Changing Times

Great changes are taking place in the IT industry globally. In the past 10
years, the profit per sale on each computer has gone down by 85 percent. If you
were to break this down segment wise, IDC numbers say that there has been a 72
percent decline in the average profit on sales of notebooks and a 59 percent dip
in profit margins on PC sales. So there is a disconnect somewhere, because there
are more PCs being bought but the channel not making money on the sales.

An average client spends only 33 percent of his overall IT spend service on
hardware, 13 percent on software and a whopping 54 percent on support. This
underlines a Gartner report that states that the managed service market is
growing annually at the rate of 10 percent.

This means that solution providers the world over have a great opportunity to
grab this 54 percent of business. But the challenge here is the disparity
between high quality staff and difficulty in retaining this staff.

Did you know that the average IT salary for Indian employee has gone up by
300 percent in the last five years? Firms are struggling with cash flow,
outstanding payments average 104 days in India, which results in 66 percent of
firms missing making their supplier payments.

And despite this all, solution providers are still sticking to the
traditional way of doing their business. Isn't this sad?

This is why there is an urgent need for partners to move to the services
business — where the scope is much better than in hardware sales. This is the
messaging that we at DQ Channels have been continuously talking about within our
pages and also through our events. And it is nice to see that some people have
already reading this message.

That is one of the things I have seen the successful solution providers do in
the past few years. And they are the one who were relatively untouched by the
slowdown.

This is one of the lessons that the slowdown has taught the industry. And
there are other learnings as well. We will explore those in detail in the
upcoming SP Summit, which we are scaling to an international level by holding it
in Bangkok and also inviting several third party market experts to expound on
topics which will hit home with the solution providers.

And to ensure that those who were unable to make it to the SP Summit can
still gain from the knowledge sharing that took place there, we will soon have a
microsite dedicated to the event, which will capture all the sessions and
opinions shared therein.

All these are endeavours we are undertaking to be a true knowledge partner
for our readers. If you can think of other things you would like us to do, then
please do email me.

Vinita Bhatia

vinitavs@cybermedia.co.in