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Benefits of channel partner expansion for IT companies

IT companies

The IT companies are following a trend to appoint channel partners in order to expand their businesses. Balaji Sreenivasan, CEO & Founder, Aurigo Software Technologies believes that in any form – retailers, distributors, vendors, consultants, VARs or SI – a channel partner, if rightly selected can play a key role in company’s success…

In an era of outsourcing, companies, especially those in the IT sector, have found a new path to expand their business through a channel partnership approach. Increasingly, IT firms are entering into partnerships and signing agreements with local as well as global partners, who provide outsourced services in the respective market and help in expanding the business of their clients.

Ideally, channel partners help IT companies in marketing and selling their technologies, services and solutions in markets across the globe. Today, there are a wide range of partner companies, who play a significant role in further expanding the vendor’s portfolio and customer reach.

Channel partners may be retailersdistributorsvendorsconsultantsvalue added resellers (VARs) or systems integrators (SI). Whoever they are, irrespective of their parent profile, they help in expanding the business, enrich market development and enhance customer experience for leading local and global brands as well.

According to a research report, an estimated 70 percent of companies earn most of their revenue through indirect channels such as dealers, agents, VARs, and distributors. In most companies, the ‘go-to-market’ strategy is strongly built around the combined effort of both the partners in marketing the brand as well increasing the sales.

So, is partner support important for IT companies?
Yes, a thriving partner community is essential to the company’s continued growth. A right and responsible partner, plays a crucial role in the company’s growth strategy.

At the next level, it depends on how sensibly an IT firm enters into an agreement with a channel partner. The vendor should assess if the new partner will add value in marketing the products and services. The partner should be in constant touch and regular communication with the vendor to be able to fulfil the demands of the customers. On the other hand, the vendor too should motivate the partner to excel by providing regular leads. Companies should work in conjunction with strategic channel partners and VARs to expand their business across all major territories.

What do companies look for in a channel partner?
When any IT vendor is getting into an agreement with a channel partner, the vendor carefully examines the track record and competency of the ‘partner to be’ in the local market or the area of operation, not to mention the partner’s contacts and networking also.

In return, a channel partner must commit resources, including financial resources, to ensure the success of the partnership. It should be result-driven and ensure that both the companies see returns on investment (ROI) within the set time, and are committed to jointly expanding the market base. The partner should be at the forefront, providing support across all areas of the vendor’s business.

While every vendor recognises the importance of a channel partner, it becomes an integral part of the company’s success.

Trend of alliances with channel partners
This trend of forging alliances with channel partners has picked pace in India in the last ten years. Though China pioneered this approach two decades ago in Asia in view of the slew of products developed by that country, India has realized the importance of channel partners. For any big or small IT product company, marketing its products and expanding the business through channel partners forms the core of the business model.

Interestingly, several Indian IT firms have commenced co-branding with channel partners, which significantly increases the risk and responsibility of the latter. This is seen as a competitive move as the channel partner has to ensure the success of the product in view of the co-branding.

By forging alliances with channel partners, IT firms can focus on their core competency rather than investing energy, time and money to reach the end-customer by forming its own marketing team. This approach is not only cost-effective for the IT firm, but can help improve its operational efficiency.

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