SMALLER MARKETS, LARGE VISION

If you go
through a classified for booking a small land to build your 'dream
home' in a tier-2 town, you will be astonished to find the huge
rise in the costs of lands. You may also wonder what this has to do
with technology! Today, no realtor can sell a property without the
words '10 km away from IT park.' Decades before, it was the
tier-2 and tier-3 towns and the tiny villages in these towns'
vicinity, which contributed a huge amount of growth for the country's
economy. The time has boomeranged, thanks to the wide-spread
development of policies on liberalization and investment in the IT
and ITeS sectors. Apart from the growth in the nation's economy on
the whole, the growth has reduced the 'take-offs' of our
youngsters to foreign nations, as many MNCs started their operations
in India. In course of time, the employment, especially in the IT
sector gradually increased and the metros and the big towns attracted
many fresh graduates to find a cushy job that offered a salary at par
to their father's annual income. While major IT companies witnessed
sky-high growth, the IT-related jobs too flourished in the country,
starting from a road-side tea shop in the IT parks to the
construction of the parks itself. The channel community also utilized
the opportunities to the maximum. The growth, which was initially
happening in the tier-1 cities, is now expanding in tier-2 and tier-3
cities. The SPs across the country have witnessed opportunities from
both the government and private sectors. Be it a security and
surveillance or network storage or enterprise services, the partners
in the non-tier-1 cities enjoy two major benefits-no big fishes
specialized with one vertical, and they can easily understand the
market since it has been growing lately. However, in many places, SPs
do not have specialization in any vertical for a couple of reasons.
One is their customers may not be having such IT cognizance or being
plain cost-conscious, and the other is, specializing in one
particular segment may not help the SP in a long run. In fact, in
many parts of the country, there are even retailers-cum-solution
providers, who have to play dual roles to find more opportunities.

WHERE
DOES
THE NEED EMERGE?

If it is a
software development firm, the opportunities are visible only with
the clients from foreign countries and big corporate houses. However,
a solution provider can find an opportunity even in a road-side
growing retail shop, which wants to connect all its branches or which
wants to create an ERP for the stock-movement or even if it wants to
have a security and surveillance device to avoid thefts. The growth
in the number of SPs
has reduced the cost, which has ended up in cost-effective solutions.
Since many business houses in tier-2 and tier-3 cities are only keen on
cost-effectiveness
and not extremely cognizant over the technology, opportunities are
aplenty for partners in those towns.

EMERGING
OPPORTUNITIES

Take the
Orissa-turned-Odisha as an example. The capital Bhubaneswar's IT
growth is laudable. “IT infrastructure and e-governance are the two
key areas which provide numerous opportunities for us,” says Rajesh
Dora, CEO, Printlink Computer and Communications, Bhubaneswar.

Some big
corporate players to win certain foreign projects, want to establish
their pan-India presence. In such a case, they setup small offices
across the country. So, they seek the help of solution providers for
various purposes. There are even some cases where, while constructing
their office, an IT-friendly atmosphere is created where the building
need not to be renovated for any further IT deployment. “Amalgamating
the branch offices is also an opportunity for us, and we are also
looking further for an excellent growth in the forthcoming days,”
Dora adds. Since, government-related projects are giving enormous
opportunities for partners-tenders, orders, payments and all other
aspects in winning a government project have became a tough task for
anyone. Jharkhand and Andhra Pradesh can be quoted as an example
under this case. Many partners from Ranchi say that the prevailing
uncertainty in the state government has affected their business.
“Our state was carved-out recently. But the growth we witnessed in
Ranchi was not anticipated during those times. However, the existing
political scenario itself is the biggest challenge for us,” says
Sanjay K Jain, a Ranchi based SP. “In spite of that, we are finding
each and every avenue for our growth. One such opportunity is the
growing demand for ERP as the overall IT awareness is growing
everyday,” adds Jain. If the continuous change in political
scenario is the issue of partners in Ranchi, functioning of the
government offices itself is a million-dollar question for partners
in a tier-2 town in Andhra Pradesh. In some cases, many partners in
tier-2 towns do not know whether their town will remain in Andhra or
come under a separate state. The opportunities differ for partners
according to the geography where the towns are located. “We are
finding more revenues from 3 key sectors, education, hospitality,
and the cement industry, apart from the regular state and central
government projects. Even in the future, we expect the market to
remain good and more oppor tunities through growing educational
institutions,” says Aravind Modi, CEO, Bits and Bytes, Jai pur.

How
ever, he says that grabbing the opportunities depends on how
effectively a solution provider understands the expectations from the
customers and the market position. Since, Rajasthan is a
geographically vast as well as a well-populated state, we can expect
more business to come up. “The marble business is growing good.
However, the IT penetration is less in that sector in particular, but
soon that may turn as an opportunity for us,” he further adds. If
we look at the situation of Himachal Pradesh, the tourism industry
holds the lion's share apart from regular state and central
government's projects. Even though the projects from the big
resorts or tourism-related contracts are bagged by the big partners
in New Delhi or Mumbai, the local partners too find their own avenues
in the SMB sector. “Our market is growing gradually, and we are
finding avenues in various areas like tourism, telecom, and
educational institutions,” says Ravinder Chauhan, CEO, HTP
computers, Shimla. However, many partners in Shimla are ready for a
healthy competition with big SPs, but are concerned about the issues
on the 'tactics' followed in tenders in various government
projects. The partners also expect their state government to promote
tourism in a more extensive way. However, the bitter truth among
various partners is that there is a great downfall for SPs in
Himachal Pradesh itself. But, contrary are the situations in some
towns. The SMB has now become a most attention-grabbing opportunity
in Ludhiana. “The industry is shifting every day. Even an office
setup with hundred computers needs to be connected, and now-a-days
even small organizations are keen on ERP, cloud, and virtualization,”
says Paramjit Singh Juneja, CEO, Secant Technologies, Ludhiana.

