India is emerging as a promising market for structured cabling as it is growing at a steady pace. However, due to the economic slowdown, the market saw a lower growth rate in 2009.

But, verticals like telecom and government are expected to fuel the demand for structured cabling. The telecom sector is also expanding, and the government sector appears to be largely recession proof. Besides these, the increasing need for high bandwidths and the growth in data center cabling is promising for the industry.

India and SCS
The Indian structured cabling market accounts for 15 percent of Indian IT budget. As per Building Services Research and Information Association (BSRIA), the market was worth Rs 795.5 crore in 2008-09. The growth rate in the current fiscal could be lower, due to the effects of slowdown.

The cabling market in India is very much in-line with the global trends, with Cat6A adoption gaining momentum. Data center market is also showing promise of higher growth than LAN cabling. Other trends gaining momentum include adoption of physical layer management solutions (intelligent cabling) and 'green' contribution in IT infrastructure.

“NSE is fast becoming global number one stock exchange and a stable central government will only fuel it further. Therefore, in future we expect considerable foreign as well as government investments in all sectors in India,” said a optimistic Debraj Dam, Sales Head-Strategic Accounts, Digilink Structured Cabling Systems.

However, the Indian structured cabling systems (SCS) industry has not been exempt from the global slowdown. Though, the Indian economy is not as badly affected as the rest of the world, Indian businesses are proceeding with caution, staying clear of expanding or starting new ventures.

Recession effect
The first two quarters of 2008 were very good in terms of business, and the SCS market truly flourished in India, but by the end of Q3 waves of economic recession began to hit the Indian shores as well. Though IT and ITeS did remain the largest contributors to the Indian SCS market, growth in the main cross-connect (MC) segment slowed down considerably. Indian companies are acting with prudence and investing cautiously-whether it is infrastructure, IT or any other part of the business. The first quarter of CY 2009 remained extremely slow with market size down by almost 25 percent. To increase the bottomline, companies are changing their marketing strategy. Some companies are coming up with innovative ideas.

“With regard to tackling the slowdown, this is the time to revisit the fundamentals of business from the point of view of structure, human resources, innovation, lean management and profitable revenues. We have a blend of volume and value clients that should see us through the coming months. We have also come up with innovative marketing plans for our Nextgen fibre networks portfolio. We had a mobile proof of concept van which reaches out to our customers in Mumbai and Delhi so that customers had the opportunity to look at and evaluate ADC Krone's solutions at their doorstep. This garnered positive feedback from our customers,” said Dileep Kumar, Director-Product Management, ADC Krone.

Dark clouds
The key concern for the industry for the current fiscal is market volatility. As the market size itself is reducing, the challenge is to remain profitable. This is especially important as falling copper prices are forcing the competition to drop prices in order to capture business.

“The answer to these questions lies in better planning, better inventory management system and reducing operating costs. In the last few months, we have tightened our inventory management by better forecasting and planning, which has definitely led to good results in overcoming road blocks to profitability,” said KK Shetty, Country Manager, Network Solutions Group.

The SCS market is moving from systems and solutions to products. Due to decrease in the numbers of large projects, the companies are now focusing on the channel market. The vendors are taking this market seriously and have invested a lot of time and resources in training channel partners. Some of them are also trying to tap into opportunities in tier-1 and tier-2 cities.

Road ahead
The vendors feel that given the current economic scenario, the outlook is extremely challenging for the SCS industry in India. Some vendors have accepted that there would not be any growth in the SCS this year at all. The SCS business itself is now plagued with continuous drop in copper prices has forced vendors to decrease the cable prices to pass the price benefit to customers.

Besides, there being more players in the market than the number of opportunities, there is fierce competition, which is causing vendors to drop prices to gain entry into the accounts. This is driving down the value of projects.

A few vendors predict that the market may actually shrink by approximately 15 to 25 percent.

However, the hope lies with the manu­facturing, BFSI, PSU, education, government and infrastructure verticals. Residential cabling also poses as a significant opportunity in the Indian SCS market. The concept of residential cabling is intended to support existing and emerging services including voice, data, video and multimedia.

The market drivers for this are broad­­band subscribers, VoIP, IPTV, multimedia networks, online gaming, and fiber-to-premise.

“Indian economy is now driven by younger generation and they are now hungry for newer technology, higher bandwidth and lifestyle infrastructure, therefore we can expect a good growth in the coming days,” concluded Dam.

Akhilesh Shukla
akhileshs@cybermedia.co.in

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