The Indian Channel Partners serving the Small and Medium Businesses (companies with 1-999 employees) in the country expect a robust 19% increase of their annual sales revenues according to a survey by Access Markets International (AMI) Partners.

"Strong economic growth, increasing adoption of a plethora of IT solutions by Indian SMBs and greater concerted efforts by vendors to fine tune their Channel Partner programs are collectively contributing to the above," observed Partha Sengupta, analyst at AMI-Partners. 

More than half of SMB channel partners in India identify themselves as value added resellers (VARs), while 13 per cent are system integrators (SIs)/network integrators. Sixteen per cent classify themselves as either independent software vendors (ISVs) or Service Providers (SPs) - both emerging market areas.

"The focus of channel partners is still on basic technologies such as computing and networking hardware and software," noted Sengupta. "There will be a gradual move towards higher value areas such as software and Internet services as more customers demand these offerings," he added.

The AMI report further stated that SMB channel partners are gearing up to meet the rising demand. Customer demands and requirements are progressively rising, and their expectations in terms of service support and product delivery is high, as product differentiation no longer plays a significant role. Indian SMBs are often strongly influenced by the channel when selecting between different brands of IT products and services. Additionally, in emerging markets like India, channel partners play a vital role in educating less IT-savvy SMBs about various aspects of IT purchase and usage.

Sengupta further noted, "Though computing and networking hardware still remain the major contributors to channel partner revenues (contributing over 50 per cent), spending on IT services has surged, making it a significant contributor as well. This reflects the growing demand for training, installation and technical support among Indian SMBs."

He added, "More channel partners, especially in cities, are now equipped to sell products to technologically-savvy SMBs. Increasing specialization has helped these channel partners to go beyond simply selling products and providing guidance to less IT-savvy SMBs. These channel partners are now balancing transactions of both high-tech and low-tech product ranges to earn maximum revenue."

The study also revealed that the channel partner business in India is bound tightly to the local economy. Nearly 75 per cent of the partners' business is garnered from customers located in the same city or town. "Channel partners have two-fold expectations, one from the end user side and the other from the principal's side. They need deliver a solution consisting of specific applications required by customers. Moreover, partnering with a vendor is a significant investment for the SMB channel partner because of the time, resources and training involved, as well as the associated costs. Therefore, they view the selection of vendors as an extremely crucial decision," Sengupta said.

Compatibility with other vendors, product quality and post sale support are given maximum weight by channel partners while choosing vendors. Gross margin and brand recognition are the other two factors, which influence vendor preferences.

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