Representing the Non-formal: the Business of Internet cafés in India
NIMMI RANGASWAMY
Microsoft Research India
It is our contention that small businesses of information and communication technologies are deeply embedded in a context of non-formal business relations and practices in developing economies. Cyber cafés in the city of Mumbai, the subject of our study, operate in and through an unregulated grey market of non-formal business practices. In this paper we explore the fit of ICTs into this ‘area’ of commercial practices. We do this by profiling café managers, business strategies and contextualizing these in the broader culture of non-formal business relationships pervading every day transactions. With regulatory discourse of information technologies centered on piracy and illegitimacy, informality of business practices in emerging economies provide an alternate premise to understand its nature and function. These challenge received notions of visualizing IT in emerging economies as simply piracy and illegality. It also implies coming to terms with markets shaped and structured by para-legal and non-formal processes in negotiating on-going and future business relationships.
Introduction
We report from an on-going research study of cyber cafes in and around Mumbai metropolis. Many small businesses in Mumbai operate in and through a grey market of non-formal business practices. Informality pervades the warp and woof of these businesses. They are often developed through dispersed family ties and local social networks, and sometimes rely on underground connections to run and maintain their day-to-day transactions.
Our focus, in this paper, is to explore the fit of information technologies into this parallel domain of non-formal practices. We use ethnographic explorations to give voice and visibility to the small business of cyber-cafes. We attempt to reveal how cybercafé businesses discover survival niches, sustain social networks and adapt organizational strategies to endure an uncertain marketplace. .
Our research is based on open-ended interviews among 30 cyber café owners in town, suburban and outer suburban Mumbai, conducted during August 2006 to April 2007. Cyber cafés are an increasing presence in Mumbai as they are in many parts of Urban India. Proliferating cafés have made it a highly competitive business with small margins. In our study, most of the 31 cafés are in low-middle income neighborhoods and 6 out of these are in the midst of bustling slums/shanty towns, 5 in Dharavi and 1 in a South-east suburb (we consider Dharavi in a separate section). We deliberately chose these neighborhoods to understand the interplay between business practices and the demand for ICTs in low-income populations living in poor infrastructural living conditions. More importantly, non-formality entrenched in the commercial cultures of poor locales provide an opportunity to study ICTs away from IT business parks.
Our understanding of the ‘non-formal economy’ in Mumbai is similar to and builds upon the notion of ‘the informal sector’, a term used by Keith Hart(1973) to describe unregulated, small scale economic and social exchanges in urban Ghana, whose individual economic transactions do not ever rise to the taxable limit. The informal sector is frequently considered synonymous with survival strategies of the poor, where economic transactions may range from daily wage labor to economic exchanges that are unregulated or remain untaxed. Mumbai is home to an extraordinarily vibrant and organic commercial culture as well as a thriving shadow economy, with businesses crisscrossing the formal and non-formal at various points . As a result, mainstream (and audited) economic practices are subsidized when people enter into informal business relationships. The state, in turn, exploits the situation by aligning illegally with these businesses fo
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