New Fiscal, New Hope

Have we finally touched the bottom? Yes, we certainly have,
if we go by the bullishness exhibited by the most prominent and leading channel
partners in Delhi. All 30 of these channels players expect the market to take
off now. In fact, April, traditionally leanest month, is turning out to be
extremely good–much better than March.

Financial 2001-02 was a year fraught with low toplines and
shrinking bottomlines. IT pundits had predicted some sharp growth before the
recession was prominent. As the recession gained ground, the market sentiments
went toppling down and so did those growth figures.

The DQW News Bureau did a market survey to find out whether
the market sentiment matched the financial figures or not. Well! The figures
were much more upbeat than the low sentiments prevailing in the market. There
has been a negligible growth instead of a drop in the toplines of the major
channel partners in the capital, which were surveyed.

The channel segment grew by a meager 4% in 2001-02, compared to the previous year’s growth of 42%. However, the new fiscal–2002-03–has brought new optimism. Projections are that this segment will grow at a heady 33%. These figures are based on a survey conducted amongst the top 30 channel partners in the capital.

The IT-enabled services segment showed the maximum spending
in the industry, corporate segment was dormant, and government sector gave the
bread and butter to the channel partners. The defense sector also did a lot of
IT buying this year. In addition, the SOHO and the home segment recorded
substantial growth during the last fiscal.

It has been a mixed year; some of the conventional box
pushers saw huge growth (Aryan Technologies and Comnet Vision had a growth of
25%) and some regressed heavily (Pulse Systems had a negative growth of 25% and
RR Systems had a negative growth of 20%). Solution providers also saw a mixed
pattern. While Infotech Network Systems grew by a whopping 100%, Tulip Software
also showed great growth clocking 80%. Samtech InfoNet went down by 40% and
Netlink Business Systems also had a negative growth of 10%. Some of the players
have been able to maintain the previous year’s performance, such as Bhartiya
Electronics, Leading Edge, Micro Max Technologies and Vidur & Co.

The channel industry saw various ups and downs in the last
fiscal. With most of the players consolidating the business, toplines are
shrinking and bottomlines are enjoying the focus. Most of the channel partners
are trying to concentrate on consolidating their business practices. They are
trying to reduce their bad debts and risk factors as much as possible. The main
reason for thin bottomlines has been the bad debts according to these channel
partners. Most of the channel partners said that the Indian IT industry requires
a paradigm shift to bring the inertia for growth. What kind of paradigm shift is
still a dogma?

Ankur Gupta, director, Pulse Systems, said, "Just
because we wanted numbers to be with us, we have huge bad debts on us. This year
saw so many defaulters and fly-by-night operators. We will be much more cautious
this year onwards." Keshav Madhav, CEO, Vidur & Co, opined similar
sentiments, "We plan to concentrate on our bottomline this year rather than
the topline. We will be realigning our business practices this year
onwards."

Some channel partners said that this year has been a shakeout
phase, which has left mostly serious players in the market while non-serious
players have shut down their shutters and thus they see a fair growth in the
coming year. Somesh Narang, Director, Elcom Trading, said, "I see a good
growth this year, as seasoned players are in the market who do not believe in
payment defaults and bad trade practices. Meanwhile, the end consumer is also
becoming educated, which should boost the end-consumer sales."

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AK Pandey, director, Miraj Infotech, commented, "Growth
has been there, if you see the retail segment it has grown substantially but the
bottomlines have fallen short due to the bad trade practices and the numbers
game."

The year saw one more peculiar trend–principals went
head-on to win not only the bigger orders but smaller orders too. Mused Anil
Gupta, CEO, Artek Enterprises, "With such fierce competition, we never
expected vendors and principals fighting for small orders, now they are also
there in the market, trying to gain as much business as possible. They can work
on much more lower margins than us, which leaves us with small business to grab
on."

Most of the channel partners have found April bullish as
compared to the March. Overall, they are expecting a growth close to 33% in
fiscal 2002-03. The figures show a high growth rate and good bottomlines for the
coming year. Most of the channel partners are consolidating their business
practices and focusing on more new business practices rather than the
conventional business practices. This year should bring some good news after the
lean period that the IT industry has seen in the past year.

Shweta Khanna

Cyber News Service, New Delhi