As the SMB sector in India grows to adopt new technology initiatives, most of the leading IT vendors are eager to increase their share of the spoils. In this endeavor, channel partners are likely to be their most important allies. Their partners are instrumental not only in increasing sales to the SMB customers but they also provide vendors with valuable inputs about client mindsets and preferences, thus helping them customize their products for this sector.

The above findings were released by New York-based Access Markets International (AMI) Partners, Inc., a consulting firm that specializes in IT, Internet, telecommunications and business services market intelligence, with a strong focus on global small and medium business (SMB) enterprises. AMI-Partners conducts annual tracking surveys of SMBs in more than 20 countries.

VARs comprise the majority of the channel partner universe, both in terms of number of businesses and revenues. This is a further confirmation that the prime requirement of SMBs from their channel partners is timely sales and support for basic IT products in the computing and networking arena. 

India channel's businesses are closely linked to the country's economy. As a result of booming growth, three fourth of India's channel experienced an average revenue growth in the past year. With the anticipated boom in IT spending, partners are optimistic about their future earnings and anticipate a substantial 19% increase in revenues in the next twelve months. 

An overwhelming majority of channel partner revenues are generated locally (from customers located in the same city/town). Only 5% of revenues are generated from customers located in another state. Approximately four-in-five of the channel members operate from a single location only indicating sufficient scope of future expansion. However, larger organizations (with over 50 employees) have the propensity to be more distributed and function from three to four locations, on average.

Channel partners service a diverse mix of customers - a typical partner derives 46% of revenues from small businesses, over a fifth from medium businesses, and another fifth from consumers. The majority of India's channel partners generate sales from repeat customers indicating that channel partners make an effort towards building up a long-term rapport with their customers.

Making the right choice
India SMBs are often strongly influenced by the channel when selecting between different brands of IT products and services. In general, partners exert most influence in the computing hardware arena followed by networking hardware and software, and then servers and storage. They exercise lesser influence in the Internet and software categories. System/network integrators are the most influential partners for India SMBs and exert brand influence over a wide gamut of IT purchase categories.

Additionally, in emerging markets like India, partners play a vital role in educating less IT-savvy SMBs about various aspects of IT purchase and usage. These businesses lack sufficient knowledge about IT technicalities and consequently depend on the channel for guidance. 

A huge majority of channel partners resell mostly simple and essential computing products such as desktops, portables, printers, peripherals, networking hardware, anti-virus software and third-party packaged software. However, in the next twelve months, channel partners plan to increase their bouquet of product offerings to the SMB sector by expanding into the following products such as PDAs, internally developed software for resell, networking solutions (i.e. WANs), outsourced IT support, etc.

Judicious selection of vendors 
Channel partners evaluate their vendors after considering various factors. “They would like to build up a stable, long-term relationship with vendors who have high-quality products/technologies,” commented Swati Sasmal, Research Manager at AMI-India. “Providing quick pre- and post-sale support by vendors is also a must for most channel partners. A few other factors that are given significant weight by partners while choosing vendors are attractive gross margins and the option of testing out a product before offering it to customers.”

The Indian channel rates Intel, Samsung and HP as the most popular global vendors along with several local players. This finding is synonymous with the results of the Channel Choice Awards that DQ Channels has constituted for the past two years.

Among various marketing tools, channel partners favor means of promotional support like literature, advertisement, giveaways, as well as referrals and vendor financing. They would also like to avail the opportunity of co-branding with the vendor that can help them enhance their brand equity. 

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