When it comes to the issue of services in the industry, the Delhi police slogan ‘With you, for you always’ is something that most appeals to me.
Although an estimate by Nasscom put the hardware services market at over Rs. 1500 crore, the actual services market may be much bigger if the vast cluttered assembler segment is added up.
This readily explains the rush to embrace services; and expectedly, the mad rush is from both the vendors as well as the channel partners.
So far, so good.
But what has irked the channel community is that the vendors, having realized that services bring in whopping profits, are offering the same themselves or appointing service providers across the country for the purpose. With multiple brands, endless offers and fierce competition, getting an account is rather difficult. Therefore, IT majors are more than keen to enhance overall business and hence, count upon services.
Resellers across the country too have an identical story on how tough it is to win and to retain a customer. Excessive competition has led to price undercutting consequently putting pressure on profitability. Thus, the partners are confronted with some kind of compulsions those force them to offer services at heavily discounted prices.
The PC penetration has created waves especially in B, C and D class cities, especially among the younger generation. This has brought in gradual changes in the services industry, says Jalgaon-based partner R S Wagh of Sri Ganesh Infotech. “With good pricing and proper margins ensured, I think the channel has bright prospects due to IT hardware services,” sums up Wagh adding that another driver pushing up demands for services is the large-scale requirement of IT infrastructure in the government sector in small towns as well as emerging verticals like education.
Of late, many of my friends in the channel have increased their attention on services with a few specially focusing on network installations and annual maintenance contracts from mere product selling and networking.
But there are already a series of complaints pouring in. The miscellaneous services from AMCs to network integration and facilities management services or new services like server leasing were preferred options for channel partners. But the common refrain from channel these days is that with vendors making direct contacts, the business graph on services is on decline for resellers and assemblers.
The channel community complains that its role as a service provider is reduced as vendors have created vast database with the help of resellers and are now targeting the customers on their own. Well, it’s a case of vendors eating into resellers’ shoe.
The toll-free number announced by vendors for services is scaring away the local assemblers and dealers. They say vendors have appointed almost non-entities in market and new entrants as independent authorized service providers bypassing the traditional and established channel partners.
Resellers also say with vendors making aggressive entry into services just to keep profit figures up, the conditions of services in Indian IT space have deteriorated. These are definitely some reasons to be concerned about because just as everyone’s baby ends up becoming nobody’s baby, perhaps the same is the case with services today. At least this is what my good friend Abhik Palit of Vivekananda Computer, Nagpur believes.
Therefore, it is understood in this context that a staggeringly high 50% of customers become ex-customers in the IT market owing to complaints of poor services mainly in smaller towns. “The service component is so untrustworthy that the end customers often experiment, not only with new vendors, but they also keep trying new channel partners, making our task more difficult,” says Wagh at Jalgaon.
All said and done, I am the last person to accept everything from the channels as gospel truth. The vendors too have their own explanations for opting for services as the move is primarily driven by customers’ choice. Wipro, for instance, is one vendor which has earned a positive name for its services.
One reason that compels vendors to opt for services despite organizational hiccups is that the confidence level of customers goes higher in case they get the service from the parent company.
The vendors, therefore, cannot afford to ignore services and leave it to partners alone because it is directly linked to their business graph. Take for instance Western Digital whose allegedly “faulty” warranty policy had cost it dearly in 2006 and it is this realization that has made them roll out a new warranty program ‘WD Express’. True, the hard drive market in particular is an extremely competitive one where keeping a customer is as important as acquiring one.
This applies to other IT hardware products as well.
There is another often debated issue. The channels say whenever the vendors take up services like warranty directly, the prime casualty is the delay factor. Apparently, most of the time, vendors go by the rule book and not necessarily by customer satisfaction.
I also firmly believe that the channel fraternity is in a situation where the partner takes a call to provide warranty and he is sincere; he is in a position to serve better. This is primarily because partners share a relationship with their customers and the customers too feel more comfortable to deal with partners. The advantage with partners giving warranty support is that they can give not only service support, but can provide customers a comfort feeling by personal touch. In fact, partners can even end up making further sales to the customers.
Finally, there can be no dispute that the ultimate responsibility in terms of providing services to the end users rests upon the vendors. After all, once a bad experience with an HP or an LG product, the end users can shun the vendor for life. But it is also essential to understand that a trouble-free service mechanism would not see the light of the day without the active involvement of the channels.
Considering the mindset of Indian consumers, most of them go back to the point of purchase for any complaint they have with the product or its functioning irrespective whether the products fall under warranty schemes or not. My understanding too is that since the first point of contact for customers is the channel; the companies must ensure that the partners are properly groomed and trained on handling service issues.
In fact, even on the part of the channels, training and logistical arrangement are certain issues which the partners need to work out.
Ideally, a meeting point for vendors and the channels ought to be worked out to handle all issues related to services. The vendor can entrust the channel partners with the solemn task of addressing all services woes. This will give impetus to the business of the partners with increase in the sales thereby increasing the revenue opportunities for the vendor as well.
A satisfied customer would always prefer to return to the same partner since his earlier problems were solved at the earliest and to his satisfaction.