Mumbai: The growing awareness about physical security and various safe city initiatives by the government has bolstered the growth of the surveillance industry in India. While the overall IT electronics market is growing at a low pace, the surveillance business has emerged as the fastest growing segment in the IT industry.
Hence, many traditional box selling channel partners are moving into the surveillance space for growth and better profit margins. Similarly, considering the growth prospects and demand for next generation security solutions, many international and domestic surveillance vendors are investing heavily in the technology innovation and distribution channel in the country.
Growth Drivers
According to 6W research India, the video surveillance market is expected to reach US$ 952.94 million by 2016, with a CAGR of 32.49 per cent and is expected to reach $ 2.4 billion by 2020. The growing awareness about security and government initiatives such as Smart City and Safe City has also bolstered the demand for video surveillance solutions. Therefore, physical surveillance is gaining momentum not only in the commercial segment, but across the industry verticals.
The surveillance industry is largely flooded with many domestic and international players. Axis Communications, Bosch Security System, CP Plus India Pvt Ltd, Vintron Informatics, Honeywell Automation India Limited, Zicom Electronic Security Systems etc. are some of the leading solution providers in this space. Access Control, Detector & Scanners, CCTV and Alarm Systems are the four major segments of the surveillance industry. The largest amongst these is the CCTV segment, which accounts more than 50 per cent of the entire electronic security equipment market.
Though CCTV surveillance segment is largely dominated by analog cameras, the IP or network cameras have seen large scale adoption in recent years. The factors such as better image quality, better control over physical equipments and declining prices, are proliferating the demand for IP based surveillance systems. “We see a trend that people are moving from analog to IP from 2006 onwards and the trend still continues. As we move forward the analog cameras are going to decline in terms of revenue and IP cameras are going to increase in terms of deployment. Five years down the line, we will see that more than 70 per cent IP cameras of the shipments,” said Sudhindra Holla, Country Head of Axis Communications.
Also Read: Axis Communications To Expand Partner Base In India
Channel Play
The traditional IT hardware resellers are increasingly shifting towards the surveillance business for better profits and the recurring revenue coming from services and maintenance contracts. Considering the high ROI (return on Investment) in the surveillance business, many channel partners, especially system integrators (SIs) and value added resellers (VARs) are exploring the physical surveillance business in a big way.
“Physical surveillance is not just about deploying a solution, but maintaining the entire security system of a customer. The profitability is high compared to selling IT hardware as major revenue comes from annual maintenance contracts. Therefore, many traditional box seller resellers are entering in the CCTV surveillance business for the recurring business”, said Amrish Shah, owner of Shah Systems and Surveillance Pvt Ltd.
Considering the growth prospects in the business, many new players have entered the surveillance space. Vendors are focusing on building their channel base in order to create a brand presence across the regions. Axis Communications is heavily focusing on enhancing its channel network in the country by increasing its Focused and small and medium system sales partners to ensure the availability of Axis solutions in every corner of the country. This year the company intends to increase its partner base to 3000 partners and add 30-40 Focused partners to its channel strength.
Similarly, home grown Vintron Informatics is also betting big on its robust distribution network. Varun Gupta, Director of the company said that the company is looking forward to working closely with some of the best system integrators focused on security and surveillance segment.
Challenges
Although the security market in India has been growing steadily, there is lack of a regulatory framework in the country. The CCTV market is largely unorganized and flooded with inferior quality products from China and other Southeast Asian countries. Secondly, the availability of components is a major is a challenge. More than 70 per cent components are sourced from other countries. Hence, manufacturers and distributors require pay heavy taxes on the procurement of components.
“China made inferior quality and cheap CCTV cameras are killing the market in the consumer segment. Customers are not really educated about the quality and hence, mostly choose cheap security solutions which do not give the desired result. Also such brands do not give guarantee of such products and services”, said Deepak Mohanti, Owner of Anjali Infocom.
However, partners say that with the growing significance of security, customers are now looking for better quality solutions which will give them better results and the cost is not the only deciding factor in deployment of solutions.
The security and surveillance industry is poised for growth and hence, there are ample growth opportunities for channel partners who are yet to explore this field. With more solution providers coming in the space, channel partners are expected to get benefited in terms of better pricing and wide choice of security solutions in the near future.