In
places like Ludhiana, even though there may not be very large
factories involved in various businesses, many large corporates in
New Delhi have some small companies in Ludhiana for secondary
contracts. This is like a company which is specialized in
manufacturing spare parts for a huge automobile firm in New Delhi.
Another city which has grown on the lines of Ludhiana is Coimbatore.
“Even though Chennai is a key market, our partners in Coimbatore
are finding opportunities from multi-sectors like textiles,
education, heavy industries and some small subsidiary companies,
which supply spare parts for the companies in Chennai,” says N
Gopalakrishnan, CEO, Velmayil Info Services, Coimbatore. “Almost
all business firms now-a-days have a specialized IT team and they
roll out projects for us,” he further adds. Not only the state
government, but at times, even the central government may help the
partners to a great extent. For instance, some of the SPs have won
part of the central government's UID project. Even though most of
them hail from a tier-1 or metro city, they have their operations
even in tier-2 towns also. As a recent need for the country is to
tackle the security of the nation, the government is keen on
developing the IT-friendly defense, air-force and navy. “Today the
emerging market makes us chase opportunities in defence- elated
projects,” says Sharad Bhawri, CEO, Lifeline Enterprises, Shillong.
“The convergence of IT and telecom has also helped a lot in recent
days to attract more projects related to networking and wireless, and
retail segment also helps us every now and then,” he further adds.
The emergence of many private banks as well as corporatization of
many public sector banks too helped some partners. Kerala is one such
example. “Finance and banking-related projects have helped us well.
Since, all the banks have to be inter-connected and intra-connected,
they need our support to a great extent. We get regular projects on
connectivity and networking,” says a SP from Kochi. Another market,
which has boomed due to textile is Surat. “Textile and garments are
the key revenue generating industries.

However, we
are also getting
regular orders from big corporates here,” says Pinakin Patel,
Nivatechno Transicions, Surat. He also says that the businesses which
were going to Mumbai have now started knocking the doors of Surat's
partners. Besides, there are places where there is no specific
industry in some towns, but still the towns are emerging. Like
Coimbatore known for the textile industry or Trichy for the huge
number of heavy-metal industry, Madurai does not have such industries
but is still growing. “The age-old trade business model of Madurai
is that people in the surrounding villages use their towns as a
meeting-point for business, which is still going on. Even though, the
solution business is not as good as the retail, we do find the
increased awareness among customers on various solutions,” avers K
Senthil Nathan, CEO, Premier Systems and Peripherals, Madurai. “Take
an example of the health indus try alone. There are huge numbers of
pharmaceutical companies, distributors, resellers, wholesale dea lers
and medical shops. All stakeholders in the industry are making use of
the technology to a great extent,” he further adds. The health
industry as such, from various aspects makes good use of the
solutions. Since hospitals deal with the lives of patients, everyone
depends on technology, be it recording a surgery or an ERP system in
the medical shops. If Madurai is for South, Ahmedabad is for North.
“We do not have any specific industry. But we get business from all
the verticals like machines, spare parts, textiles, home, SMBs, etc,”
says Kaushik Pandya, CEO, Kalp Systems, Ahmedabad.

EXPECTATIONS

Partners also
have big expectations from vendors, out of which the first and
foremost is the training. Many partners in tier-2 towns feel that
their employees need more training on services. They also expect
regular service programs from vendors. Partners also feel that being
upcountry, they cannot enjoy maximum benefits that are available for
the partners in tier-1 towns. “We are at par to the SPs in big
cities. However, be it a warranty or replacement or any other
service- elated issues, we are given least preference. This mentality
among the vendors should change,” says a partner.

CHALLENGES

The
challenges are comparatively more for partners in small towns. The
foremost would be the competition against the giant partners in
metros. For instance, Coimbatore or Madurai have no nearby
competitive markets, as the biggest neighbouring markets, Bengaluru
and Chennai are located far-off. However, partners in a town like
Jaipur, which is located near to New Delhi have a tough competition.
Almost all the major projects from the government sector are bagged
by big players of the industry, who have their base in a big city or
a state capital. The SPs in small towns have to work extremely hard
to bag any project. Another big challenge is the poaching of
employees by big corporates. Even though the poaching is not realized
by many partners in small towns, many partners claim that such
incidents happen in small cities when the MNCs want to expand their
presence across the smaller towns. And the last would be the issues
related to warranty services. Being in an urban or rural areas, the
vendors take more time in service or warranty issues. This has been a
reason for losing many orders by SPs in the small towns. “We are no
way behind the partners in tier-1 towns. But what we need is an equal
recognition which motivates us to grow further,” says a partner
from North-East India.