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November 14, 2003

"Having back-end in India can salvage ASP business model": Kanwal Rekhi & Co.

The Opportunity: The Application Services Provider (ASP) business model--which involves delivering software over the web on a rental model--is a great way to tap the 7 million strong small business market in US which can not afford enterprise software that come with a high-ticket price.

The Problem: As several ASPs have discovered over the last 2-3 years, the high cost of developing software in the US nullifies the "small price X large volumes" rental revenue model.

The Answer: Do the software development, maintenance and support out of India.

At least, that's what several Indian entrepreneurs heading US-based ASP firms--including veteran Silicon Valley entrepreneur Kanwal Rekhi (now the CEO of web-hosting software company Ensim Corp.), Munjal Shah (CEO of online auction tools company Andale), and Ram Varadarajan (CEO of sales automation software firm Arcot Systems)--believe, according to a recent article in Businessworld.

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