<PAGE>   1
                                                                    Exhibit 10.7

                                AMENDMENT NO. 1

THIS AMENDMENT NO. 1 (the "Amendment") is entered into effective as of the
__ day of August 1999, between Corio Corporation ("Customer") and Concentric
Network Corporation ("Concentric").

        WHEREAS, Customer and Concentric are parties to a ConcentricHost Server
Solutions Service Agreement, dated 29 January 1999 ("Agreement").

        WHEREAS, Customer and Concentric wish to amend the Agreement to
incorporate specific, additional terms addressing the establishment of a
multi-server, dedicated area hosting environment at Concentric's data center,

        NOW, THEREFORE, in consideration of the mutual covenants and conditions
in this Amendment, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

        1. Services. Section 1.0, Services, is deleted in its entirety and
replaced with the following new section:

                "Subject to the terms and conditions of this Agreement, during
                the term of this Agreement, Concentric will provide to Customer
                the goods and services (collectively, the "Services") as
                described in the Statement of Work, attached hereto, as Exhibit
                B."

        2. Services. Section 1.0, Services: The additional provision is added
        as follows:

                "During the term of this Agreement, Customer agrees that
                [*]

        3. Payment and Invoices. Subsection 2.1, Fees, is deleted in its
        entirety and replaced with the following new subsection:

                "Customer shall pay Concentric the fees and charges as set forth
                in Exhibit A, Pricing, attached hereto. These fees and charges
                may include one-time set-up charges, one-time engineering design
                fees, engineering support fees, sustaining engineering fees,
                cross connection fees, as well as certain monthly recurring
                fees. During the term of this Agreement the fees shall be fixed;
                however, should Concentric's general fees for the Services
                decrease during the term, Customer's fees will be adjusted
                accordingly. In addition, the parties agree, on an annual basis,
                to discuss pricing to insure such pricing is competitive in the
                market. If such pricing is not competitive, then the pricing
                will be decreased accordingly."

        4. Marketing and Promotion. A new subsection, 7.2 is added as follows:

                7.2     During the term of this Agreement, [*]


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    the omitted portions.


<PAGE>   2
     5.  Term and Termination. Subsection 6.1, Term, is deleted in its entirety
and replaced with the following new Subsection:

     "The term of this Agreement will commence on the Effective Date and
     continue for the term of [*]

     6.  Term and Termination. Subsection 6.2(a), After the first clause, ending
with the word "breach", add the following:

     [*]

     7.  Term and Termination. Subsection 6.3(a), Effect of Termination, is
deleted in its entirety.

     8.  General Provisions. A new subsection 9.11 is added as follows:

     [*]

     9.  Defined Terms. All capitalized terms in this Amendment, not otherwise
defined herein, shall have the meanings ascribed to them in the Agreement.

     10. Ratification and Affirmation. The Agreement, as modified by the express
terms of this Amendment, is hereby ratified and affirmed by Customer and
Concentric, and shall remain in full force and effect.

     IN WITNESS WHEREOF, the Parties have executed this Amendment effective as
of the date first above written.


CUSTOMER:                                    CONCENTRIC:

CORIO CORPORATION                            CONCENTRIC NETWORK CORPORATION


By: /s/ GEORGE KADIFA                        /s/ HENRY R. NOTHHAFT
    -----------------                            -------------------
Name: George Kadifa                          Name: Henry R. Nothhaft
      ---------------                              -----------------
Title: President & CEO                       Title: CEO
      ---------------                              -----------------

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    the omitted portions.
<PAGE>   3
                                   EXHIBIT A
                                    PRICING

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
POINT TO POINT CONNECTION TO DATA CENTER     SETUP                 MONTHLY
--------------------------------------------------------------------------------
<S>                                          <C>                <C>
o Cross Connection                           [*]                [*]
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
NETWORK PERFORMANCE DATA FEEDS TO CORIO      SETUP                 MONTHLY
--------------------------------------------------------------------------------
<S>                                          <C>                <C>
o Management System setup and use for
  1,000 end points                                              [*]
--------------------------------------------------------------------------------
o Pinging of alternate connections
  data feed                                  [*]                [*]
--------------------------------------------------------------------------------
o Vertical notification per data feed if
  requested at the time of installation                         [*]
--------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
TAPE BACK UP TAPES 30-60 GBS OF STORAGE                         PER TAPE
--------------------------------------------------------------------------------
<S>                                                             <C>
o Per tape (30 to 60 GBs)                                       [*]
--------------------------------------------------------------------------------
</TABLE>


