Everyday we read these ads in the paper offering web design services at extremely low rates and I wonder how they survive on such margins and who do they serve. But as it happens there is a huge opportunity for ‘entry level’ web design firms at the bottom of the pyramid.
Its a prolific Industry that designs thousands of websites a month bringing Indian business onto the world stage.
An offshoot of the gigantic Indian software industry, the low cost web design industry is growing every year, generating literally thousands of websites for small businesses all over India. What would be the average profile of such web design firms.
- Mostly 2-5 member teams, a lot of whom are related or college friends.
- Located in homes, tiny back offices all operating as sole proprietorships
- They are all independent entrepreneurs where there is no heirarchy and the boss also makes the coffee
They use template based designs which allow for a quick turnaround and low costs
No design processes. No complex wireframing phase. Just choose a template from the hundreds of template available for sale on the net, plug in the content and you’re ready to go!! Most of these businesses do not need a fancy website. They just need to get online. Customization is very little and not required. So what if your site looks like a clone of the hundreds of others.
They charge costs ranging from Rs.2500 to Rs.10,000 (how do they survive?)
They charge peanuts for these sites. After deducting the cost of the template, hosting and other add-ons the margins are wafer thin to non-existent. They make it up in volume and high turnover per month. Many of them are hosting providers who also do web designing.
Its a very high Business Mortality Rate (survival of the fittest)
As with any highly commoditized industry many go out of business within a year or two of starting. Many take up jobs after struggling to make ends meet. But for every one that dissappear two more spring up, ready to serve.
Its extremely difficult for them to move up the value chain.
Most of these businesses are run by college dropouts or owners who are not exactly at the top end of academic excellence. Due to the templatized nature of their work most are not able to go up the value chain with advanced services. The owners business skills are also rudimentary at best. Due to the low cost nature of their services many clients would not trust them with higher work.
However they do serve a purpose that of powering thousands of small businesses across India on the internet. They allow companies on a budget to get a taste for what the web can do for them. These same companies then continue this with newer sites, better sites, climbing up the value chain where companies like ours sit. And all this due to the hard work and ingenuity of the web designers at the bottom of the pyramid.