IT Associations braves vendors in direct government tenders

The vendors are all keen on bagging the largest deals and are trying to build
their business on the ongoing government tenders. As was the case with Assam
government, under their initiative of Assam Electronics Development Corporation
Ltd (AMTRON), about 17,400 desktops were donated by the state government; in a
bid to award the students securing first division in the HSLC and High Madrasa
examinations since 2005 under the Anundoram Borooah Award Scheme. Also, in
Gujarat, under Flood IT, a considerable amount of desktops and other IT related
products were secured by the state.

The pan-India scenario

In a pan-India focus, the case is all the same with most of the states.
However, its not the same all over the country and not so easy for some of the
IT players. State government's policy of direct buying from the OEMs and vendors
has left the channel community in anguish looking for an explanation about the
government's policy of tenders.

The north-eastern part of the nation has been the first one to raise a voice
against such a biased scenario. In Assam, where the IT channel space and the
market is still at it's nascent stage, channel partners alleged that the channel
community has always been carefully sidelined in the entire process of
government tenders as AMTRON has been inviting direct bids from the OEMs like
Acer, Wipro and HCL for the last four years. Furthermore, dealers in Guwahati
alleged the local IT Association has been incompetent and has failed to address
the issue at the government or the OEM level.

“Assam is now growing in the field of IT with the government stressing on IT
education and infrastructure. However, unlike other states, the channel has been
left out in this progress. The government has built a separate body, AMCRON to
issue IT tenders and has imposed a huge EMD amounting to Rs 50 lakh while
bidding in the tenders ensuring that no channel player is able to bid in the
process”, said Surendra Kumar Choraria frustrated with the government's policy.

Commenting on the case, North-East Computer Trader's Association (NECTA)
President, Sanjay Bagaria said, “Business has been slowed down by over 40
percent for the last two quarters. Further, this move by the state government
has brought down the figures by a huge margin. It is a serious concern for the
channel players across the state. Now, we are left with no other choice except
catering to the SMB and SOHO segment. The tea-gardens comprise the bulk of the
business and now, with the government distributing free computers to home users,
the market has been direly affected. Till now, we have not spoken to any state
body or vendors over this issue but will be addressing it shortly.”

The allegations

Taking the case down to the western part of the nation, in Goa, the
government has signed a rate contract with PCS Computers for a three-year term
and secondly, the tender quotations issued by the RC panel are beyond the reach
of the dealers. The government has deployed Goa Electronics Ltd, a PSU to issue
purchase notices and agreements and GEL has always been preferring direct vendor
and OEM purchases.

Dealers across the Goa market alleged that the government is least bothered
in the tender process and with the handling of responsibilities to GEL, the
process is time consuming and has become corrupt. Big players like HCL, Dell,
TCS and Wipro are the largest bidders in Goa and none of them issues bids
through the channels. Also, tender poaching and breaking into other's accounts
in educational institutions and government installations has become rampant.

Also, Punjab-Haryana belt is dominated by large-scale e-governance projects
and the channels have little space. Mostly, dominated by large players like
Dell, Acer and HCL, the region provides ample tenders for the vendors leaving
the channel in dismal condition.

Addressing the issue, Ambala-based Sanjeev Soni of SR Enterprises said,
“Tenders hare are centralized and HARTORE is in charge of floating these
tenders. However, since the government is involved in direct OEM purchases
across the state, there is little scope for the channel to expand their
vertical. The government only floats tenders to the listed companies in
accordance to the policies of HARTORE and government business contribution to
the channels is negligible here. The primary players in e-gov projects are HCL,
Dell and HP. Even then, some public sector companies, the Indian Army and BSNL
make purchases through the channels but it is not of considerable proportion.”

Recently, the IT association of Gujarat, FITAG raised their voice against a
biased government policy of issuing tenders to players like HP, HCL and Acer and
went to the extent of boycotting the above said vendors after the crisis arose
from the Flood IT project, a scheme launched by Gujarat Urban Co-operative Banks
Federation's to finance a desktop to students studying from kinder garden level
to post-graduate level on zero percent interest rate. The move was targeted to
increase the penetration of PCs across Gujarat, especially in the rural Gujarat.
In this respect, FITAG has claimed that they are losing about 30 percent of the
total opportunity as a result of the state government policy. In the state, the
tenders originate in Gandhinagar and are issued by Gujarat Informatics Ltd,
(GIL), a semi-government body and is normally concentrated among HP, HCL and
Acer. Also, channel sources has claimed that in the government purchases, the
price is higher than normal quotations as GIL always maintains a minimum profit
of 3 percent on all quotations.

Vendors' take

Reacting to the allegations of the channel community across India, most of
the vendors are keeping mum over the issue. As HP and HCL kept silent over the
issue, other vendors like EMC refused to comment on the scenario citing
non-declaration of government tenders as a part of their corporate policy.
However, CISCO, empaneled with NICSI, railways, defense and other government
projects ensured that the company follows a channel oriented policy.

Speaking on the issue, R Dhamodaran, Senior VP, Channel Operations and
Commercial Strategy, India and SAARC, Cisco stated, “Cisco does it's business
full-fledged through it's partners in India. Partners are the route to market
for the company. Each partner which Cisco has in its eco-system, has a unique
value proposition which it brings to the business not only for Cisco but also
for the customer. We invest a lot on partner development in terms of designing
programs not only to enhance the partner profitability but also to help them
move up the value chain and make them more focused towards solution selling.”

Presently, dealing in projects with the Ministry of IT, NISG and the State
secretaries, the company is educating them on the benefits, the model to follow
and applications utility. Cisco is working closely with Punjab, Haryana, Gujarat
and Assam governments have already begun working on the SWAN, SWAN Horizontals
and SDC (State Data Centers) projects. Cisco is also working on various state
level projects funded by state governments directly. According to the company
sources, in the next year, more State Governments are looking to issue SWAN
tenders which CISCO is eyeing to bag.

Resolving the crisis

As most of the vendors refrained from commenting on the ongoing crisis
openly, it seems that an organized channel community is successful in bringing
the alleged vendors to their knees. In Gujarat, FITAG at last resolved the
matter by lifting the ban on Acer, HP and HCL.

“We have lifted the ban after HP, HCL and Acer have agreed to our terms and
conditions. Now, the channels will be involved in the entire exercise of having
a share in the Flood IT project. Besides, they are also ready to give over
rating commission (ORC) to the channels, in case they get the order” said
Kaushik Pandya, President of FITAG.

Also, GIBA is planning to follow the footsteps of FITAG as the association is
planning to introduce banning of HCL products in the entire channel space. It
seems that only an organized and powerful channel community has the potential of
successfully facing the wrath of the vendors in the direct tendering process
where neither the government nor the vendors are keen on involving the channel
community in the entire process

Avishek Rakshit

avishekr@cybermedia.co.in