A fragmented webhosting industry tries to stick to its guns as new opportunities come its way.

By Aparna Ramalingam

Does the Indian webhosting scene evoke a sense of déjà vu? Just ask any leading webhosting player what is choking growth in the segment and the reply will likely be a familiar refrain: ''Lack of bandwidth, VSNL's near-monopoly over the infrastructure, and little or no cooperation between ISPs.''

Globally, the webhosting pie is valued at $25 billion; the corresponding figure for India is a modest Rs 65 crores. Then there are the projections. Analysts estimate the domestic hosting industry as growing at a rate of, hold your breath, 100 per cent.

A substantial chunk of that growth comes from the e-enabling wave sweeping through old economy companies. Says Deepak Setty, Sales Manager (South Asia), Intel Online Services: ''The manufacturing and banking segment have begun to invest increasingly in the sector.'' But that doesn't ensure that the business is going to land up with Indian companies.

A major drawback of the domestic webhosting industry is its fragmented nature. The hosting itself maybe happening on Indian servers, but 80 per cent of it is shared hosting (here the service provider serves pages for multiple web sites, each having its own Internet domain name, from a single web server). Many ISP's sell space on a server or a server within a rack to resellers who, in turn, sell the same to the customers. And that is where the unorganised sector steps in. Laments Avinash Jayaprabhu, Vice-President (Hosting), Satyam Infoway: ''These fly-by-night operators create very rudimentary infrastructure and just play on the price factor.''

Peering arrangements (relationship between two or more ISPs in which they create a direct link with each other and forward each other's packets directly) are almost non-existent in the country. In the absence of this there is bound to be wastage of bandwidth. Says Atul Gupta, Chairman and Managing Director, Pugmarks Interweb: ''India is burning premium bandwidth which (anyway) is far from sufficient to support even a few data centres.''

To survive, Indian companies in the hosting services area will have to move up the value chain and offer services like load-balancing solutions-distributing processing and communications evenly across a network so that no single device is overloaded. In the long term though hosting companies would have to convince Indian companies to host their sites locally.

The shift may not happen immediately. Local B2C players might take the plunge first since it makes tremendous business sense for them to be hosted in servers based in India. Even the slightest of delays could result in the loss of a willing customer for them. A site hosted domestically can reduce this time lag considerably.

Then there's the cost factor. US companies charge anywhere between $60-$120 per hour for services like maintenance, up-time, and customer support; in India the charges hover between Rs 2,000-3,000 per hour. And this is one factor which could move the centre of gravity of the hosting business to India, provided the infrastructure falls in place.

It will take some more time before things become clear in the Indian hosting business. Right now, though the growth in the supply side of the business has been more than that in the demand side. Pugmarks' Gupta sums it up best: ''So far, it has been a typical case of one step forward and two backwards.''
  

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