Strategic analysis of Business model of CSC

1. Seminar II
Sustainability and Viability of Commom Service Center(CSC) in
India:A Strategic Analysis of Business Model of CSC
Student:Satya Prakash Patel Mentor-Dr .Prof . Peter Stanonvik
(email:sppatel06@rediffmail.com)
Green Industry MBA/MSc (Ecotechnology)

2. Agenda
• The presentation contains three parts-
Part-I: Background and Introduction
• Growth India story; Rural –Urban divide; Rationale for CSC ;Service need
matrix of CSC and National e Governance Program(NeGP)
Part-II: T-S-M Analysis
• T=Technological framework of CSC
• S=Service Framework of CSC
• M=Market opportunity/size and customer need
Part- III : Strategic Analysis of CSC
• Challenges and issues in CSC’s Implementation
• Tools of Strategic Analysis-(i)SWOT (ii) Porter’s Five Forces
Method(iii)Value Chain(iv) Business Mapping/content –services Ecosystem
of CSC
• Business Model analysis of CSC—Value Proposition; Framework of CSC;
Cash Flow Analysis of CSC.
• Discussion-Suggestion and followed by Conclusion

3. Growth India Story :Facts and Figure
• 5000year old civilization and incredible history and culture. Having 18 official
languages and 325 spoken languages.
• 28 States and 7 union territory,638,596 villages
• India’s Population=1.12 Billion and --700 million working population. In 2020
worlds largest working force to take demographic dividend to achieve continuous
growth of country.
• World largest dynamic democracy and honest election system
• 4th largest economy of the world(after USA, China and Japan) with growth rate 8%
to 9%.
• 55%share in worlds IT-BPO Industry(World IT-BPO industry=1.6trillion USD)
• Worlds largest English speaking population=300million in 2010
• Explosion of middle class in India 368million(32% of total population) in 2010 -
main driver of Indian economy.
• India has a vibrant private sector and market led economic growth not the state
induced growth like China.
• 706 million telephone user(fixed phone-36million+670 million mobile phone) till
September 2010 in India
• Internet user in India 81 million till September 2010 in India. Among it 10.3

4. Contrast and divide between Urban India vs. Rural India

5. Rationale for Internet connected service delivery kiosk(CSC) in
rural India
• To bridge the urban and rural developmental and digital divide in India
• Empowerment the rural people through access to government
information/public services(e-governance) at their door step on affordable
cost.
• Reduce the poverty in rural area through : (i)increasing job opportunity,
(ii)enhancing empowerment, (iii) improving financial security.
• New access to knowledge ,information and education in the remotest part of
India.
• Achieve an inclusive growth in India .

6. Service Need Matrix of CSC

7. NeGP and CSC
• Approved by the Union Cabinet in May, 2006- The NeGP, comprising of 27
Mission Mode Projects (MMPs)and 8 components.
• Vision of NeGP-“Make all Government services accessible to the COMMON
MAN IN HIS LOCALITY, through Common Service Delivery Outlets and
ensure EFFICIENCY, TRANSPARENCY & RELIABILITY of such services at
AFFORDABLE COSTS to realize the BASIC NEEDS of the common man.
• CSC is an integrated mission mode projects(MMP) of National e Governance
Plan (NeGP) of India
• The goal of the CSC Project – ‘To empower the rural community and catalyse
social change through modern technologies’.
• The Government of India has approved and launched a Common Services
Centres (CSCs) Programme in 2006, for providing support for establishing
100,000 CSCs in 600,000villages of India on “honey –comb model” i.e. each
CSC will cover six villages
• CSC scheme comprises –technological, organizational and service framework.

8. Part-II :T-S-M Analysis of CSC
• T=Technological framework of CSC and Organization Framework
• S=Service Framework of CSC and Analysis of CSC offered Services.
• M=Market opportunity/size and customer need;

9. Technological Framework of CSC
• Technological framework of CSCs is based on the core infrastructure of NeGP---(i)Networks
(SWANs)(ii) State Data Centres (SDCs) (iii) Common Services Centers (CSCs).
• All services supported on these 3 infrastructure pillars to facilitate -web-enabled Anytime, Anywhere
access
• (i) State Wide Area Networks (SWANs)/NICNET.--- Connect the CSC with SDC with speed of 2
mbps. State Wide Area Network(SWAN) is serving government to government (G2G) services and
government to citizen services(G2C), especially for various mission mode projects(MMPs) like CSC.
• (ii) National Data Bank/ State Data Centres ( SDCs) :(Back end ): There is a National Data Center
(NICNET) which is connected to all government department and agencies of central and state
government of India to their respective state data centers(SDC).
• SDCs are securing and hosting of data and its application and act as the- Central repository of the
State, provide secure data storage, disaster recovery and remote management functions etc.
• (iii)Common Service Centres (CSCs): primary mode of delivery : The CSCs are envisaged to
provide high quality and cost effective video and data services in the areas of e-governance,
education, health, agriculture, entertainment as well as other private services.
• CSCs are broad band enable service provider kiosk having at least following technical infrastructure-
two P.C.s/laptop ,two printer ,web/digital camera, wireless connectivity ,UPS/invertor/ generator.

