Recruitment site techTribe has buckled just two three years since inception, blaming the nascent nature of Indian Internet scene, and the fact that the referral model didn’t automate as desired. Rohit Agarwal, founder of techTribe, has told VCCircle that niche Internet firms will not succeed on the Indian web: “Unless it’s a service that is a must have, it doesn’t work in Indian web.”

The sites business model was based on fees paid by companies posting jobs on the techTribe network which are referred by users, as well as sponsorships of communities. It has half a million users and 30 large communities but has found it difficult to scale up and make money.

While the site may have had half a million registered users, we wonder what the repeat usage was like. Remember techTribe had repeatedly spammed users on Orkut asking them to sign up. About the monetization: referrals in India continue to remain a personal, manual process. Second, the site was targeted primarily at the IT industry with 60 percent of its users from the sector. The recession has meant a sharp downfall in HR activities as companies axe jobs.

Agarwal is now considering alternatives and is on the lookout for a strategic partner or buyer. The website has stopped referrals and is being reconfigured. Agarwal has moved on to a new startup called TenMarks, according to Pluggd.in, a blog by a Yahoo employee. Incidentally, Yahoo’s own social network site SpotM is on the anvil.

techTribe is backed by Miven Venture Partners, The Entrepreneur Funds as well as heavyweight venture capitalist Canaan Partners, which is said to have pumped in a supposed $2 million into techTribe in 2007. Alok Mittal, Managing Director, Canaan Partners has stated in an article in Mint that the fundamental concept of incentive driving referrals was not going as expected and revealed plans to sell off the company. It remains to be seen how other sites backed by Canaan Partners India such as CellcastBharatMatrimony and iYogi fare.

(with inputs from Nikhil Pahwa)

(Updates: changed headline from Plans to Sell to May Sell; changed time since inception to three years from two; included issues with the referral model)