Is Nehru Place dying as India's biggest IT hub?

Crowned as the king of the IT business hubs, Nehru Place
is losing its crowning glory. The IT dynasty is fading away. With street-side
vendors and stray animals capturing the open spaces, hygiene and business focus
is in a limbo. Most of the IT operators in Nehru Place are concerned with the
slow but imminent death of India's most valuable and important IT hub.

There are various reasons attributed to this present
status of Nehru Place. Various issues have aggravated this condition and the
erstwhile Dalal Street of IT products--Nehru Place--has lost its position as the
one-stop-IT market. Reasons are varied, right from the cleanliness to the
paradigm shift in the distribution model of various vendors and distributors;
everything is adding to the present misery of this IT hub.

The veterans in the industry feel that the major reason
for this has been the change in the business practices. One of the pioneers of
Nehru Place, Shyam Modi, Director, Modi Peripherals, said, "The market
dynamics have changed drastically in the last few years. Now no longer a person
from up country comes to buy his inventories from Nehru Place, all the
distributors are present in smaller cities too. As a matter of fact, even
vendors want to make their presence felt in smaller cities, which in turn makes
the gross business from Nehru Place dip further." His feelings are
reflected by most of the people in the industry.

Moninder Jain, National Marketing Manager, Samsung
Electronics India Information and Telecommunication Ltd, voiced a different
story though. "Nehru Place is one of the most important hubs for IT
business in India and it cannot lose its place so easily. It's just that there
are more hubs coming up and major players are also expanding their branches to
smaller cities or other hubs in the city. De facto Nehru Place would remain the
major hub and we would always be able to gauge the IT business situation from
the activities of Nehru Place."

Keshav Madhav, Director, Vidur & Co, said that the
economies of scales have a large role to play for the present status of Nehru
Place. "As the distribution model matures and the taxation policy becomes
uniform, few resellers would come to the major IT hub for procurement as they
can do buying from the local distributor. They save on double taxation and on
the transport costs. When they can make more margins and create better
bottomline, why would they not do it?"

Added Rajesh Agarwal, Director, Micro Max Technologies,
"Nehru Place is no longer able to control the prices, which can be
attributed to the fact that the breadth of the IT market has increased
manifolds. Besides this, the quantum of business and number of players is
immense as compared to what they were five years ago. Now the impetus is on
reaching the smaller cities and creating healthy bottomline."

The aggregator role and the sub-distribution model is
also changing, rather it is fading away. As the economy advances, the
distribution model gets thinner and thinner to generate higher margins. Similar
thing is happening in India, where the total number of tiers in the IT
distribution is reducing. Meanwhile, most of the distributors are becoming
aggressive about dealing with smaller resellers in the regional cities.

Argued Alok Gupta, CEO, Softmart Solutions, "Nehru
Place is not losing its importance, it's just losing the growth pace.
Information dissipation has a major role to play in this. As the news and
information would be easily available, people would find easier and nearer
places to fulfil their requirements."

Said GS Paul, DGM (Sales), Tech Pacific India Ltd,
"The market dynamics has focused on the end-users now. Box pushers have
lost their position, it is the value-addition that sells. The redistribution
tier will fade away soon. Trimming the distribution model has been a sure-shot
way to earn healthy margins and we cannot remain immune to the international
trends."

Gurjeet Singh, Head (Sales), OA Compserve, opined in the
ubiquitous voice that the growth in Nehru Place has staggered in the past and it
will be so as the distribution has gone regional and smaller cities are also
well-connected through the distribution network of major distributors.

With IT growing at a constant rate across the nation and
smaller business hubs mushrooming at various nook and corners in Delhi, Nehru
Place might just be a little battered. But business has never been dependent on
one single hub, rather the more the reach of business, healthier it becomes.
Nehru Place might lose its shining armor, but it would still be reckoned as the
veteran IT hub in Indian IT industry--albeit rather nostalgically.