10. Technical Framework of CSC
Three Pillar of NeGP
Infrastructure Connectivity Network of CSC

11. Organizational Framework of CSC
Stakeholder Level Role
State
Designated
Agency
(SDA)
Nodal
Agency at
State
Level
• To facilitate implementation and monitoring of the CSC project within
the State and to provide requisite policy, content and other support to
the SCAs
• Policy & Regulatory Support at State Level
• Selection of SCAs through a competitive bidding process
• Coordinate with central government and to SCAs with in state and
follow up with district/block/village level progress of CSC project.
Service
Centre
Agency(SCA
)
Implement
ing
Agency
• Investor and prime mover Owner of the CSC business.
• Select CSC locations and set-up the CSCs in phase manner and
facilitate them for their sustainability. – to balance equitable spread
• Maintain and manage the CSCs through VLEs.
Village Level
Entrepreneu
r= Franchise
of CSC.
Local
Level
Entrepren
eur
• Actual Operator at CSC level.
• To deliver the service to the rural consumers in a cluster of six 6
villages.

12. Implementation Status of CSC Project
• The CSCs project is being implemented with private sector partnership (PPP Model).
• Total approved cost of Rs 57.42 billion (USD 1.44 bn). The 71% will be provided by the
private sector, 15% by the central government and 14% by state governments.
• The implementation is being coordinated by a National Level Service agency (NLSA)
appointed by Department of Information Technology, Government of India, which oversees
a 3-tier implementation framework(SDA,SCA and VLE).
• As on 30th April 2011, a total of 94,786 CSCs have been rolled out in thirty one States/UTs.
• 100% CSCs have been rolled out in 12 (Twelve) States--- Chandigarh, Delhi, Goa, Gujarat,
Haryana, Jharkhand, Kerala, Madhya Pradesh, Manipur, Puducherry, Sikkim & Tripura.
• More than 70% of the rollout has been completed in 13 (Thirteen) States--- Assam,
Arunachal Pradesh, Bihar, Chhattisgarh, Himachal Pradesh, Maharashtra, Meghalaya,
Mizoram, Nagaland, Orissa, Tamil Nadu, Uttaranchal and West Bengal.
• 3 (Three) States (Jammu & Kashmir, Rajasthan and Uttar Pradesh) implementation of
CSCs have crossed half way mark (more than 50%).
• It is expected that the roll out of 100,000 CSCs would be completed by June 2011.
• A total of about 14,236 CSCs have been affected due to termination/ re-bidding. 8,785
CSCs have been affected due to SCA termination in 6 States. These States are Andhra
Pradesh, Bihar, Haryana, Mizoram, Tamil Nadu and Uttarakhand.
• About 5451 CSCs have been affected due to delay in the SCA selection process in the
States of Andaman, Karnataka and Punjab.
• Due to naxal affected and difficult areas, about 5331 CSCs are likely to be delayed

13. Implementation Status of CSC Project:
continued-----

14. Service Framework of CSC
 The Common Services Centers (CSC) are proposed to be the delivery points for Government,
Private and Social Sector services to rural citizens of India at their doorstep .
• The CSC Scheme is envisaged to be a bottom-up model for delivery of content, services,
information and knowledge on Private Public Partnership (PPP)Model.
 End-to-end Services: This means that a specific content/ service should be in a
marketable format for it to be selected as a part of the service network in the CSCs. Broadly,
the services selection would be on their ability to impact the consumer through the saving
cost, helping income generation and enabling socio –economic generation

15. Basket of CSC Offered Services
G2C:Government to Citizen services
Land records, Registration of vehicles, Issue of
certificates, Government schemes ,Employment
exchange ,Ration cards, Electoral services
,Pension schemes, Road transport ,Public
grievance, Utility/ Telephone Bills (Government
undertakings)
e-Government Services-
Market Linkages,
Education,
Healthcare,
Agricultural ,Extension etc. ,
Data collection ,
Rural BPOs,
rural banking
(B2C) services
(i) Commercial Services-Digital photos, web
surfing, photocopy, DTP, e-mail/chats CD burning,
typing, printing, games, forms downloads/
estimates ,utility/telephone bills (private
enterprises).
(ii) e-Commerce/Online Services –Railway tickets,
astrology, matrimonial, shopping, resume.
(iii) Education Services-IT education, English skills
training, tuitions.
(iv) Entertainment-DTH, community TV.
(v) Telemedicine- Primary healthcare.
(vi) Agriculture Services-Agriculture-inputs,
agriculture –loans, agriculture -consulting and
Business-to-Business services (B2B)
Advertising & promotion services,
marketing ,promotions,
data collection services,
research data collect,
data entry,
distribution services ,
FMCG products,
financial services ,loans/deposits ,referrals ,insurance
etc.

