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6 threats for enterprise channels in 2013

Channelworld India staff | May 2, 2013
A weak economy is combining with a number of long-dormant issues to form a set of challenges partners needs to watch out for.

According to the chaos theory, the flutter of a butterfly's wings in Brazil can create ripples that result in a storm in Mumbai. In the last few months, the banking system that started years ago, has been generating strange new storms on our shores, blowing the plans of Indian enterprise channel partners off course.

A sluggish economy combined with long-existing issues in the channel have come together and created challenges that are surprising in their reach. It has, for example, not just squeezed the budgets of customers and channel players but also of vendors. As a result more principals are now cannibalizing their own channels.

Some of these ripples can hit channel partners harder than others. For example, the combined forces of a weak capital market, a hesitant investment environment, and hard-to-tame inflation have spawned cash flow challenges that are forcing some solution providers to curb expansion plans--and others to shut down existing branches.

The slowing economy is also hastening the evolution of old trends. It is, for instance, forcing tier-1 channel players to invade the markets of their tier-2 peers, as their own markets dry up, creating a clash within the partner community itself.

Enterprise channel partners, however, aren't taking these events lying down. They are finding new ways to work around the challenges thrown at them. In the spirit of forewarned is forearmed, here are the six large threats your peers are telling you to watch out for.

The Operating Cost Quagmire

The Threat: Higher-than-expected expenses stemming from the rising costs of rentals, office infrastructure, staff compensation, and logistics, among others, are forcing solutions provider to rein in expansion plans and close down branches.

More often than not, the enemy of the new is the old. For an enterprise channel partner, little demonstrates that better than the way operating costs have gotten in the way of new expansion plans. Ask the folks at Albion InfoTel.

Until recently the New Delhi-based solution provider had plans to expand its operations to the US, the UK, Canada, and other Asia Pacific markets. Then the mounting costs of its existing operations caught up with it. "The increased cost of operations leaves us with fewer resources to enter new markets. Plus, our sales depend on daily marketing expenditure, and any cost reduction there, will have an adverse impact on our sales," says Sanjeev Gupta, managing director, Albion InfoTel.

For most channel partners, operating costs include a host of variables including employee salaries, rentals, conveyance, logistics, and advertising and marketing expenses, among others. Rampant inflation and new standards of living have raised the cost of most of those line items, which in turn, affect the way a business is planned. "If operating costs increase more than we expect, our overall budget is affected," says Gujarat-based Ishan Infotech's Executive Director Keyur K. Jathal.


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