Orange City Ripe For IT

Known for its world famous oranges, Vidarbha region is primarily looked after
by Nagpur district for its IT needs. Nagpur also acts as supplier for the
neighboring state of Chattisgarh. The previous two years were not very good for
IT business in Vidarbha region.

But the business appears very positive this year. Customer segments like the
small and medium enterprises (SME), government, educational institutes and
industries have actually begun investing in IT infrastructure.

Neighbouring cities like Amravati, Akola, Gadchiroli, Gondia, Wardha,
Yavatmal, Bhandara, Gondia, Chandrapur, Buldhana, Jalgaon, Dhule, Nandurbar,
Nanded and Aurangabad, all look at Nagapur, Pune and Mumbai for sourcing their
IT needs.

The channel community is witnessing the best year in recent times for IT
business in the region. And it looks like this positive trend will continue at
least for the next few years.

CUSTOMER SEGMENTS

The absence of big corporate houses has forced Nagpur to look at the markets
in neighboring states. Its close proximity to Chhattisgarh state has helped
Nagpur in extending its business there. The capital city of Chhattisgarh state
— Raipur — has many industries in the power, aluminum, cement and steel
sector.

Within
each district, the local governments have started spending in IT infrastructure.
Very often, one will find systems integrators pacing to win government
contracts. Government is one of the largest customers segment for channel
partners in this region, which until last year was not explored much because of
the bureaucracy that existed in the region.

But, things have improved. The government is actually implementing IT
solutions in various departments. Apart from government, a limited number of
corporate customers has compelled partners to focus on SMBs and the home
segment.

The region is also known for the large number of engineering colleges and
educational institutes after Pune. The World Bank has come forth to help in the
development of these institutions this year. Despite the low margins they get
from providing solutions to educational institutes, partners are banking on the
fact that these will be future investment for getting annual maintenance
contracts.

EVERGREEN SERVICES

Providing third-party maintenance service is a big business activity in this
region. Many partners have moved out of pure trading activities because of the
low margins and payment issues. They have now provide value-added services. In
most cases, service forms a decent chunk of the channel's total revenue. In
terms of profitability it holds the largest share.

Another development in the region is the entry of many software developers
and exporters. The entry of software houses has also fueled the growth of PC
business and the services around it.

The narrowing gap between assembled and branded PCs is forcing many SIs to
take up sales of branded PCs. In fact, they are finding it better to deal with
branded PCs because bigger deals help them negotiate better. At times, they work
out cheaper than providing assembled PCs.

Retail showrooms are reportedly doing well, with home segment doing a lot of
buying. Some of the big showrooms selling PCs are doing up to 50 PCs a month.

HOT PRODUCTS

Among the product segments that are doing well are entry-level servers
market. Branded as well as Intel-based servers are reporting good sales. Most of
the sales are coming from the SME segment.

Storage and security are two other areas where serious business is happening.
NAS and SAN products have become a reality in the few corporate and government
departments in Nagpur.

Laptops too have started moving in good number to the SME customers. Fiber
networks and services around it are another growth coming from ISP customer.
Meanwhile, wireless networking has only induced excitement buying in some

government department and colleges.

It looks like the correction phase is over in the last two years, and now is
the time to grow. "Business has matured and it is happening in a sensible
manner. There will be decent growth for everybody," feels a top SI.
Vidharba region is at least trying to emulate the metro cities if not match
them.

NELSON JOHNY in Nagpur