ISODA Raises Concerns Of Software Resellers

In their bid to resolve matters pertaining to taxation imbalance and discuss
ways to get rid of the current liquidity crunch bothering the software
resellers, Infotech Software Dealers Association (ISODA) held a tri-party
conference at Hotel Sahara Star on Aug 21 in Mumbai. The event witnessed
participation from vendors, including McAfee, Sify, Websense, Symantec and
Adobe. In addition to more than 100 members of ISODA from across the country,
leading distributor Neoteric Informatique and Inflow Technologies were also a
part of the tri-party conference.

During the event, the members discussed several implications of dual taxation
on the software business and the resulting loss borne by the software reseller
community. The discussion was followed by panelists pointing out the benefits of
opting for SAAS or managed services model of business and the emerging
opportunities that the partners can concentrate on to expand their businesses
further.

Dual Tax is here to stay

Speaking on the subject of taxation, Shriram Krishnamachary, Head-Channels &
Distribution, Adobe Software, India clarified that Nasscom and other IT
associations in the industry had formulated a group and approached the finance
department within the government to resolve the issue of dual taxation and
further abolish it. However, according to the service tax commissioner the dual
taxation policy is here to stay and it is only TDS that will be abolished.

(L-R) Shiv Nath Gosh, VP & Head-Enterprise Applications, Sify; Paras Shah of Neoteric; Naveen Kapoor of Iris Technology; Sudhir Kothari of Embee Software; Alok Gupta of Softmart Solutions; Jaimin Shah of Dev IT; Jyoti Prakash of Websense, G Anand of Inflow Technologies; Sriram Krishnamachary of Adobe; Kartik Sahani of McAfee

G Anand, VP, Inflow Technologies opined that the confusion around dual
taxation is going to remain until a constitutional amendment is made to the
recent bill that has been passed by the government.

Alok Gupta, Proprietor, Softmart Solutions and one of the panelists at the
event shared, “The amendments that have been made in the current ruling around
taxation on software is going to benefit Nasscom and other such associations.
Today an international vendor can sell software directly to the customer, since
he is not bothered about paying service tax and VAT. This will kill the channel
community since they will no longer be required to further the product. Hence,
it is important to negotiate with the government and not to take them head on.”

Liquidity crunch

Panelist alongside the members also held a healthy discussion around the
current liquidity crunch scenario that software resellers are experiencing on
account of extending advance payment to government, as part of service tax.

Pointing that payment of service tax has led to software resellers furthering
a lot of advances to the government and further they (software resellers) are
unsure of recovering the amount, Naveen Pansari, MD, Iris Software mentioned,
“It's important to ask customers for 100 percent cash payment. Besides the
suppliers will have to be approached for extending the credit period. Bank
finances and equity can also effectively be used to raise capital and thereby
maintain cash flow.”

Sudhir Kothari, CEO, Embee Software opined that it was important for an
organization to have the right policies in place. “It is very difficult for
organizations of our size to afford a CFO or a CIO, hence we ourselves will have
to take charge and do an inspection on a daily basis to beat credit crunch. It
is important to set policies and map the processes, since we are going through
tough times. One needs to invest prudently in infrastructure, buildings and
offices and look at rental options,” he elaborated.

Jyoti Pakash, Channel Manager-India and SE Asia, Websense elucidated, “In
times of recession, it is best to do an introspection and evaluate the best
options for investment and understand customer challenges to avoid delay in
payments.”

Speaking about the recession and suggesting ways to beat credit crunch, Paras
Shah, MD, Neoteric pointed, “The world economy and GDP is witnessing a reset and
not recession since excess money was pushed into the economy and finance was
easily available. Growth will take place only when partners will curtail their
overspending habits and frame right policies.”

On the other hand, Jaimin Shah of Dev IT, pointed that the today channel
partners are least concerned about the productivity and not collaborating within
the partner community. “Today even the high-end system integrators and solution
providers ranging from TCS, Wipro and HCL are getting into our business. Hence,
it has become very important for us to collaborate with each other and
strengthen our service portfolio.”

New Opportunities

Yet another topic that was widely discussed during the event revolved around
opportunities emerging from managed services or Software as a Service (SAAS)
model of business.

Throwing light on the emerging opportunities, Kartik Shaney, Regional
Director-India, McAfee shared, “A lot of obsolesce takes place in the security
products and what is right today cannot be applied tomorrow. Hence, the reseller
community can envelop the security products with their solutions as it offers
huge scope for earning service revenues. Even while deploying the project
software resellers can look at extending value-added services to their
customers.”

The discussion was followed by Q& A sessions. During the session partners
raised queries around extension of credit limit and period, dual taxation and
whether SAAS will actually change the business scenario from a cash flow point
of view.

While the panelists did suggest that extending credit limit would mean
creating an imbalance in terms of audit and compliance, they also suggested that
the credit period can be relaxed on case to case basis.

On the query around SAAS, the panelists pointed that the software reseller
can look at the opportunity in SAAS and managed services by either concentrating
on the business partially by taking on the vendors infrastructure and white
labeling the products/solutions being offered by them or be a provider on his
own by using his/her existing infrastructure. The tri-party conference was
sponsored by Symantec and Sify, and collateral sponsors included Adobe, Websense
and McAfee. The event was hosted by Vipul Dutt of Future Soft Solutions.

Puja Sharma

poojas@cybermedia.co.in