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The impact of layoff reports by tech companies on enterprise channels in India

Yogesh Gupta | July 9, 2013
Enterprise channels are vigilant to safeguard their business as partner friendly technology companies reduce their workforce.

The recent news of IBM layoffs crossing 3000 employees is not a big surprise. In past twelve months, many technology companies have announced cuts in their employee workforce including HP, VMware, NetApp to name a few.

Enterprise channels are being vigilant and safeguarding their business as partner-friendly technology companies reduce the size of their workforces. "The layoff numbers mentioned are mostly worldwide with a major impact for mature markets and much less on India. Partners should check the impact on R&D, delays regarding product launches, investment plans for the India market of that company," says Rahul Meher, Director of Pune-based Leon Computers.

"It has no influence on our business as these companies have a long-term vision and this phase is part of cycle at a company," agrees Atul Gosar, Director, Network Techlab. But Parag Dalal, director, Dynacons Systems & Solutions opines, "These reports definitely affect channel industry making partners more conscious of margins and payment terms with customers."

Business as Usual?
Such news does not surprise the sentiments of partners and customers says Edward Jeevan, Director, Binary Systems. However, it is time for channels and customers to improve efficiency, be conscious about costs and overheads, he adds. Such layoff announcements add extra burden as the number pressure increases and it does affect relationships with that vendor if there is change of guard at their team, says Dalal.

"On long-term basis, we have to work our investment plans in terms of manpower and certification investments with that vendor," he adds. It may not affect relationships with a vendor as these companies rely on loyal partners more rather than adding their own team, says Gosar.

According to Sandeep Jain, Partner at Kanpur-based Aryan Computers & Peripherals, partners should be careful when deciding vendor relationship in terms of honoring commitments and pre-sales, sales or support issues. "Our end customers are not really worried as long as they get proper post-sales service and continuity in support," says Meher at Leon Computers.

"They take note of such news but they are more concerned with their warranty support, once they procure the material," agrees Dalal at Dynacons.

Impact on Distribution Channel
Distributors or Value Added Distributors (VAD) are undoubtedly an important link in the enterprise channel ecosystem. Rising salaries, travel costs, the falling rupee, increasing discounts, all tend to put pressure on profit margins of global vendors too, says Ashok Kumar, CEO & MD, RAH Infotech. "When we sign up a vendor, we make them aware of the need to keep their expectations real about India business," he says. As per iValue InfoSolutions, managing business in an uncertain world has become the new normal since 2008.


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