SMB Boom in India Pushes Up Channel Revenues Too

The economic boom, coupled with high IT awareness among small and medium businesses (SMBs or companies with up to 999 employees) is boosting the fortunes of resellers or channel partners in India, with more than 90% of channel partners reporting a rise in their annual revenues over the last 12 months, according to the latest report by New York-based Access Markets International (AMI) Partners.

The average revenue of channel partners focusing on IT needs of SMB in India was US$324,000 in the 2005-06 financial year. It has risen to US$399,400 in the last 12 months. “This is due to a significant increase of IT services as contributor to revenue growth of channel partners,” says Partha Sarathi Sengupta, Senior analyst at AMI-Partners. “Hardware reselling has become a commodity business with heavy discounting. This is curbing reseller margins. To stay profitable, channel partners have ventured into services and solutions as a business model.”

Channel partners in India have aligned their business models to suit the current requirement of SMBs. Currently, channel partners focusing on SMB needs are still product-oriented and their revenue mix is dominated by computing and networking hardware (about 52%).

“Getting entry into an account is becoming difficult for channels due to multiple brands, endless offers and fierce competition,” Mr. Sengupta says. “So the channels are heavily banking upon services now.” There has been a significant increase of IT services – from 12% to 17% - as a contributor to revenue growth of channel partners. However, resellers complain that IT vendors are making an aggressive entry into services just to keep profit margins up and are eating into resellers’ shares.

Many channel partners are now also showing a keenness to venture into the international market, mainly due to increased competition in the Indian market. As it is, most IT vendors are looking to expand their addressable market and target SMBs. However, SMBs are widely spread in terms of geographical coverage.

IT vendors find it difficult and costly to tap SMBs in every corner of a vast country like India with their own sales force. Therefore, channel partners are integral to reaching and selling to geographically dispersed SMBs. They are like the conventional foot soldiers. Their knowledge of the market is excellent, so is the trust they have built up among their customers.

“SMB channels have moved up the value chain,” Mr. Sengupta says. “Most distributors are now looking to increase their high margin, low volume business vis-à-vis low margin high volume business. Accounting, educational institutions, retail stores, manufacturing, and professional business services are some of the industries where channel partners are targeting sales.”

About the Studies

AMI’s 2006-2007 India Channel Partner Market Overview and Topline Assessment study highlights these and other major trends in the context of channel partners’ business models, product & service offerings, decision making and demographics. Products and services covered include computing hardware, software, internet, networking and security services. Based on AMI’s annual surveys of SMB channel partners across India, the study tracks a broad spectrum of issues pertaining to revenues, employee strength, vertical markets served and customer mix. These data point to key opportunities and messaging hot buttons for vendors and service providers seeking to expand their business through channel partners.

For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

Article Source: http://www.share.onlypunjab.com

For more information visit www.ami-partners.com.

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