500 strong network of cybercafés, mostly in Tier-1 and Tier-2 cities.

Govt programmes

In addition to low rent and PC penetration in the non-metros, various Government initiatives such as the Common Service Centre (CSC) programme have encouraged the setting up of cybercafés in non-metro cities in the last three years according to Mr Ashish Saboo, President, Association of Public Internet Access Providers.

“The Government plans to deploy one lakh CSC centres (similar to cybercafés) in about six lakh villages”, he added.

OneRoof India, which currently has around 20 cybercafé franchisees in the non-metro pockets of Tamil Nadu, has seen a record growth in enquiries for café franchises in recent times. The company expects to double its franchise network by the end of this fiscal.

Multiple services

Cybercafés are moving away from the plain vanilla model to providing value-added services (VAS) for additional revenue.

“The key factor for a cybercafé is to sell multiple services to his existing user-base,” according to Mr Srinivasan. Sify’s cybercafés provide a user not just Internet access but services such as ticket reservation and purchase of insurance policies, he added.

Rural players are adding on innovative services such as ‘browsing for others’. “In this, an illiterate person can come to the cybercafé, ask for details pertaining to the prices of rubber or information on trains, and pay for the service,” said Ms Deepa Anandakrishnan, CEO, OneRoof India.

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