16. Impact of CSC offered Services :
• Empowering the rural people and bring transparency and accountability in government
functioning,
• Creating new job and enhancing their income.
• Provide new access to education, knowledge, micro- financing, agriculture extension and health
Services.
• These services catalyse the social change and social development.
• Provide new distribution channel for products and service in rural area, this market linkage
opens new economic opportunity in rural India
Customer Need:
• Government services to save their time and cost.
• Build income and promote livelihood through Need market linkage of agricultural and other
productive activities to build their income and promote their livelihoods.
• Need Health and Educational services for their social development.
• Need entertainment and e-commerce services to enhance their quality of life.
Utility of CSC offered Services and
Customer Need

17. Market Potential/opportunity space for CSC
offered services
• ANC –ORG MARG Survey report 2006 states that a conservative estimate
of the total expenditure that a household could spend on CSC offered
different services will be 6.75% of a mean monthly expenditure of Rs.4739
• Sahaj Srei Sahaj e-Village pvt. ltd( a SCA) estimated in 2008 that a rural
Indian citizen spend Rs.639 per month on CSCs offered services. Average
population in the catchment area of one CSC is 8159 on the basis of
population of India in 2007(total population of India=1.02 billion and rural
population=815million estimated). So total opportunity per CSC per month
is around Rs. 5,213,000(5.2 million rupees.) hence the total opportunity
available for 100,000 CSCs in country is around Rs.521 billions. Presently
on an average only 5%to 10% opportunity is tapped by one CSC.

18. Market Analysis of CSC offered Services-G2C
Services
• e-Government service offered by CSCs have their significance that they helps CSCs to recognise in rural
community as an authenticated service provider .These service provide assured source of income to
CSCs.
• Analysis of four government services in a tehsil Anoopshahar, district- Bulanadshar,Uttar Pradesh-India
• These four government services provides Rs.4894 per month to each CSC, while govt. of U.P. proposed
to include 35 government services in the basket of CSC . This indicates the financial viability of CSC e-
Government service offered by CSCs have their significance that they helps CSCs to recognise in rural
community as an authenticated service provider .These service provide assured source of income to
CSCs.
 These four government services provides Rs.4894 per month to each CSC, while govt. of U.P.
proposed to include 35 government services in the basket of CSC . This indicates the financial viability
of CSC.
 e-Government service offered by CSCs have their significance that they helps CSCs to recognise in
rural community as an authenticated service provider .These service provide assured source of
income to CSCs.
 These four government services provides Rs.4894 per month to each CSC, while govt. of U.P.
proposed to include 35 government services in the basket of CSC . This indicates the financial viability
of CSC.
Tehsil-
Anoopshahar(U.P.)
Name of e Government Services Number of User in year 2010
(01-01-2010 to31-12-2010)
1 Land Records(Khatuni: Records of Right) 32,440
2 Residence/Domicile certificate 3,304
3 Caste Certificate 8,761
4 Income Certificate 16,468
Total 60,973

19. Market Analysis of CSC offered Services-B2C and B2B
Services : Top 80% Revenue Generating Services of CSC
Source: AC Neilson –ORG MARG survey on CSC(2006)

20. Market Analysis of CSC offered Services-B2C and B2B
Services ---Continued---
• CSCs have a potential to become the gateway for tapping the rural market by companies
offering different product and services. CSCs opening new distribution channel for
product and services.
• Indicus Analysis Pvt. Ltd., New Delhi market survey report 2008-09 - despite of
economic slowdown the market of personal care and home care product was bulking
trend because these companies have discovered rural markets, which now contribute a
little more than half the total sale for such product in country.
• CSC empowers the rural people through government service and save their money and
time .It creates new jobs and a helps in poverty reduction. It also offers new access to
financial, agricultural and health related services as well as new knowledge, information
and education.
• The average number of professionals emerged as 60 youths in sample villages of Uttar
Pradesh(India). Of those who attained some professional education, 38% were employed
as professionals and 7% were service (govt., private or tuitions). However, 32% such
professionally qualified were still engaged in cultivation or in some kind of labour
work.”--[ANC-ORG MARG Survey]
• These 32%professional educated youth can enhance their skill through CSCs offered
vocational education , computer education and English speaking course and can be
engaged in IT-BPO industry. These IT educated youth become a prime driver of
emerging rural economy of India.

