Web Outage Hits Indian Outsourcing Firms

India's lucrative outsourcing industry contended with Internet slowdowns and outages Thursday after two cables were cut under the Mediterranean Sea, disrupting Web access across a wide swath of Asia and the Middle East.

The disruption cost India half its bandwidth. While larger companies with sophisticated backups appeared equipped to handle the situation, smaller firms said they could lose business if full Internet access was not quickly restored.

"Most of our work ... consultation with our overseas customers, is done online. The Internet is our main business tool," said Praveen Mathur of Streit India Advisory Services Pvt. Ltd., an investment consulting firm that is based in New Delhi and has clients in the United States and Canada.

The firm's business, he said, would "definitely be affected" if the problem persisted.

The outage also raised questions about the system's vulnerability. A Gulf analyst called it a "wake-up call," while one in London cautioned that no one, including the West, was immune to such disruptions.

They could have a "massive impact on businesses," said Alex Burmaster from Nielsen Online in London, adding that ordinary people "probably couldn't imagine" life without the Internet.

Such large-scale disruptions are rare but not unknown. East Asia suffered nearly two months of outages and slow service after an earthquake damaged undersea cables near Taiwan in 2006.

The Mediterranean Sea cables, which lie north of the Egyptian port of Alexandria, snapped Wednesday as the work day was ending in India. The impact was not immediately apparent there, but it was in Middle Eastern countries.

There, outages slowed traffic on Dubai's stock exchange and left officials scrambling to reroute traffic to satellites and through Asia.

Dubai's stock exchange was back up by Thursday, but many Middle Eastern businesses were still having trouble — as were ones in India, where the Internet was sluggish. Some users were unable to connect at all and others were left frustrated by spotty service.

The Internet Service Providers' Association of India said the country had lost half its bandwidth, and TeleGeography, a U.S. research group that tracks submarine cables, said the disruption reduced the capacity on the route from the Mideast to Europe by 75 percent.

Bad weather stymied initial attempts to reach the cables Wednesday. A top Egyptian telecommunications official said it could take a week to repair the damage once workers arrive at the site.

The official said it would not be known what caused the damage until workers reached the area, though rumors suggested a ship's anchor was to blame. The official in Egypt's Ministry of Communications and Information Technology asked not to be identified because he was not authorized to speak to the media.

While the snapped cables caused problems in many countries, the loss of Internet access was potentially disastrous for India, which earns billions of dollars (euros) a year from outsourcing.

Analysts said, however, that India had built up massive amounts of bandwidth in recent years and would likely handle the situation without enduring major economic losses — but the situation would be disruptive, especially for smaller companies that depend on local Internet service providers and lack sophisticated backup systems.

"Telecom and bandwidth are the bedrocks of the IT (information technology) industry," said Ajit Ranade, the chief economist at the Aditya Birla Group, an international manufacturing and services company. "If something happens to the bedrock, obviously the IT industry will suffer."

That was the case at the New Delhi office of Symantec Corp., a security software maker based in the city of Cupertino in the U.S. state of California. "There's definitely been a slowdown. We're able to work, but the system is very slow," said Anurag Kuthiala, a system engineer.

But at Intel Corp.'s India operation, which employs about 3,000 people and is focused on research and development, there were few problems because the company has a heavily redundant system routed through U.S. servers.

"When one of the nodes goes down, the network is able to reroute itself," said Rahul Bedi, who heads Intel's South Asia business operations. "We have our last mile line coming in locally, but we don't reach the Internet through India, we reach it through the U.S."

The system is not foolproof, he added, but said "it depends on the intensity of the outage."

There was also concern that disruption could keep millions of South Asians working in the Gulf from sending money home. The South Asians, who do everything from construction to caring for the children of the well-off, are paid little by local standards — but their income is often a lifeline for poor families back in India, Pakistan, Bangladesh and Sri Lanka.

"The system is a bit slow today, but we have not experienced a total breakdown," said Sudhir Kumar Shetty, who runs Abu Dhabi's UAE Exchange, a money transfer firm.

But the major test would come Friday, the first day of the month, when thousands of foreign workers are expected to descend on the company's 53 branches to send money home.

Mustafa Alani at the Dubai-based Gulf Research Center said the outage should be a "wake-up call" about the need to better protect vital infrastructure.

"This shows how easy it would be to attack" vital networks such as the Internet, mobile phones and electronic banking and government services, Alani said.

Wednesday's damage was not terrorism — but that is still a threat, he said. "When it comes to great technology, it's not about building it, it's how to protect it," he added.

Users in India, Pakistan, Bangladesh, Egypt, Qatar, Saudi Arabia, the United Arab Emirates, Kuwait and Bahrain were affected.