At the outset, let us have a look at the recent findings that emerged from a study conducted by Access Markets International (AMI) Partners, and their conclusions. Then let us see what is really waiting for the Indian IT resellers.
The Study Report:
Over 40% of SBs (small businesses, or companies with up to 99 employees) in India have indicated plans to invest in computers for the first time in the next 12 months, opening up a huge opportunity for hardware, software and solution vendors. The universe in India for small businesses that do not own any computers (also termed as non-PC SBs) is vast around 2.6 million. On being queried, over 40% of them totaling more than a million revealed plans for first-time PC adoption in the next 12 months.
The India SMB sector is en route to becoming an extremely potent force within the Indian economy; yet it may seem surprising to many that a huge majority of this segment (roughly 65%) still manage without owning a single computer, says Dev Chakravarty, Senior Analyst at AMI-Partners. If we delve into the cause of the relatively lower usage of PCs, a single-most striking barrier looms large the lack of awareness and education about the utility of computers. After all, a commercial unit is not likely to invest on computers if it feels that they have no relevance to their line-of-business ; this sentiment exists for over half of the entities that AMI surveyed. Hence, a need remains to educate SBs about the myriad benefits and applications of PCs.
The demographic analysis of SBs without PCs reveals that a huge majority; above 90% of them are quite small and fall within the 1-9 employee category. The vertical breakout indicates skew towards the wholesale/ retail sector that makes up 55% of the universe. The non-PC SB segment is also growing quite fast and displaying a healthy economic trend. More than one third of them mentioned hiring plans in the next 12 months and over three quarters experienced revenue growth last year.
Non-PC SBs are gradually realizing that computerization and automation is the first step towards managing rapid business growth this probably explains a shift towards PC-purchase plans. Pressure from ecosystem players like customers and suppliers as well as an urge to outshine competitors are some other key drivers behind PC purchases in the next 12 months, indicated Chakravarty.
The adoption plans of these first-time PC buyers add up to a likely planned shipment of 1.6 million PCs in the next 12 months. Even if a small fraction of these purchase plans is translated into actual practice, this is going to boost the overall PC installed base and PC penetration within the nation to a significant extent. Thus, the future holds considerable promise for hardware and software vendors.
When asked about their channel preference for future PC purchase, 57% of non-PC SBs preferred the local retail store. Retail offers many advantages, e.g. convenient options of buying over the counter and scanning through the available brands and models thus providing a chance to weigh the pros and cons of each.
However, an interesting trend is also the rising popularity of local resellers/ system builders/ box-pushers (also known as value-added resellers, or VARs) as a preferred channel mainly due to their personalized service & support. Non-PC SBs need considerable hand holding in the initial stages, in terms of installation and occasional troubleshooting. And herein lies the utility of VARs, mentioned Chakravarty.
Potential for the Resellers:
The study indicates in the next 12 months, the hardware, software and solution vendors will find a huge opportunity, because of the decisions of the SB owners to invest in IT. So, the overall market scenario is very bright. However, it also says, 57% of non-PC SBs preferred the local retail store. Is this really an obstacle on the path of growth of the resellers?
Just a few days back, Saket Kapur, general secretary of PCAIT Delhi, and managing director of Green Vision, has told us, I would say that every threat has an opportunity in disguise. Surely retailing will have hierarchy pyramid, whereby the channel will be at the base of the pyramid. Business dynamics of retailing needs to be re-strategized by the channel partners.
There lies the point. Resellers have to improve in their service area. Indian SBs are mostly one-man-centric ventures. Most of the SB-owners will obviously look at sourcing their products from the local resellers, system assemblers and integrators, as they will expect service assistance at once. The organizations, which are just transforming from non-PC SBs to IT companies, will definitely not prefer getting into any kind of hassles as far as servicing of their PCs are concerned, especially, in the semi-urban areas. Secondly, as far as the warranty issues are concerned, SB-owners with their business-minds will always prefer assembled PCs, as the present trend shows. Thus…