Steel City under “Fire”

True to say that Jamshedpur began with Tata and is deemed to end with Tata holding the dictum true for the IT channel community too. It was the Tata conglomerate which founded the city here and led to its development. Further, the group owns some key areas and localities in the city like Bistupur which is now being leased out to the central government. After Jharkhand's separation from Bihar as a different state entity, it's dual cities; Jamshedpur and Ranchi were poised to take the state to the next level and to an extent it has done already with FMCG, manufacturing, heavy engineering, heavy electrical becoming prominent with the latest being the BFSI segment. Even then, the Tata group continues to rule the chart justifying the channels dependency on this group of industries.

But now, Jamshedpur, which once topped the channel partner's charts and distributors network preference in upcountry east is losing its charm fast primarily on account of the change of IT tendering policy from Tata industries and the rise of Ranchi as the preferred IT destination.

For the last couple of years the Tata group has introduced a centralised norm for its IT projects and deployments headquartered in Mumbai and local tenders have been rendered obsolete. As a consequence, suppliers and integrators in the city have lost atleast 60% of the IT supply market.

Lamenting over the fact, Abhay Upadhay of Om Computer World said, "Tata industries used to be the growth driver for the channel trading in the city. Many channel partners established themselves in the market primarily based on key Tata accounts and projects but now, with Tat group changing its tendering policy, local partners are not able to bag projects from Tata in the city".

This move has led to a fall in enterprise and SMB channel trading by atleast 70%. Besides, the emerging verticals in the city are also modelled on a centralised scale leading to the clog in SMB and enterprise segments. Also, some of the older generation of channel partners in the city are on the verge of quitting the channel business altogether.

The respite in the city came in the form of retail, however with most of the channel partners opting to venture into this segment.

However, the primary concern for the partners is the loss of interest in the city both from the vendors as well as the distributors.

A prominent channel partner in the city said, "The prime concern for us (channel partners) is the attitude from both the vendors as well as the distributors".

According to him, unlike previous days (early 2000), the vendors and distributors have now started doing away with the exclusivity model in sub-distribution which has led to the decline for distributors.

"National distributors have now started appointing a selected breed of a few channel partners as sub-distributors overloading them with major brands. As a consequence, none of these distributors are either able to focus on a single brand or are least concerned with the brand development. We had brought this into the notice of the vendors, but to no avail", he complained.

Such a move clearly coincides with the rise of Ranchi as the preferred channel destination for the distributors. Channel partners in the city suggested that this can be primarily because of Ranchi's proximity to the airport and the rise of FMCG at a greater scale in Ranchi.

Even as Jamshedpur continues to boast about its steel plants and the heavy machineries dotting its industrial landscape, channel partners in the city have much to worry about.