21. Part-III: Strategic Analysis of CSC
1.CSC: Challenges and Issues
2.Tools of Strategic Analysis—(i)SWOT (ii)Porte’s Five
Forces (iii)Value Chain (iv) business Mapping
3.Business Model Analysis of CSC
(i)Value Proposition (ii) Cash Flow Analysis of CSC

22. Challenges and Issues in CSC Project
Implementation
Despite of this remarkable progress, CSC project is facing some major challenges in the following
field
[A]–Major Challenges--
• Delay in deployment of G2C services
• Insufficient back end computerization in government department
• Lack of Entrepreneurship in VLEs
• Inadequate capacity building effort
• Inconsistent Connectivity and Electricity supply
• Insufficient content in regional languages
• Lack of Awareness about ICT and CSC project
[B] Minor challenges--- that are equally affecting the rollout progress of CSC scheme and its
sustainability e.g.
• Suitable place selection for CSC and population in the catchment area of CSC
• Inappropriate monitoring system for VLEs,
• lack of credibility of VLEs in local rural community due to inconsistent service delivery,
• maintenance of computers in remote area etc.

23. Strategic Analysis(S.A.) and Its Tools
Objective of S.A.: To understand and identify the core issues and barriers which
are affecting the sustainability and financial viability of CSC
Framework for translating core issues identified through S.A.--This
framework makes core issues more quantifiable , measurable, and responsible
teams of organization become more accountable. They are-
1.Product ------(what are we selling?)---CSC offered services
2.Process ------(how are we selling it?)---Through CSC
3.Customer------ (to whom are we selling it?)----To rural people of India
4.Distribution----- (how does it reach them?)---- Technical frame work of CSC
5.Finance----- (what are the prices, costs and investments?)—Investment in CSC
project and by VLEs
6.Administration---- (and how do we manage all this?)-Through Organizational
framework of CSC.
Tools of S.A.- (i) SWOT Analysis(ii)Porter’s Five Forces Method
(iii)Value Chain Analysis(VCA) (iv)Business Mapping/Ecosystem of content and
services of CSC.

24. SWOT Analysis of CSC
Strength-
1-Exclusive right to deliver G2C services to rural people.
2-G2Cservices make CSCs credible and unique position
in rural community(strong brand name)
3-2Mbps internet connectivity to CSCs through SWAN.
4-Location of CSC in the heart of rural community
5- CSC delivering G2C, B2C and B2B service at their
door step to rural people.
6-Public –Private Partnership model (PPP) for
augmentation of CSC scheme.
Weakness-
1-dealy in roll out in G2C services.
2-Lack of content in local languages in case of G2C and B2C
services.
3-Dealy in SWAN roll out and its maintenance.
4-lack of entrepreneurship in VLEs and poor capacity
building efforts.
5-Poor quality of services less credibility in local community.
6-Poor infrastructure of CSC and their connectivity in rural
area.
7-Inadequate support of government and road blocking
attitude of government functionaries.
Opportunity-
1-Every rural Indian spent Rs.639/month on CSC offered
services and one CSC have population 8196 so the total
opportunity space for CSC offered services in a month
for 1,00,000 CSC in rural India Rs.5200 billion.
2-CSC open new distribution channel for product and
services of private companies.
3-Access to rural market of India through CSC to
harness its potential.
4-CSC offer access to education, information and
knowledge to rural India. Space for IT and English
education in rural area and harness the cheap cyber
labour in competitive IT/ITes market by companies.
5-CSC offers citizen centric government-citizen interface
and empower the rural people.
6-CSC creates100,000 direct job and 300,000 indirect job
in rural India and catalyse the social change and
inclusive growth in rural India.
Threat-
1- competition to other B2C and B2B
Service provider in the market.
2-CSCs are in Tax net while their competitor is not in the
tax net.
3-Threat from the mediatory and road blocking attitude
of non motivated government functionaries .
4-Low education, poverty and slow adoption rate
towards ICT.
5-Unwillingness and poor participation of private sectors
and NGOs in this ambitious scheme.
6-Lack of awareness about ICT and CSC scheme
among rural community, government functionaries.

25. Porter’s Five Forces
Porter’s
Forces
Application on CSC business
Entry Barrier Entry barrier are low because lack of awareness about CSC and profits of CSC
business are not so visible at the early stage of CSC project implementation.
Power of
Supplier
Services offered by CSC are— G2C,B2C and B2B.In case of G2C services the
VLE s have exclusive right to deliver it to citizens. So the power of supplier is
strong.
In case of B2B and B2C services are provided by other private players in the
markets. So citizens have more choice ,so CSC power is week for these
services.
Power of
Buyers(Rura
l people)
Power of buyers is strong in case of B2B and B2C services because they have
more options in the market for these services while their power is week in case of
G2C services due to monopoly of CSC.
Threat of
Substitutes
CSC may face threat from substitute services available in market. In early stage
of CSC scheme it is difficult to accessible in remote rural area so there is not
any potential threat of substitute of CSC but in future there will be a potential
threat for this Project. B2C and B2B services are still facing that threat.
Rivalry Tough rivalry among CSC owner and non CSC private players in the catchment
area of CSC and near by in the field of B2C and B2B services.. VLEs are also
facing rivalry from intermediaries in the field of G2C services .

