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The economic boom, coupled with high IT awareness among small and medium
businesses (SMBs or companies with up to 999 employees) is boosting the fortunes
of resellers or channel partners in India, with more than 90 percent of channel
partners reporting a rise in their annual revenues over the last 12 months,
according to the latest report by New York-based Access Markets International
(AMI) Partners.
The average revenue of channel partners focusing on IT needs of SMB in India
was Rs 14,596,200 in the 2005-06 financial year. It has risen to
Rs 17,992,970 in the last 12 months. “This is due to a significant increase in
IT services as contributor to revenue growth of channel partners,” said Partha
Sarathi Sengupta, Senior Analyst, AMI-Partners. “Hardware reselling has become
a commodity business with heavy discounting. This is curbing reseller margins.
To stay profitable, channel partners have ventured into services and solutions
as a business model.”
SMB needs
Channel partners in India have aligned their business models to suit the
current requirement of SMBs. Currently, channel partners focusing on SMB needs
are still product-oriented, and their revenue mix is dominated by computing and
networking hardware (about 52 percent).
“Getting entry into an account is becoming difficult for channels due to
multiple brands, endless offers and fierce competition,” Sengupta said. “So the
channel is heavily banking upon services now.”
There has been a significant increase of IT services as a contributor to
revenue growth of channel partners. However, resellers complain that IT vendors
are making an aggressive entry into services just to keep profit margins up and
are eating into resellers' shares.
Many channel partners are now also showing a keenness to venture into the
international market, mainly due to increased competition in the Indian market.
As it is, most IT vendors are looking to expand their addressable market and
target SMBs. However, SMBs are widely spread in terms of geographical coverage.
Helping vendors
IT vendors find it difficult and costly to tap SMBs in every corner of a
vast country like India with their own sales force. Therefore, channel partners
are integral to reaching and selling to geographically dispersed SMBs. Their
knowledge of the market is excellent, so is the trust they have built up among
their customers.
“SMB channel partners have moved up the value chain,” said Sengupta. “Most
distributors are now looking to increase their high margin, low volume business
vis-à-vis low margin high volume business. Accounting, educational
institutions, retail stores, manufacturing, and professional business services
are some of the industries where channel partners are targeting sales.”
AMI's 2006-07 India Channel Partner Market Overview and Topline Assessment
study highlights these and other major trends in the context of channel
partners' business models, product and service offerings, decision-making and
demographics. Products and services covered include computing hardware,
software, Internet, networking and security services.
Based on AMI's annual surveys of SMB channel partners across India, the study
tracks a broad spectrum of issues pertaining to revenues, employee strength,
vertical markets served and customer mix. Page(s) 1
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