CORIO PER SERVER HOSTING SERVICE:

     [*]

(per server per month charge to include the following components found on this
page and the next page)

Server Management

o    Server management up to the OS level

ASSET MANAGEMENT SYSTEM

Corio specific asset management system




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<PAGE>   4
REPORTING SERVICES

o    Server outage reporting

o    Bandwidth utilization reporting

o    Corio specific tape backup reporting

o    Corio specific asset management reporting

TAPE BACKUP

o    All physical effort involved with tape backups

o    Management of tape backup system as defined in the statement of work

SYSTEM ENGINEERING SERVICES

o    Up to 1 hours per server per month

ENVIRONMENT (16 FT. X 16 FT. CORIO CAGE)

o    Secure, scalable areas including locked cabinets, racks, shelves, locked
     cages and private suites

o    Telco hardened

o    Environmental controls

o    Redundant heating, ventilation and air condition systems

o    Physically secure with escorted access at all times

o    Fire Master 200 Fire Suppression System

o    Redundant, built-in, clean, continuous power distribution units to servers

o    Redundant power. UPS & diesel generator power back-up

o    Telco Relay Racks.

o    standard 19" rack mount

o    cable guides on both sides of each rack

o    circuit drops directly to their network cabinet.

***ASSUMPTIONS: CORIO PROVIDES "CORIO SPECIFIC": SERVERS, ROUTERS, SWITCHES, AND
TAPE BACKUP EQUIPMENT

***SUSTAINED ENGINEERING WORK TO BE BILLED AT $150.00 PER HOUR


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<PAGE>   5

--------------------------------------------------------------------------------
SERVER SETUP:
[*]

o    Drop Shipment receipt of server
o    Inventory of server
o    Corio specific asset tagging of server
o    Server assembly
o    All installation and configuration of Corio specific software
o    Installation of server within Corio data center
o    Configuration of all server specific monitoring systems
o    Management and storage of Corio equipment

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
PRELIMINARY ENGINEERING DESIGN WORK:

[*]

o    [*]

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
START UP ENGINEERING SUPPORT:
[*]

o    Implementation plan defining of all Corio specific procedures
o    Please refer to implementation plan for all items covered

--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
INFRASTRUCTURE RACK: 1 RACK FOR EACH 16 X 16 SPACE
[*]

o    Concentric will provide 1 open telco rack for Corio installed
     infrastructure machines in a 16 X 16 foot space.
o    Machines on this rack will be installed by Corio and maintained by Corio.
o    If Corio elects to have Concentric install and manage servers, then the
     per server price will apply

-------------------------------------------------------------------------------



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    the Commission. Confidential treatment has been requested with respect to
    the omitted portions.
<PAGE>   6
MONTHLY RECURRING CHARGES: CO-LOCATION BANDWIDTH FOR INTERNET ACCESS NOT ACCESS
TO CONCENTRIC DAF LINES.

                           Monthly Recurring Charges

<TABLE>
<CAPTION>
                                Description
Bandwidth Options      (includes first 8" rack space)      [*]
-----------------      ------------------------------      -----------
<S>                    <C>                                 <C>
   o 500 Kbps           Dedicated Switched Ethernet          [*]
   o   1 Mbps           Dedicated Switched Ethernet
   o   2 Mbps           Dedicated Switched Ethernet
   o   4 Mbps           Dedicated Switched Ethernet
   o  10 Mbps               Dedicated Ethernet


                                  10 Mbps
                                  11 Mbps
                                  12 Mbps
                                  13 Mbps
                                  14 Mbps
                                  15 Mbps
                                  16 Mbps
                                  17 Mbps
                                  18 Mbps
                                  19 Mbps
                                  20 Mbps
                                  30 Mbps
                                  40 Mbps
                                  50 Mbps
                                  60 Mbps
                                  70 Mbps
                                  80 Mbps
                                  90 Mbps
                                 100 Mbps
</TABLE>


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    the omitted portions.


<PAGE>   7
DISCOUNTS & INCENTIVE OFFER TERMS

     DISCOUNTS

     Concentric will provide Corio with the following discount schedule for
     dedicated hosting services.