26. Porte’s Five Forces
Matrix for CSC:
• Michel porter develop
the five forces model
for understanding the
competition in
business and take
appropriate decision
• G2C services very
important for
sustainability and
viability of CSC.
• The capacity building
of VLE is important for
their survival and beat
their rivals.
G2C
Services
B2C
Services
B2B
services
Buyers
Power
low high high
Suppliers
Power
high low low
Threat of
Entry
low high high
Threat of
Substitut
es
low high high
Competit
ors/Rivals
low high high

27. Value Chain Analysis (VCA)
of CSC and its framework
• VCA - Powerful diagnostic tool to
identify the critical issues and blockages
for target customers and provide
framework for intervention to change the
circumtances.
• VCA identify the factors which are
responsible for economic viability and
commercial sustainability of CSC
offered service in market
• Primary Activities of CSC—
Establishing and operating the CSC to
deliver services to rural people by VLEs.
• Support Activities of CSC –includes the
activities under technical, organizational
and service framework of CSC.
• Result-The VCA identyfied the core
issues and barriers that are hampering the
sustainability and fiancial viability of
CSC.
• The support activies are mainly
responsible for the poor implementation

28. Content and Service Eco system of CSC

29. Business Map of CSC and
its Ecosystem
Conne
ctivity
Provid
ers
Service
and
Content
Providers
Sellers Users Remarks
NICNE
T/SWA
N
Central
governmen
t and
agencies
Owners of
CSC(VLEs)
Rural
People
NICNET/SWAN is only for CSC
while private internet provider
companies may provide VLEs
and Non VLEs
AIRTEL State
governmen
t and
agencies
through
SDC
Private B2B
and B2C
service
provider in
the
catchment
area of
CSC and
near by.
Governm
ent/their
agencies
*Content and services provided
by government in case of G2C.
*content and services of B2B
and B2C services are provided
by private companies to VLEs
and Non VLEs.
IDEA Private
content
and
services
providers
Individual
B2B abd
B2C service
agents
Private
compani
es
*Delivery of G2C services is
exclusive right of VLE
*B2B and B2C services
delivered to consumers by
VLEs and non VLEs.
TATA
Teleco
m
Internet
based
content
and
services
Intermediat
eories in
case of
G2C
services
survey
conducti
ng
agencies
/consulta
ncies
*User of G2C,B2B and B2C
services are rural people,
government itself and private
companies. User only get G2C
services from CSC(VLEs)
*B2B and B2C service can be
obtained either through CSC or
through Private player(Non
VLEs).
• This is a description of
ecosystem of CSC.
• What other player are
working in same field and
what are the main
stakeholders and what is the
interrelation among them.
• This matrix shows the
interrelationship among
different stakeholder in
CSC ecosystem and choices
available for user/sellers.
• VLEs can only sustain if
they provide cheap and
qualitative service to rural
consumers.

30. Results of Strategic Analysis of CSC : Core Issues and critical success factors
Responsible for sustainability and Viability of CSC
• Deployment of G2C services and mounting of monitoring devices(OMT) should be
as early as possible.
• Connectivity of SWAN must be uniterrupted connectivity to CSCs to reduce the
operating cost of CSCs. .
• Speed up the back end computerisation process of government department and
speedy e-readiness of states.
• Select appropriate place for CSC
• Select appropriate VLEs that have entrepreneurial quality and technical knowledge
• Provide better B2B and B2C services to rural people so that they do not shift
towards non CSC private players.
• Content and services must be available in local languages.
• Awareness campaign must launched regarding CSC and services offered by CSC.
• Capacity building of VLEs ,government functionaries and other stakes holder must
takes on priority basis.
• Sufficient and uniterrupted supply of electricity to CSCs ,so that their operating
cost should be minimum.

31. The Business Model Analysis of CSC: Sustainability and financial
viability of CSC
Value Proposition of CSC
• Around 70% population lives in rural area but they are
still struggling for basic amenities and spent more
money and time for getting government and business
services.
• 100,000 common service centres are going to be
establish till June,2011 on honey comb model(one
CSC covers six adjacent villages) to cover all
600,000village of India.
• CSC are Internet connected service delivery kiosk
providing G2C,B2C and B2B services on affordable
prices at their door step of rural people.
• CSC will empower the rural community and catalyse
the social changes through modern technology.
• Although B2B and B2C service provider are exist in
market but CSC are unique because they have fast
internet connectivity through SWAN and access to
government information and have exclusive right to
deliver G2C services to rural people.
• The rural people will save billions of rupees every
month by getting G2C services at their door step.
• CSCs can tapped the Rs. per month 5200 billion
market of CSC offered services.
Concept of business
model
What is
product/
service?
CSC details/product attribute
Who will
buy it?
Market and customer of CSC
offered services-Customer segment
Why
they will
buy it?
Value proposition of CSC.
How
they will
buy it?
*Value Chain(Main activities)
*Industry map i.e. position of CSC in
the market.
*Advantage of CSC offered services
*Profit model of CSC: Cash flow
analysis of CSC.

