WHAT WORKS: TARAHAAT'S PORTAL FOR RURAL INDIA


EXECUTIVE SUMMARY

TARAhaat is a business enterprise of Development Alternatives (DA), an NGO focused on sustainable rural development in India, and its marketing arm, Technology and Action for Rural Advancement (TARA). TARAhaat uses a franchise-based business model to bring computer and Internet technology to rural regions and plans to use these technologies to create revenue streams leading to financial viability for itself and its franchisees.

BUSINESS MODEL
The business combines a mother portal, TARAhaat.com, with a network of franchised village Internet centers, or TARAkendras. TARAhaat will deliver education, information, services, and online market opportunities to rural consumers via the Internet and its kendra outposts. It also hopes to provide a cost-effective gateway by which larger corporations can reach rural customers. It will offer information, email and web services, and eventually e-commerce and fulfillment services, earning revenues through membership fees and commissions.

These business objectives are balanced with the social objective of uplifting rural India through easy access to relevant local and global information and propelling it into the twenty-first century. TARAhaat also hopes to find the right balance of rural and peri-urban franchises to be able to subsidize rural locations with lower earning potential. It encourages innovation by its franchisees and seeks to assist entrepreneurs in developing businesses using its services.

INFRASTRUCTURE
Where possible, TARAhaat will use existing telephone lines to connect its franchise internet centers. But it also plan to install vSat links where necessary to provide connectivity, utilizing satellites operated by others. Thus TARAhaat is largely dependent on India's existing commercial infrastructure, which is less than ideal. Dependence on the satellites has already caused interruptions in service for some franchises, and is a relatively high-cost solution. Connectivity, and bandwidth capable of supporting a graphics-rich Internet experience, are likely to remain in short supply for the near future, posing a continuing challenge to the venture. In addition, electric power outages are frequent, so much so that the company provides a diesel-powered generator as part of the franchise infrastructure, adding considerably to costs and maintenance needs.

CONTENT
One factor that bodes well for success is the company's flexibility in developing its products. TARAhaat has shown high sensitivity to customer needs, allowing products to evolve to meet these needs. For example, TARAgyan products, TARAhaat's education offerings, came into being only recently to address the strong demand for computer and computer-based education in the initial customer base. In addition, each franchise has latitude in developing products and services that meet local market needs. TARAhaat hopes to create a brand image in which the local TARAkendra is seen as the place for a family to find products aimed at the entertainment, information, and commercial needs of each member. The company provides content in two local languages as well as English, and expects to provide content in other local languages (India has 18 official languages) as well.

HUMAN CAPACITY
TARAhaat provides extensive support for its franchisees, including assistance with financing, Internet connections, business and IT training, and marketing. It plans to create a TARA university for franchisee training. Many franchises offer computer or other IT classes. Nonetheless, the lack of literacy among many of its intended customers poses continuing challenges to its business strategy.

POLICY
India's telecom regulatory policies are improving, but fall short of fully open competition. As a result, prices are relatively high and service is generally quite poor, especially in rural areas. Since TARAhaat is largely dependent on commercially available infrastructure, this poses a substantial challenge to the venture. However, the company faces no major regulatory hurdles.

ENTERPRISE
TARAhaat's association with Development Alternatives brings a wealth of rural expertise and a resilient attitude towards overcoming all hurdles. Some of the initial challenges described in this report have been handled with creative solutions, both at the franchise level and at the enterprise level. However, the venture has substantial financing needs and faces long-term challenges relating to product development and franchise operations that still await resolution. Unlike many startups, however, its management team is seasoned and strong.

KEY LESSONS
Interviews with users of TARAhaat's services demonstrate the venture's social benefits, including empowering the education of girls, inspiring confidence and higher aspirations among rural children, and enabling farmers to gain market information and substantially higher prices for their crops.

The staying power of TARAhaat's business model is not yet proven, but the positive customer response is an early indication of viability. The venture's franchise model seems likely to harness local entrepreneurial energies to the benefit of both. Its emphasis on locally-relevant content, in local languages, and strong orientation to product development based on customer feedback is also an important characteristic, one that takes advantage of India's large rural middle class. Finally, the company combines both commercial and NGO characteristics, potentially giving it an advantage in pioneering the relatively risky Internet market in rural India, and is unlikely to face major competition in the near future.

Read the full case study