Cover Story
Rising Expectations
With the swearing-in of a stable government at the center, and an improving economic outlook, channel confidence is on an upswing
CRN Network
Channel confidence seems to be surging. This was the main conclusion of the CRN Channel Confidence Survey which polled some of the country’s biggest and brightest channel partners who attended the recently concluded CRN Channel Leadership Summit in Goa. Channel partners were more or less unanimous in pronouncing that the worst of the recession is perhaps behind us.
 Changing outlook
Nearly 80 of the respondents who participated in the survey are optimistic that India will continue on the growth path despite the global recession. They expect Indian GDP to clock a healthy 7.5 percent growth in 2009-10.
The primary reason for the overall surge in channel confidence is the swearing-in of a stable government at the center. Nearly 35 percent of the respondents believe that a government with a clear mandate at the center will ensure greater economic and fiscal reforms that will boost the Indian economy.
“India is likely to emerge as the fastest-growing economy in the world, and with a pro-reform government at the center a lot of foreign investment will flow into India. This will result in the rupee appreciating, which will further boost local demand,” says Sanjiv Bhavnani, CEO of Mentorpreneur Advisors.
Partners said that improvement in customer sentiment was the second big reason for their optimism, with 28 percent of them suggesting that demand from mid-market and enterprise users, which had taken a nose-dive, is finally showing signs of revival.
Many even attributed the reason for their confidence to the way US president Barack Obama is try to shore up the American economy. 11 percent said that there has been no bad news from the US for the last 3-4 months, and this has contributed to the stability of the global economy.
With confidence in the overall economy rising, partners believe that the domestic IT sector will grow faster than other sectors, and record a healthy 16 percent growth in the current fiscal.
An emphatic indication of channel confidence is that in 2009-10 the respondents expect to grow at 31 percent, almost double the rate of growth they anticipate for the IT industry as a whole.
“We are expecting to grow at over 30 percent this year, and have plotted geographical expansion and the addition of new products and services which will help us deliver on our target,” says Rajeev Mehta, MD of Zest Systems.
Adds Neel Shah, Director, Insight Business Machines, “Frankly, India was never as badly hit as the other economies around the world. Whatever we saw in Q42008 was a purely a knee-jerk reaction to the problems of the US financial system. Markets have improved in JFM.” Insight expects to grow at a robust 20 percent in the current fiscal.
Interestingly, nearly 44 percent of the respondents believe that demand will normalize over the next 3-6 months. This means that channels expect customers to buy at the same pace as they had been doing before H22008.
30 percent expect demand normalization in 6-9 months.
“Customer inquiries have increased substantially since April. Companies cannot hold back their genuine needs for long, and they have to start investing in IT because it has become a key tool for cost optimization and productivity enhancement,” says B Shankar, CEO of Ashtech.
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