Against All Odds

India witnessed a steady 9.8 percent growth this year with central and state
governments taking initiatives to battle the inflated trend in the market. With
a liberal de-centralised fiscal policy, spending on the e-governance front has
started to gain momentum throughout eastern India.

With the emergence of a powerful retail and SMB sector across major cities in
Orissa, mainly centred in Bhubaneswar and Cuttack, the quaking IT sector seems
to have taken a step ahead compared to other upcountry markets in the East.

Witnessing a staggering growth rate of 30 percent YoY, Bhubaneswar has
gradually emerged as the leading player in the eastern upcountry beating its
dominant counterpart-Patna, by a margin of over 14 percent (Q1 to 3, FY 2008).
At a time when nearly all major markets in the East are registering a negative
growth rate, including Kolkata, Bhubaneswar not only registered the highest
growth rate in the last three quarters at an average of 34 percent, but has
emerged to be a promising center for private IT investments.

“Bhubaneswar has a promising future at this point of time. Having a steady
supply of skilled manpower in IT and a mature retail and end-user segment,
Bhubaneswar holds the future of IT investments.

E-governance projects by the state government have taken the market to a new
high and the city has already overtaken major markets across the East,” said
Rajesh Dora, CEO, Printlink Computer and Communication.

Over the years, the city has seen a dramatic change in the consumer segment
with new generation gizmo freaks emerging. Orissa, now boasting of major
technical colleges is fast becoming a major educational destination, giving rise
to the student community which has emerged as a major customer for the IT retail
segment.

Bhubaneswar

FACT FILE Over 30 percent growth rate YoY E-gov projects give fillip to market Sales of laptops supersede desktops

“Nowadays, a PC is a must-have for any student. Earlier, it was the medium
and high 'disposable income group' who accounted for majority of the customers,
but now, it is the students who are the driving force in the market. Also,
desktop sales have gone down as students are preferring laptops and notebooks to
the traditional PC,” commented Prasant Kumar Swain, Chairman, Nigama Computech
and Services.

Catering to the demands of next generation customers, IT vendors have
introduced major releases to keep their businesses running.

As the consumer segment continues to account for 40 percent of the total
market, the government has evolved strong accounting for nearly 16 percent of
the marketshare. As major e-governance projects are in the pipeline and in a
stage of implementation, the IT retail segment is looking for a higher profit
margin as bulk sales by the state government are on a steady rise.

Four years back, Orissa witnessed a thaw in retail, primarily due to the low
purchasing power of the government and due to emerging SOHO sector witnessing a
slowdown. But now, with the introduction of new liberal fiscal policy by the
central government and the governments enhanced focus on resorting deficit
spending, the IT retail sector has not just recovered, but is heading towards an
increased growth ratio compared to the other upcountry markets in the East.
Also, higher net disposable income of individuals and the desire to be more IT
savvy is helping the region grow fast.

Major vendors like HP, Dell and Lenovo have a lead in this region as compared
to the rest of eastern India with HP targeting to have 52 percent growth on a
YoY basis for the coming years. HP, the market leader in the state, has a 55
percent marketshare in the notebook front and commands a steady 35 percent
marketshare on the desktop segment as well. With manufacturers aiming to
maintain the lead in the region, the channel community has undergone a massive
change in last four years. As key players have resorted to a channel oriented
sales policy rather than a franchisee-based model, regions across Orissa
including Sambalpur and Cuttack are growing at a rapid pace. On the other hand,
similar to the developed markets, niche consumer sub-segments have started to
evolve now, national distributors in the region are fast gearing up to meet the
demands of the new niche segment.

Speaking about the growth of Bhubaneswar market, Rajesh Goenka, VP-Sales and
Marketing, Rashi Peripherals said, “Overall, we see that the market size will
double in the next two years coupled with the advent of LCD and wireless
technology. There are two sub-segments primarily in this region, which are most
demanding. First one is the very low-cost PC for the basic consumer and the
other is very high-end gaming geek asking for complete range of products right
from AMD CPU to LCD monitors, graphic cards and gaming devices.”

Avishek Rakshit

avishekr@cybermedia.co.in