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What is common between Jabalpur,
Silchar, Rajahmundri, Muzaffarpur, Kottayam and Kota? Apart from
being small towns dotted across the map of India, these cities are
part of the annual roadshow Rashi Peripherals is organizing across 51
cities over the next two months. Rashi is just an example and these
cities are some names I have randomly picked up from their roadshow
agenda. The bigger story is this epitomizes best how the IT market in
India is now growing in the D and E class cities. It's not just that
the metros are saturated, even the Tier 2 cities are close to
saturation; no wonders the vendors (and that means the national
distributors) are aggressively courting these small towns.
Small towns though were not on the
agenda of these vendors even a few years back but with the passage of
time they have assumed enough importance for each company to sit up
and take note of their existence. It's true that few years back a
Dell or Cisco or an LG might not have even heard of Rajahmundry or
Muzaffarpur. The channels that added tier-2 and tier-3 markets helped
distributors who played their cards well to stay ahead. For deeper
penetration into the C, D, E class channels voted for a requirement
of good strength. It's not always the NDs, but sometimes even vendors
are directly appointing distributors in small towns. HP has already
appointed Linkworld and Karuna Management as zonal distributors in
the east. The entire idea behind this is to appoint local
distributors who understand their respective local market dynamics
better and can generate better business and growth.
Realizing the importance of these
small towns that are growing at 60%, NDs like Rashi decided to
increase it focus on these towns-Rashi, in fact, has been one of
the biggest beneficiaries with small cities collectively contributing
40% to its overall revenues. Education is expected to be the biggest
growth driver of this segment. The SOHO segment was the strongest
segment which did not de-grow even after recession, offering a major
advantage for those banking on it. Though enterprise demand slowed
down SMB and SOHO appeared the promising segments.
The challenging situation during
the recession ensured the growth of these smaller cities, as everyone
were forced to look at newer avenues to not just sustain, but even
survive. And with another recession (according to many round the
corner) the importance of penetrating further into the likes of
Silchar, Kottayam, Gwalior or Bilaspur cannot be emphasized any
further. It's not just Rashi, most of the Tier 2 NDs are also
following the same roadmap. In FY09, Iris restructured its regional
focus by declaring Delhi NCR as N1 and North India as N2 regions.
This enabled the company in FY10 to penetrate smaller towns like
Ludhiana, Chandigarh, Shimla, Ambala, Jammu, better; this reflected
in its 25% growth that year.
Without churning out more specific
numbers, I feel the message has already drilled down. It's going to
be the Tier 3 or 4 cities that are going to be the new IT havens of
India. Come on Tirupati, Kolhapur, Gangtok and Jammu-your days in
the sun are here now.