Upcountry Jewels

Time was when all the vendors would look at was having a fair bit of
marketshare in the metro cities and their job was done. But that was then, and
these days the tables have turned. While metro's are still important but they
have stopped being all-important, if you know what I mean.

Well there are several reasons for that, but the biggest is market
saturation. While presence in metros is still important the big growth in
business is coming for upcountry locations. Vendor after vendor insists that
they are trying to break into the B and C-class cities, trying to tap the
burgeoning market in these cities. Given the length and breadth of the country,
the essential question is where do you start?

To make that task easier, in the next couple of pages you will find detailed
profiles of 10 cities that we think no vendor or distributor should miss. So
what is it that made these 10 stand out among the at least 20 other odd cities
which have huge potential and more importantly which are the segments that are
driving growth in these cities.

Growth drivers

The two Es are what are driving the growth in almost all the cities that
have made it to the list. Those are education and e-governance. In education it
is specifically the engineering and MBA institutes whose students are the growth
drivers for IT because of the early and almost compulsory IT adoption that these
sectors witness. The manifestation of such institutes is the reason why cities
like Jaipur, Indore and Bhubneswar have scored over their counterparts in the
state.

And who can ignore the massive e-governance plans that most governments have.
Given the outlay and money that each government has, just meetings those demands
ensures that the business grows at a 20 percent year on year (YoY). The reason
why Raipur, Bhubneswar, Vizag and Coimbatore are witnessing steady growth
patterns in business.

But these two are not the only reasons for growth across India; places like
Ludhiana make it to the list because of the high investment in real estate.
Realty is driving IT deployment in these cities, especially the malls that are
mushrooming across the landscape as they heighten the need for security and
surveillance products and solutions.

Another factor is the rural market. Most e-governance projects are driving
the demand for IT products in the rural area. Recently the Indian Government, as
part of the National e-Governance Plan (NeGP), decided to use WiMax technology
to connect almost common service centers (CSC) in the hinterland. In this
project, the government will invest Rs 750 crore to connect more than 1.000
blocks in the country. And this is the plan outlay that the central government
has, add to that what is happening at the state level and these cities are
sitting on potential goldmine to sustain growth despite recession.

Buyers and products

So apart from government and realty at the common person level who is
driving the growth in the market? To put it simply students especially who are
pursuing post graduation are embracing IT and increasing the adoption across. In
the competitive scenario that exists in the job market, it is students who in
the race to be in tune with the times are enhancing IT adoption across the
country. Since IT skills have becomes something of a necessity to be 'job ready'
these days, IT industry is seeing a boom time. While this may be true for
metro's also, the high presence of engineering colleges in cities like Indore
and Raipur plus Bhubneswar drives growth and makes the segment the target group
to watch out for.

The product segment, which is thus seeing the highest traction, is laptops.
So much so that the sale of laptops has easily superseded desktops in all these
top cities. There are a lot of factors that work in the favor of
laptops-predominant among them being the ease of use and high degree of mobility
that they provide to the user. The other product segment is high-end PCs, which
has seen a fair amount of growth. Engineering students and automotive industries
are the ones driving growth in this segment since they use high-end graphics for
almost all their work.

Number crunching

This is where the game actually is played. There are centers like Jaipur and
Ludhiana that are supposed to be clocking in business of Rs 50 crore per month.

In fact in some centers, laptop market has registered a growth of almost 100
percent YoY. A place like Ludhiana is able to sell almost 1,500 to 2,000
notebooks per month, while Indore manages to sell 5,000 laptops per month. This
kind of growth, despite higher incomes and adoption is not possible in the
metros at all.

The other centers like Vizag, Coimbatore are seeing almost 110 percent growth
in segments like laptops, PCs and accessories while Guwahati which serves as a
gateway for the entire Northeast sees a sale of minimum 10,000 PCs every month
and is registering a steady growth of 30 percent YoY.

In fact all the cities which have made it to the top 10 list have over the
last few years managed to register a growth rate of 20-30 percent YoY, which is
pretty impressive. While fears of recession looms large and everyone is talking
about the impending slowdown, these cities are the ones which will keep the
growth flag in IT sector flying since they are more in tune to local, domestic
demand.

So here's raising a toast to the success that these cities have achieved and
hoping that they continue to flourish the next year also.

Shivangi Yadav

shivangiy@cybermedia.co.in