32. The Business Model Analysis of CSC: Sustainability and
financial viability of CSC
Basic Business Model of CSC
• Developed by IF&FS for draft
document of CSC(2006)
• Objective--to trap the market potential
of CSC by adding values to rural
people.
• This model describe-Capital cost and
operational cost( fixed cost+ variable
cost).
• Cost sharing formula—85% of capital
cost financed by banks to VLEs and
15% bear by SCA.
• Interest rate=12% p.a., annual
maintenance of hardware=10% of
asset value, Insurance of
hardware=1% of asset value,
• Revenue sharing Model=
SPV(government body):SCA:VLE: :
5%:40%:55%
Business Model developed by SCAs
from Field Experience
Cost sharing Business model of CSC
• 80% of capital cost bore by SCA. and 20% of capital cost bore by
VLEs
• NICT a SCA in the state of M.P. (India) followed this model
successfully.
• Sahaj Seri a also follow this model initially in Uttar Pradesh
but later drop that model and focus on to choose a VLE who can
bear total capital and operating cost. They only facilitate services
and training to VLEs.
Employee Model-
• Entire capital cost bore by SCA and VLEs work as their employee
and SCA pay them fixed salaries.
• SCA helped the CSCs with initial operating expenses till the time
the CSCs become sustainable.
• SCA de-motivated VLEs in taking loan to avoid financial burden
in the initial stages of the project.
• BASIX a SCA working in the state of Orrisa and Meghalaya(India)
implementing that model successfully.

33. Framework of CSC’S Business Model
and model cash flow Graph
• A business model is defined as a summation of
core business decision and trade- offs employed
by a company to earn the profit. It framework
have four parts----
Revenue Sources- of CSC from G2C,B2C and B2B
services.
• Revenue model--membership/subscription,
volume/unit based, transaction fee and
advertising.
Key Expenses—Capital cost and Operational
cost(Fixed cost + variable cost)
Investment Size
• Investment size of CSC is the sum of capital,
variable and fixed
• Maximum investment is the amount of cash
required before a company achieves positive
cash flow.
• cash flow diagram provides the means for
capturing and summarizing information relating
to the cash requirement of a business model
Critical Success Factor- is an operational factor or
competency that a company must possess in order
for it to be sustainable and profitable.

34. Cash Flow Analysis of a CSC :(Village- Jalalpur, District –
Raebarelly, Uttar Pradesh- India)
Cost Details of CSC
• Total Capital cost=hardware cost +
other assets cost=Rs.118,100
• Rate of interest=12% p.a.
• Maintenance of hardware=10% of its
asset value
• Insurance of hardware=3% of its
asset value
• Tax rate =30% p.a.
• Depreciation of hardware=25% and
other assets 10% of its value p.a.
• Monthly expenditure on
contingency=1% of monthly revenue
• Monthly expenditure on business
promotion=5% of monthly revenue
• Travelling cost monthly=5% of
monthly revenue
• Miscellaneous Expenditure=3% of
monthly revenue
Asset details of CSC
Asset Schedule of CSC-Jalalpur
Assets: Hardware
Two P.C.+O.S. 44,000
Inkjet printer 7,000
Dot matrix printer 7,500
Digital camera 7,000
TV+VCD Player -
---
IT Software 2,000
Total 67,500
Assets: Others
Generator(750VA) 20,000
UPS(500VA) 2,600
Wireless equipment -
Furniture & fixture 15,000
Phone line 1,000
Others 12,000
Total 50,600

35. The Business Model Analysis of CSC: The cash flow detail of a
VLE-Village- Jalalpur, district- Raebarelly,(Uttar Pradesh), India

36. Profit & Loss Statement Year 1 Year 2 Year 3 Year 4
Income from G2C services 1,10,442 1,33,958 1,59,074 1,73,482
Growth rates %
Income from B2C services 20,327 23,337 31,140 36,978
Growth rates %
Income from B2B services 21,875 32,344 36,446 41,068
Growth rates %
Total Revenues 1,52,644 1,89,639 2,26,659 2,51,528
Operating Expenses
Hardware maintinance 3,375 5,400 8,100 10,125
Hardware Insurance 2,025 2,025 2,025 2,025
Training cost of VLE 2,000 - - -
Manpower cost per month 30,900 33,600 37,200 42,000
Monthly fee to SCA 6,000 6,000 6,000 6,000
Rent for premises 12,000 13,200 15,000 17,400
Business promotion per month 7,632 9,482 11,333 12,576
% of Revenue
Travelling cost permonth 7,632 9,482 11,333 12,576
% of Revenue
Contingency 1,526 1,896 2,267 2,515
% of Revenue
Internet connection charge 4,700 4,800 4,800 4,800
Electricity charges per month 4,800 5,400 6,000 6,600
Generator running cost per month 4,200 4,800 5,400 6,000
Miscellaneous 4,579 5,689 6,800 7,546
% of Revenue
Total Operating Expenses 91,370 1,01,774 1,16,257 1,30,164
Operating Profit 61,273 87,864 1,10,402 1,21,364
Depreciation Expenses 21,935 21,935 21,935 21,935
Profit Before Interest and Tax 39,338 65,929 88,467 99,429
Interest Expenses 12,855 9,753 6,256 2,317
Profit Before Tax 26,483 56,177 82,211 97,112
Taxes Paid 7,945 16,853 24,663 29,134
Tax rate %
Profit After Tax 18,538 39,324 57,547 67,979
Revenue Growth 24% 20% 11%
Operating Margin 40% 46% 49% 48%
PAT Margin 12% 21% 25% 27%

