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 Princy Bhatnagar, Director, Office Business Group, Xerox India, expects the domestic services revenues to grow by 50 percent with hardware sales stagnating or even showing decline in 2010
As we start the year 2010, it is important to review various events and trends that shaped business, and list out the key lessons learned that will be crucial for the future.
I will always remember 2009 as a year that transformed the IT industry. It has re-defined how business will be done in the years to come. Most of the changes are permanent and good for the health of businesses, customers and channel partners.
With the global recession leading to an economic slowdown in India, we did expect the market to show negative growth. However, what was not expected was the negative growth recorded by the industry in Q3 2009—the highest ever year-on-year decline in almost five years.
In 2009, the demand for laser technology products in some segments like government and education decreased significantly. I expect the market to remain stable at these levels for the next two quarters, and then build momentum from Q3 2010 onwards.
The economic slowdown led to a severe financial and credit squeeze. This impacted IT distribution, which heavily relies on credit availability. As a result, we have seen a drastic drop in the number of day-traders in the reselling market. Overall, the sub-distribution business, which operates on distributor-leveraged finance, has come down dramatically during the last 12 months.
The other important shift has been the transition from hardware to services. The shift was inevitable, but the economic slowdown has expedited it. This is the most defining development of 2009 that will change the IT business forever.
Year 2009 also saw corporate India warm up to Green technologies for business competitiveness and cost efficiency. Vendors who have enabled genuine cost-efficiency solutions have gained momentum in the market.
Economic outlook
Indian economy will witness a healthy growth trajectory in 2010 and will grow faster than most other economies.
I wouldn’t like to forecast GDP, as I have realized the fallacy of doing so. The International Monetary Fund (IMF) has changed its GDP growth forecast for India once every two months, over the last one year. Hence, it will be inappropriate to make a forecast.
There are clear factors that will drive India’s GDP. In the first phase of economic inclusion, between years 2003 and 2008, nearly 70 million Indians benefited from better rural governance and government development schemes. In the next phase, another 70 million will get an opportunity to be included in India’s economic development story. This will certainly boost demand.
Even in the year of economic slowdown, consumer demand continued to be strong. The trend will continue in 2010. Savings growth rate is showing no sign of slowing down and foreign institutional investors have returned to the stock market. India continues to buy more gold than ever before. After pushing up the GDP in 2009, car, camera, apparel, phone and commodity sales continue to grow. The stimulus package implemented by government has played a pivotal role in spurring demand.
Indian companies remained cautious during 2009. Most of them have done well to improve operational efficiencies of their businesses by at least 20 percent in 2009 compared to 2008. So, this will give them an edge and resources to invest in 2010.
In 2010, we clearly see paradigm shifts in customers’ buying decisions. Clearly, the focus will be on solutions and will be based on three key criteria—total cost of ownership (TCO), business efficiency and Green technologies. This means hardware specifications will become less relevant in all purchase decisions.
| Takeaways for 2010 |
- Sub-distribution business, which operates on distributor credit, came down dramatically in 2009
- The most defining development of last year has been the transition from hardware to services
- Vendors who have enabled genuine cost-efficiency solutions have gained momentum in the market
- Customers will buy solutions on three key criteria—TCO, business efficiency and Green technologies
- The only way partners will grow is by solving customers’ business-critical problems
- Both consumers and companies will invest significantly in physical security solutions
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As the transition from products to services will continue to gain momentum, we expect the domestic services revenues to grow by almost 50 percent with hardware sales stagnating or even showing decline in 2010. Overall, the IT industry will grow between 8 to 10 percent during the year.
Technology trends
Green technologies with better cost efficiency and less carbon deposits will be the most visible technology shift in 2010. More and more customers are looking at products that consume less power and are easy to recycle. This not only adds to cost efficiency but also complies with corporate responsibility towards the environment.
In 2010, security solutions are likely to create a buzz. It is the single biggest opportunity in the market today. Both consumers and companies will invest significantly in physical security solutions.
Business efficiency solutions, and asset and infrastructure consolidation will make businesses more competitive. It would be other important area of focus in 2010.
Channel trends
Xerox India has always shared a great rapport with partners. The consistent element of our partner strategy has been centered on customers—providing them solutions that meet their needs.
We believe that the only way partners can grow is by meeting customers’ needs and solving their business-critical problems. Hence, the success of partners critically hinges on what they can do for their customers.
Our agenda for 2010 is as follows:
- Drive enterprise customers towards business efficiency solutions
- Equip our partners with the right technology platform to help them provide solutions and services to mid-market customers
- Align channel training needs to drive solution selling approach within existing partners and new partners
These three steps, we believe, will lead us to success.
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