Half an hour from Bangalore's airport, villagers line up outsidea nondescript shop in Devanahalli village to get a copy ofgovernment records ranging from birth, death and caste certificates,to land records. Until three years ago, they did not have thisoption; residents who wanted to buy land or get certificates toenrol in college had to trek to Bangalore city and the governmentdepartment concerned, and dodge or deal with waiting touts to gettheir records.
Today, they can just walk up to a rural business centre (RBC) setup by Comat Technologies, pay Rs 15, give them the relevant number(survey number, in the case of land records) and walk away with adocument. Two years ago, when real estate prices rocketed as theairport neared completion, Comat's centre in Devanahalli was jammedby locals who needed these land records to make a quick buck.
If Devanahalli now blurs the line between urban and rural Indiawith the IT capital just an hour's drive away the attraction forComat's services lies in the smallest of villages. For example, inShanboganahalli, some 30 minutes from Ramanagaram town on theBangalore-Mysore highway, Comat's centre is located next to a cowshed and its customers often come straight from the fields feetbare, dressed in dusty kurtas and frayed striped shorts. Landrecords are the most popular, but at this time of the year, withcollege admissions under way, caste certificates are chart-toppers.
Comat Technologies
Founded in: 1996
Focus: Gives rural people doorstep access to critical data suchas land records, birth, death and caste certificates
Scale of business: Revenues not available, but Comat runs 800service delivery centres in Karnataka, and deals with 60,000customers daily
Presence: Mainly in Karnataka, but slowly growing into otherstates such as Haryana and Sikkim
Investors: Omidyar Network Fund, Unitus Equity Fund, Avigo, Enam
Comat, which services 60,000-70,000 customers a day across 800centres in Karnataka alone, has spread to five other states withmixed success.
The government may be the largest service provider to citizens,but its services are often tagged as bureaucratic and inefficient,says Sriram Raghavan, Co-Founder of Comat. We provide services onlywhere the citizen has direct contact with a government department...we want to provide competition and improve the quality of servicedelivery.
Comat's business model hasn't happened overnight; the company cantrace its roots back to 1992 when two friends, Ravi Rangan andSriram Raghavan, started Comat in the US to develop software.Version 1 of Comat lasted only a couple of years. It was reborn in1996, with a focus on government technology projects, and offices inthe US and India.
In 1995, the Union Government kicked off the revolutionary voterID scheme and Comat was one of the companies selected for thisproject. It started small, with just one district, Shimoga inKarnataka, but it expanded across the state, before eventuallycovering 11 other states.
In 2001, Raghavan decided to sell the US operations to Dallas-based Worldwide Employees Inc. and returned to India to fashionComat's next evolution. This time, the duo decided to look beyondjust IT and focus on enhancing delivery of citizen services as itsbusiness. We started as a technology solutions provider andleveraged some early projects such as the Bhoomi electronic landrecords initiative to graduate into services delivery, saysRaghavan. Since then, Raghavan has taken a more central role, withRangan being more hands off.
The graduation didn't happen overnight; the company spent yearsworking on the back-end work flow for government departments, whichwere paper-based and difficult to digitise. It was only in 2006 thatthe company launched its first services delivery centre and it hasbeen a slow, tough climb to its current size. Delivering theseservices has been a monopoly of government departments and the lowerlevels of bureaucracy didn't openly welcome us, admits Raghavan. Ourgoal is not to keep the local bureaucracy happy.
Each of these centres is around 200 sq. ft, costs Rs 1.5-2 lakhto set up and is manned by Comat employees. Since sensitive personaldata is handled, the government is wary of letting franchisees intothe business. The centres use VSAT satellite connectivity oftenbacked by a broadband Internet line to access government records.
Four-fold path
Digitise the government's paper-based documentation
Focus on departments that interact with citizens
Issue certificates & government documents on the spot
Expand number of services offered and the user base
There were (and still are) other teething problems: often, it ishard to find a suitable location, and infrastructure, especiallyelectricity, is a bugbear. The day BT visited Comat's Devanahallicentre, the power had been turned off at 10:30 a.m. and would returnat 6:30 p.m. While the back-up lasted for a few hours, staff wereeventually rendered, literally, powerless. We have tried othersolutions such as solar power, but the capex required is Rs 2 lakhper centre, which doesn't work, says Raghavan.
While Comat's business model is reliant on the government givingit a fee, some layers in the bureaucracy are throttling its cashflows. Centre managers typically give all their collections to alocal government office, which in turn returns the fee due to them.We are in effect providing working capital to the stateadministration, says Raghavan, the government almost never gives usour dues on time.
The long-term potential of Comat's business model seems to haveattracted investors in droves. In three rounds of funding, investorsincluding eBay Founder Pierre Omidyar's Omidyar Network (its firstdirect investment in India), Unitus Requity Fund (first investmentoutside of microfinance), Enam and Avigo have pumped in Rs 80 crore.The capital intensive nature of its business is a big challenge andComat's centres need to generate enough revenues to be self-sustainable, says Maya Chorengel, Managing Director of Unitus EquityFund.
Despite these operational hurdles, there is a viable business tobe built around social enterprise, Raghavan contends. Building asocial enterprise is a lot more challenging and fulfilling than aconventional business. There is a compelling business case here, butthe road is a lot steeper, he says. Comat, for example, set up 730RBCs by April 2007, added another 40 by January 2008, before takingits total to 800 operational centres, even though there are around2,000 in various stages of development. Eventually, Comat hopes toreach 10 lakh customers daily.
To achieve this goal, Comat needs to shave costs, expand itsnetwork and deliver more services through them. Even as it expandsits presence in Karnataka, the company has already rolled outsimilar units in five other states and is also expanding the bouquetof services on offer. We already have 45 centres in Sikkim forexample, but there we deal more with NREGA applications and varioustypes of government dole, unlike in Karnataka, says Raghavan.Elsewhere, the company has also set up centres in Haryana as itseeks to expand.
Besides looking to expand its footprint, Raghavan also believesthat Comat can improve its vertical presence by offering moreservices to citizens (life insurance premium payment and mobilephone recharge, for example) and target newer consumers includingwomen and children.
Then, Comat recently announced plans to train around 15,000 ruralpeople to run its RBCs and says it will ramp this up. According toRaghavan, Comat sets certain minimum qualifications (education,ability to attend daily tutorials for people already holding otherjobs) and imparts onthe-job training to rural youth. We wereapproached by the Karnataka Government for some training programssix months ago, says Raghavan, we've decided to impart some basictraining to about 2,500 people per month for a year and thenconsider its future.
Besides employing them in its own centres, these people can alsolook for employment on government offices or where rudimentarycomputer skills are needed, he reckons.
With the rural economy expected to be the next growth engine ofthe Indian economy, Comat may play an important role in catalysingits growth.
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