37. Profit and Loss Statement of Jalalpur CSC
Revenue Inflow Analysis
• major source of revenue inflow is from G2C
services and B2C and B2B services have
minor contribution.
• Growth rate of revenue from G2C services
gradually decreasing in four year as-
21%>18%>9%. Due to poor support activities
of CSC project.
• G2C services have vital and pivotal role in the
sustainability and financial viability of CSCs.
• Delay in G2C services adversely affecting the
sustainability and viability of CSC and VLEs
are forced to exit from CSC operation.
• Cause of minor contribution of B2B and B2C
services is-lack of awareness about ICT and
CSC project in rural community..
Revenue Outflow analysis
• Major revenue out flow source is repayment of
loan( interest+ principle component)=Rs.37,320/-
per year.
• Second major revenue out flow source-
depreciation –R. 21,935/- every year
• Amount of taxes paid in four year is
Rs.7,945.>Rs.16,853>Rs.24,633,>Rs.29,134.
• Expenses on generator and on electricity is almost
equal total around 9,000/- p.a.
• Expenditure on internet connectivity is around Rs.
4,800 p.a.
• Net cash flow in four year is
Rs.16,008>Rs.33,691>Rs.48,419>Rs. 54,910.
• Cost expenses are so high in compare to net cash-
flow. No VLE can survive only on the income of
CSC in initial year.
• Where G2C are not deployed there survival of
VLEs is very difficult.

38. Cash Flow Analysis of a CSC :(Village- Jalalpur, District –
Raebarelly, Uttar Pradesh- India)
Cash Flow Statement of CSC Balance Sheet of CSC

39. Cash Flow Analysis of a CSC :(Village- Jalalpur, District –
Raebarelly, Uttar Pradesh- India)
Cash Flow Analysis of Jalalpur
CSC
Cash Flow Graph of Jalalpur CSC:
X-axis shows months; Y-axis shows-Amount
of monthly cash flow in rupees
• The revenue growth of said CSC in four
year is 24%>20%>11% respectively
• The operating margin in four year is
40%>46%>49%>48% respectively.
• The post-tax (PAT) margin in four year
is 12%>21%>25%>27% respectively
• Net cash flow in four year is
Rs.16,008>Rs.33,691>Rs.48,419>Rs.
54,910 respectively. Total=Rs.153,028
• Total interest paid in four year+ principle
amount=149,280
• The cash flow statement shows that CSC
attained breakeven point in around four
year.

40. Results of Cash Flow Analysis of Jalalpur
CSC
The main critical success factor responsible for the sustainability and financial viability of CSC
• G2C services play vital and pivotal role for the sustainability and financial viability of CSC.
Major source of revenue inflow is from G2C services.
• Growth rate of revenue of G2C services is decreasing due to poor support activities in the
value chain of CSC.
• Revenue from B2C and B2B services is less due to lack of awareness about ICT and benefits
of CSC project.
• Government and SCAs should support the VLE in initial years so that they can able cross
the valley of death and early achieve the breakeven status.
• Operating cost of CSC are very high in initial year of operations. Loan liabilities are very
high when combined with tax liabilities, depreciation of assets and operational cost the
financial burden on VLE become unbearable. Ultimately they forced to stop the operation of
CSC or exit from project. If G2C services are not deployed then situation become worst.
• Net cash flow is less in compare to expenses. No VLE can survive for four year on that net
cash flow from CSC.
• CSC reaches its breakeven point in four year. This time period is long for his/her survival
under such condition.