<TABLE>
<CAPTION>
<S>                                       <C>
[*]                                       [*]
</TABLE>

[*]

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    the omitted portions.
<PAGE>   8
                                   EXHIBIT B
                               STATEMENT OF WORK

CUSTOM CO-LOCATION AND NETWORK SERVICES

In accordance with the specifications & requirements provided in this Exhibit,
Concentric will be a networking and hosting partner for Customer. Concentric
will manage a Customer specific hosting environment and provide various forms
of data connectivity to the hosted environment. Concentric will manage Customer
servers, provide Customer specific reports on: server, bandwidth, tape
backup and assets. Concentric will also manage the complete data backup
procedures. The Concentric support center will provide helpdesk to helpdesk
incident identification, escalation and management of server and network events.

1)   SECTION ONE: CO-LOCATION SERVICES

     a)   Corio provided components:

          i)   Hardware:

               (1)  If Corio procures and owns their own equipment it may
                    consist of a combination of Approximately 20 Sun E250,
                    E450, D1000 and Ultra servers for Infrastructure (WWW, mail,
                    ftp, etc.), Implementation (staging of new Corio customers
                    before production), and Production.

               (2)  Corio can supply tape backup equipment for a dedicated
                    backup application. Additionally, acquisition of backup
                    systems can be transferred to Concentric if required.


          ii)  Application level software (People soft, Oracle database server,
               mail server and FTP server)

          iii) Corio staff to be present at Concentric Network for the first 10
               installs of production systems for Corio co-located services.

          iv)  Ownership, installation and management of the Operating Systems
               and patches until otherwise requested. At some point, it may
               become advantageous for Corio to transfer this responsibility to
               Concentric Network.

          v)   Corio can provide management of all access lists on the router
               gateway to and from the co-located service. This includes the
               routers and switches associated with defining the data path of
               all Corio customers. This means that Corio will construct all
               changes to the access lists for each customer site and each
               internal VLAN.

          vi)  Management software for a "Manager of Management Tools"
               application. Concentric can provide monitoring feeds to Corio.
               Corio will provide a software environment where those feeds are
               assembled and reported.


     b)   Concentric provided components:

          i)   Space within the Concentric Network HQ for a Corio
               representative to work while the initial set (10) of
               installations takes place.

          ii)  Hardware and associated services.

               (1)  16 X 16 Co-location cage

               (2)  Up to 19 open Telco racks and associated switches and
                    cables. At least one of the racks will be dedicated to
                    network equipment.

               (3)  Power, fire detection and suppression systems, environmental
                    controls, and 7 X 24 site security including online cameras,
                    breach alarms, automated police notification and limited
                    card key access to all secure zones.

               (4)  CNC may lease to Corio, A Router, switch and associated
                    cabling for incoming network connections both from
                    Concentric and alternate service providers.

               (5)  Firewall and encryption boxes plus configuration and
                    management of these services can be supplied by Concentric
                    if required by Corio.

               (6)  Concentric can procure and lease to Corio the Hardware for
                    the production co-located services if required.




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<PAGE>   9
                (7) Tape backup service components to include:

                    (a) Can include the procurement of equipment to perform
                        backup where Concentric Network will bill Corio back for
                        the dedicated hardware.
                    (b) Physical tape swapping once a week
                    (c) Off site storage of tapes
                    (d) Tape rotation
                    (e) Coding of tapes for retrieval of backup
                    (f) Administration of the backup servers
                    (g) Tape backup equipment
                    (h) Retrieval and loading of tapes for restoration.
                    (i) Legato Tape data identification library.

          iii)  Software
                (1) Legato Software and management thereof for tape backup
                    systems
                (2) Micromuse software for the retrieval of data to facilitate
                    monitoring of the co-located server environment as well as
                    Corio end users CPE. The service provided by the use of this
                    software allows for Concentric to send a simple "ping" to a
                    port of a Co-located machine or to an end customer site and
                    report the status of that machine to a log where it can then
                    be fed to an agreed upon monitoring tool. This will allow
                    Concentric Network to determine the status of the machines
                    and escalate to Corio if there is a non-response. This will
                    also allow Corio a "view" into the status of all the above
                    mentioned devices.

          iv)   Server Staging and Installation:
                (1) Installation of all hardware for Corio co-located
                    environment whether procured by Concentric Network or Corio.
                (2) Auto install of base software/operating systems from a Corio
                    provided master can be provided by Concentric. As a
                    benchmark for an installation process the first 10 machines
                    (approximately) will be staged and installed by a
                    collaborative effort between Concentric Network and Corio.
                    If an auto installation can be mutually agreed upon
                    Concentric will provide auto loading of master systems onto
                    the Corio production servers.
                (3) Asset Management system to distinguish between and manage
                    Concentric and Corio hardware components. Components to
                    include:
                    (a) Tagging
                    (b) Tracking
                    (c) Update reports provided either via email or an updated
                        web site.

