It is a time when companies are tightening their purse strings where IT purchases are concerned. In such a scenario, the government sector is one area that has not really taken a hit due to the global economic slowdown. Vendors are all bidding to bag the largest deals and are banking their businesses on the steady flow of government tenders. One such major government tender was announced by Assam Electronics Development Corporation (AMTRON). About 17,400 desktops were donated by the state government, to students who secured first division in the High School Leaving Certificate (HSLC) Examination and High Madrassa examinations since 2005, under the Anundoram Borooah Award Scheme. Also, in Gujarat, under Flood IT, a scheme launched by Gujarat Urban Co-operative Banks Federation to finance desktops to students studying from kindergarden level to post-graduate level on zero percent interest rate, a considerable amount of desktops and other IT related products were secured by the state.

Pan-India scenario
While the government has been releasing tenders to bolster IT adoption, of late there has been mounting dissent over the governments' direct-purchasing policies. The state government's policy of direct buying from original equipment manufacturers (OEMs) and vendors has left the channel community in anguish, looking for an explanation to such a drastic decision.

In Assam, where the IT channel space and the market is still at a nascent stage, channel partners alleged that the channel community has always been carefully sidelined in the entire process of government tenders as AMTRON has been inviting direct bids from OEMs like Acer, Wipro and HCL for the past four years. Furthermore, dealers in Guwahati alleged the local IT association has been incompetent and has failed to address the issue at the government or the OEM level.

Sanjay Bagaria, President, North-East Computer Trader's Association (NECTA) added, “Business has slowed down by over 40 percent for the last two quarters. This move by the state government has further brought down the figures by a huge margin. Now, we are left with no choice except to cater to the SMB and SOHO segments. The tea-gardens comprise the bulk of the business and now, with the government distributing free computers to home users, the market has been direly affected. Till now, we have not spoken to any state body or vendors over this issue but will be addressing it shortly.”

Similarly, last year saw a duel between associations down South and Electronics Corporation of Tamil Nadu (Elcot). The vendors involved in Elcot's scheme to offer lower price laptops to students decided to offer the laptops to Elcot at very discounted rates, which was proving to be a challenge for the local channel.

The allegations
On the western horizon, in Goa, the government had signed a rate contract with PCS Computers for a three-year term. The tender quotations issued by the RC panel are beyond the reach of the dealers. The government has deployed Goa Electronics Ltd (GEL), a PSU, to issue purchase notices and agreements and it has always been preferring direct vendor and OEM purchases.

Dealers across Goa market alleged that the government is least bothered in the tender process and with the handing of responsibilities to GEL, the process has not only become time consuming but also corrupt. Big players like HCL, Dell, TCS and Wipro are the largest bidders in Goa and none of them issue bids through the channels. Also, tender poaching and breaking into other's accounts in educational institutions and government installations has become rampant.

In the Punjab-Haryana belt, which is dominated by large-scale e-governance projects, there are ample tenders for vendors, but the channel are left out here as well. Addressing the issue, Ambala-based Sanjeev Soni of SR Enterprises said, “Tenders here are centralized and HARTORE is in charge of floating these tenders. However, since the government is involved in direct OEM purchases across the state, there is little scope for the channel to expand their vertical. The government only floats tenders to the listed companies in accordance to the policies of HARTORE and government business contribution to the channels is negligible here. The primary players in e-gov projects are HCL, Dell and HP. Even then, some public sector companies, the Indian Army and BSNL make purchases through the channels but it is not of considerable proportion.”

Recently, Federation of IT Associations of Gujarat (FITAG), the IT association of Gujarat, raised its voice against a biased government policy of issuing tenders to players like HP, HCL and Acer. And after the crisis surrounding the Flood IT Project, FITAG went to the extent of boycotting those vendors. FITAG claimed that they were losing about 30 percent of the total opportunity as a result of the state govern­ment policy. In the state, the tenders originate in Gandhinagar and are issued by Gujarat Informatics Ltd, (GIL), a semi-government body.

Uniting for a cause
Speaking on the issue, R Dhamodaran, Senior VP-Channel Operations and Commercial Strategy, India and SAARC, Cisco stated, “Cisco does its business full-fledged through its partners in India. Partners are the route to market for the company. Each partner which Cisco has in its ecosystem, has a unique value proposition which it brings to the business not only for Cisco but also for the customer. We invest a lot on partner development in terms of designing programs not only to enhance the partner profitability but also to help them move up the value chain and make them more focused towards solution selling.”

As most vendors refrained from commenting on the ongoing crisis openly, it seems that an organized channel community has been successful in getting vendors to comply with them. In Gujarat, FITAG at last resolved the matter by lifting the ban on Acer, HP and HCL.

“We lifted the ban after HP, HCL and Acer agreed to our terms and conditions. Now, the channels will be involved in the entire exercise of having a share in Flood IT Project. Besides, they are also ready to give over rating commission (ORC) to the channels, in case they get the order,” said Kaushik Pandya, President, FITAG.

Avishek Rakshit
avishekr@cybermedia.co.in

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