The company is also working on various partnership arrangements with technology majors like Sun Microsystems, Dell, Hewlett Packard, Compaq Financial Services and GE Capital. "The margins in the IDC business are really in value-added services and it is for this that we are in talks with various technology majors as well as third party financiers who will be in a position to make available the relevant technologies, servers or capital for the same" says Mr Sanghi.

Net Magic is in the process of working out partnerships whereby the company will either strike a revenue sharing deal on a new technology or a technology major may rope in a third party financier to help Net Magic procure the technology.

The server costs are in the range of about Rs 8 lakh and above per server. Net Magic employs about 60 of them between its US and India offices.Mr Sanghi did not rule out the possibility of placing equity with the technology players from whom Net Magic sources its technologies but said, "We cannot be seen as an extension of their business or as a dedicated shop for that particular technology so we have to be careful to preserve our neutrality and will place equity with them only if it does not compromise neutrality.

The company's existing investors include Mr BV Jagadeesh, Mr KB Chandrasekhar (both co-founders of the US based Exodus) and Mr Kanwal Rekhi who have come in with a total investment of less than $1 million in the first round alongwith eVentures which has put $2.5 million and Global Technology Ventures which has invested $400,000 in Net Magic.