Ludhiana: Tapping the Industrious Lot

The busy lanes of Ludhiana bespeak the story of
entrepreneurship. The numerous bustling small and medium entrepreneurial
ventures jostle alongside prominent biggies like Vardhman Group, Nahar Group,
and Hero Cycles. From self-made entrepreneurs to successors to family legacies,
the citys entrepreneurial streak has begot industrialization, validating its
claim to the title Manchester of India.

So, it does surprise us that the software industry failed to
ride this strong entrepreneurship wave in Ludhiana. But, the disappointment over
the possible loss of opportunity is offset by a more potent potential
opportunity. While the city couldnt feed the software needs of the US and
European markets, this industrial hub offers a vibrant domestic IT market,
something not to lose sight of.

The Industrial Behemoth

Ludhiana is one of the most prosperous cities not only within Punjab, but also
within the country in terms of wealth owners.

Ladda Kothi, Sangrur

The city has become a major hub of industrial activity. It is
home to not one but several industrial clusters. Its a major textile and
light engineering center and exports woolen garments, machine tools, dyes, cycle
parts, mopeds, etc to international markets. The city, reportedly, produces
approximately 95% of the country's woolen knitwear, 85% of the country's sewing
machines, and 60% of the nation's bicycle and bicycle parts.

Coupled with the entrepreneurship spirit, there are other
factors that make Ludhiana the industrial hub that it is today. Its proximity to
the countrys capital is one of them. The city also has the advantage of
cluster development, helping one city feed the other.

Ludhiana throws open a vast market for the IT shops. However, it
has not been as easy as it sounds, considering the fact that IT adoption in
Ludhiana is still comparatively low. Being an under-penetrated market opens up
an even bigger opportunity to be tapped. The city is now on the radars of major
IT vendorsSAP, Microsoft, Sun, etcwhile the hardware vendors are stepping
up their coverage through strengthening their channel base in the city.

So, what is it that is beginning to attract IT vendors to the
city? The usual suspectvendors. They are now looking beyond tier-1 cities and
into the next tier of cities that can offer them incremental revenues. But, more
than the next tier of cities, it is the next tier of companies, beyond the large
enterprises, that offer the market for the future. Ludhiana offers an ample base
of small- and medium-sized enterprises. The citys industrial belt is largely
dominated by SMEs.

There is also a growing recognition for the need for technology
to run the businesses successfully. The increasing realization for the need for
automation is coming not only from the point of view of running the operations
more efficiently, but also because of the growing pressure from international
markets. For instance, the knitwear industry is facing intense competition from
China, forcing the units here to improve efficiency, deliver on time while
offering more competitive prices. All this, the market is realizing, can be made
possible through the use of IT that can help manage the supply chain better,
have better control over the production processes and the inventory, and avoid
undue wastage. Considering that many of the shops here are export-oriented units
and targeting the international markets, they are also forced to go the
automation way as part of certain compliances required by the partners they deal
with in these markets.

While the basic level of automation is in place among the larger
enterprises and preliminary adoption is in place among SMEs, the market is now
moving towards the next level of IT adoption in Ludhiana. The bigger enterprises
are now looking at graduating from stand-alone island of applications to
standard ERP packages. Meanwhile, with the ERP vendors coming out with trimmed
down and lower-priced versions of their ERP, they are now aggressively targeting
the smaller units in Ludhiana. For instance, SAP.

Cluster Advantage

A key dynamics of the nature of industrialization in Ludhiana is the
emergence of clusters, which effectively make things easier for the IT vendors
in terms of marketing. According to Ajit Lakra, managing director, Superfine
Knitters and the president of the Ludhiana Knitters Association, being in a
cluster most of the units are within close proximity, thereby making it easier
for the vendor to target a much larger number of units with comparatively lesser
effort as opposed to a non-cluster industrial area. Also, considering the units
within a cluster work closely, the word of mouth helps in spreading awareness
and marketing for a solution. So, an entry into the cluster makes it easier to
grow the market beyond. Further, an entry into one industry helps in providing
an access into the other allied industries in a cluster. More vendors are
gradually realizing the broader as well as the finer nuances of the Ludhiana
market, bringing the city on their radars.

The Channel Link

The channel community is gradually beginning to emerge strongly in the city,
considering that vendors are strengthening their channel base to strengthen
their presence in the city. According to Samit Jain, CEO, SK Trading Company,
most of the hardware vendors and their brands are now well represented in
Ludhiana. Another key reason for the stronger channel base in Ludhiana is the
fact that it is emerging as the hub to cater to rest of the markets in Punjab.
Jain explains that the city is strategically located at the center and that
makes it easier to feed the remaining IT markets in the state. And, its
proximity to Delhi also works in its favor in terms of logistics. Further, the
sales ASMs and RSMs of most vendors are now located in Ludhiana. The Association
of Computer Entrepreneurs (ACE) has also been formed to solve any partner
related issues.

Challenges

The potential opportunity comes with its own share of challenges. The
biggest one is the cost and awareness factor. While on one hand these industrial
units are increasingly recognizing the need for technology, on the other hand,
they are not willing to bear the cost of an expensive solution. As Lakra says,
even a Rs 10 lakh ERP package is going to be way too expensive for a small unit.
There is also dearth of industry-specific customized solutions specific to the
needs and requirements of a particular industry. The need of the hour,
therefore, is cost-effective and industry specific solutions coupled with
spreading awareness.

According to Narinder K Miglani, general secretary, Knitwear
Club and also managing partner, Election Knitters, the availability of trained
manpower is also a challenge as once these companies have the system in place,
they also need the right manpower to maintain these systems. With most
IT-trained workforce moving out to the hubs for software development, the
availability of not only trained manpower but also ISVs is becoming a challenge.