2)   SECTION TWO: NETWORK SERVICE

     a)   Concentric Provided Components:
          i)    Network design specification and diagram of proposed LAN, WAN,
                and VPN components to be provided by Concentric. Corio and
                Concentric Network to jointly develop the final versions of the
                network design specification and diagram once the overall
                concepts are agreed upon.
          ii)   Cross Connections of Corio customer dedicated access from
                alternate network service providers into the Corio custom
                co-location server environment. Components of this service
                include;
                (1) Acceptance of the alternate provider demarcation in the
                    Concentric Network Telco room and patching of that line into
                    the Corio designated server port.
                (2) Monitoring of the cross connected patch panels and cables.
          iii)  Concentric network Dedicated Access Facilities service to Corio
                customers for access to the Corio co-located server environment.
          iv)   Installation and management of the Corio custom router
                environment excluding the management of the actual access lists.
          v)    Security Services:
                (1) Firewall configuration, installation, monitoring and
                    management to be provided if required.
                (2) VPNet Encryption configuration, installation, monitoring and
                    management for both the co-location environment and for
                    customer sites (CNC DAF and alternate provider sites) if
                    required.
          vi)   Network Monitoring of all co-located devices.
          vii)  Monitoring of all customer premise sites.
          viii) Proactive notification of outages.



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<PAGE>   10
3)   SECTION THREE: SUPPORT SERVICE

          Parties will mutually agree upon Corio specific support and escalation
          procedures to address all of the following components:

     a)   Data Center Support provided by Concentric:

           i)  Managed server support for Corio co-located servers to include:

               (1) Tape backup management
               (2) Full backups in time frames to be provided by Corio.
               (3) Server installation and upkeep
               (4) Router and switch installation and upkeep
               (5) Cross-connection of alternate providers into the co-located
                   server environment
               (6) Power cycle of downed machines
               (7) Loading of base applications if required.
          ii)  Varying levels of escalation of detected outages of Corio servers
               (all escalation notification to be provided to Corio. Corio to
               then escalate to their customers if needed). Notification to
               include:
               (1) Infrastructure outages
               (2) Implementation server outages
               (3) Corio customer production server outages (of the highest
                   priority)
               (4) Customer premise outages
         iii)  Direct intervention in error correction of Corio server outages
               up to the basic OS level
          iv)  Reporting on bandwidth usage, backup usage and status, outages
               and errors. Reports to include:
               (1) MRTG online report tool for bandwidth usage out of the
                   co-location facility
               (2) Micromuse reports and logs
               (3) A Read Only view into Open View of the Corio servers and
                   customers.
     b)   Network Operations Center support services
          i)   Concentric Network to provide direct access (read only) to
               systems monitoring tools for their co-location and end customer
               sites.
         ii)   Concentric Network to provide, in accordance to mutually agreed
               upon support procedures, monitoring down to the customer premise
               router for Corio customers cross connected to the co-location
               servers via Alternate Provider access, and reporting to Corio
               when Concentric is unable to "ping" remote devices.
        iii)   Concentric Network to provide monitoring down to the customer
               premise router for all Concentric Provided DAF lines to Corio
               customers.
         iv)   Concentric to provide a dedicated contact for access into the
               trouble tracking system for the Corio systems and their customer
               connections.
     c)   Operations Desk support service
          i)   Concentric to provide help desk to help desk escalation of
               problems to the first tier Corio support staff for escalation to
               Corio customers and vice versa. Ops desk would be the mouth-piece
               and trouble ticket contact for both co-location and DAF/Alternate
               provider escalation services.
         ii)   Maintenance policies to be defined to Corio and any possible
               customer effecting maintenance service notifications to be
               provided proactively to Corio.


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