41. Knowledge Based Business Model of CSC
• Knowledge base business model of CSC –Proposed for long lasting sustainability of CSC
1. 1.Make access to education; information and knowledge through ICT enable CSC to rural youth.
2. 2.The CSC offered IT-Computer and English skill courses will transform the young rural population
into skilled human resources for IT-BPO industry
3. 3.SCAs will play the role of driver in this business model. SCA will bags the IT/ITes
contracts/business from domestic and offshore markets and then they sublet to CSC. These CSC will
distribute work among IT and English educated rural youths. CSC will acts as coordinator between
SCA and these rural youth.
4. 4.This IT enable rural workforce is cheap in compare to urban based workforce in India. Indian IT/ITes
services become cheap in compared to other IT/ITes providing countries in the world.
5. 5.Rural youth and specially women who are engaged in agriculture but their productivity is
insignificant, they can be successfully shifted in service sector.
6. 6. IT/ITeS industry will penetrate in rural area and generate wealth through creating new job
opportunity for rural people. If income of rural people increases it leads towards building more
disposable income in rural community that can be tapped by CSC for their sustainability and
profitability.
Example- NASSCOM Foundation Mumbai(India) and an NGO Multipurpose Social Service Society trained
24 student for IT-BPO sector in Cuddalore near Pondicherry(India).

42. Core issues for the sustainability and Viability of
CSC: Suggestions
Core Issues Suggestions
Delay in G2C service
deployment to CSC
• Speed up the back end computerization of government department
• Speed up the OMT installation in the computers of CSCs
Inconsistent or non
connectivity of CSCs to
SWAN
Speed up the SWAN connectivity process to CSC and where connected maintain the high
speed and quality of connectivity to reduce the operating cost of CSC.
Lack of Financial support
to VLEs in early stage
SCAs and government should disburse the financial assistance of Rs3,000/month to VLEs
for their survival.
Lack of awareness about
ICT and CSC project
Launched massive campaign of awareness for rural people and benefits off CSC offered
services for them.
Lack of entrepreneurship
in VLEs
• Select a VLE who have entrepreneurship quality and SCAs trained them for marketing
and technology handling.
• Choose who can bear initial capital and operational cost.
Insufficient Content and
services in regional
languages
B2C and B2B services are not popular due to this region. Government should take
initiative on PPP model to develop content and services in regional languages.
Road blocking attitude of
Government functionaries
More capacity building effort should be done to change their attitude and enhance their
knowledge . Responsibilities should be fixed who are not taking interest in CSC project
Insufficient and irregular
supply of electricity
Supply hours should be increased with consistency. Alternative energy option should be
evolved. VLEs use laptop rather than PCs

43. Conclusion
 The CSC is a great effort by the government of India making government and commercial services
accessible to rural people at their doorstep on an affordable prices with a vision to bridge urban-
rural development .The goal of the CSC project is to empower the rural community and catalyse
social change through modern technologies. These CSCs will become a vehicle for rural inclusion
and inclusive growth to unlock the potential of rural India.
 3.Analysis of technological framework of CSC indicates need for improving connectivity and
infrastructural facility on priority basis.
 4.organisational cohesion and better coordination between SCA and government agencies like SDA
is needed.
 5.Success and sustainability of CSC is very much dependent on selection of appropriate SCAs and
VLEs
 6.Analysis of services framework suggest that delay in deployment of G2C services and road
blocking attitude of government functionaries are demotivating the VLEs that hampering the
progress of CSC roll out
 7.CSC scheme is facing major challenges like ----- lack of content in local language, lack of
awareness about CSC in rural community, inadequate capacity building effort to enhance the
efficiency of VLEs and government functionaries. These challenges must be addressed in an
integrated manner.

44. Conclusion—continued------
8.Strategic analysis of CSC gives a broad picture of internal and external potential and challenges that
determine the sustainability and viability of CSC.
• SWOT analysis show s that maintain and build the strengths(G2C and connectivity) and opportunities
(market potential of CSC ) should prioritise and optimise. The weakness(connectivity,G2C services
deployment, content in regional languages , poor capacity building efforts)of CSC should be removed
and threats(lack of awareness, competition with market players) must be counter effectively in time.
• Porter’s Five forces analysis helps in understanding the competition in the market. VLEs are facing
tough competition in B2C and B2B2 services. The capacity building is necessary for them to counter the
competition.
• Value Chain analysis of CSC indicates that support activities(technical ,organizational and services
framework) of CSC are not satisfactory and they are affecting the sustainability and viability of CSC.
• Business mapping and ecosystem analysis of CSC indicates the interrelationship with different market
players.
Business model and cash flow analysis of CSC—quantified and specified the core issues and critical success
factors that determine the sustainability and viability of CSC.
• G2C service are vital and their early deployment should be done on war footing.
• Operating cost should be minimize.
• Choose VLEs who have entrepreneurship quality and financial capability to bear initial cost of CSC.
9.Critical analysis of existing business model of CSC is suggests that the some new model should also be
adopted for sustainability and profitability e.g. knowledge based business model..
10.This strategy will bridge the urban-rural divide and India will able to achieve an inclusive growth.

45. References
• Administrative Reform Commission (India) Report, 2008, page. 129)
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I.I.M. Ahmadabad ,India ,February 2011,W.P. No-2011-02-03, page 20.
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Icfai University Press52, NagarjunaHills, PunjaguttaHyderabad, India–500 08, 2009.page33
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• www.csc-india.org.

46. Thank you!
?