French riviera of the East

Considered as the educational hub of South India, Puducherry (formerly known
as Pondicherry), is a small Union Territory, nestled on the Eastern seaboard of
the country. It has around seven medical colleges, seven engineering colleges,
and 10 arts, science and technical colleges. The end user segment contributes
nearly 65 percent to the business of the IT channel in Puducherry and the rest
of the business comes from corporate and government sector.

Puducherry Industrial Promotion, Development and Investment Corporation (PIPDIC)
has set-up a software technology park, and an Electronic Industrial Estate is
also coming up. Apart from the manufacturing units, many prominent hardware
producers such as IBM, Wipro, HCL, Numeric and Acer are running their sizeable
operations in the Puducherry IT market. Infact there are a number of other
industries which are looking forward to expanding their horizons to Puducherry.
Also, the union territory has a fairly proficient technical workforce for the
software industry. Owing to these IT-related activities happening in the region,
Puducherry can be rightly placed as an upcoming IT market.

Despite all the facts being in place, the slowdown is kind to none. Suresh
Kumar Soni, CEO, Auro Enterprises feels that the city's average sale has gone
down by around 15-20 percent in the past three months due to the global economic
slowdown, but its traditional liquor and fisheries businesses are performing
relatively well.

He shared, “Puducherry has a lot of scope for growth, but the recession has
hit people in the IT industry very hard. Hence, besides getting new customers,
we are also trying to retain the present ones. We send them e-mail alerts about
our products on a regular basis and do regular follow-ups to keep ourselves
updated about their immediate requirements and other service-related needs.
Besides advertising our products extensively, we are also focusing on server
business, which has attained a growth of about 15 percent in the recent past.”

During January every year, the festival of Pongal is celebrated widely in
Puducherry. This is the time when people buy a lot of things from the market.
Due to such festivals the sales of IT products sees a major boost. “Thanks to
the auspicious month of January, during which Pongal falls, we were able to earn
relatively good business, despite the slowdown. We deal with brands like Apple,
Dell, WeP, Samsung laser printers and LG mobile phones. Among these, laptop and
desktop market is doing quiet well. Laptops have helped me earn a business of Rs
1.5 lakh in the past three months,” he added. Soni is optimistic that the
current situation would get better in Puducherry in a few months time.

Claiming that the market is nearly down by 20 percent in the last two months
owing to the slowdown, M Sridhar, CEO, Sukkra Trders said that the accessories
and services business has also taken a massive hit. According to him, the sales
would be back on track only by June-July, as the educational segment, which is
considered to be the hottest one in Puducherry, would be spending considerably.
He cites that the increase in prices are also a major reason for the drop in
sales. “If the vendors are really eager in helping out the channels at this
point of time, they need to reduce the prices and increase our margins, as it
will have a good impact in the sales,” Sridhar claimed.

According to him, breadth billing is one of the major issues that is haunting
the channels, where the distributors bill directly to the end users and
unregistered channel partners. “If they are going to do the sales directly,
there is no need for channels in the region. The association has warned them
once but we haven't seen any improvement in the status; we might take some
strong action by April against this,” he said.

According to partners in Puducherry, Dell has gained more ground and many of
them agree that it has overtaken the sales of HP after the former took the
channel route. However, in the desktop segment, HP and assembled PCs rule the
roost.

T Sivakumar, CEO, Siara Systems feels that there has been no technical
updates in the products segment since past one to two years. “Only if there is a
technical update, customers would be lured to buy the product and they won't get
attracted to the configuration or the change in design of the products,” he
claimed. Sivakumar doesn't see any positives from the market at this point in
time. However, he feels that possession of quality manpower would definitely
improve the sales, as the lack in quality of sales force is a major reason for
losing business.

He feels that the vendors must identify their backlogs that have been there
for a while and rectify that for some improvement in market situation. “For
instance, HP's service is the worst problem in Puducherry. It takes almost two
months to service a laptop and they haven't been able to rectify a problem in
our customer's server. We made them buy a new server using our face value,”
Sivakumar pointed out.

Government is also taking several initiatives to make Puducherry an IT hub.
It is offering incentives to attract many computer hardware manufacturers to the
region. Some of the important government departments like accounts and
treasuries, civil supplies, transport, electricity, etc that have been
computerized for facilitating transactions with the public.