Rise Above The Recession

The effects of the US recession may be felt in India. But solution
providers have no reason to fear. They only need to know which technologies and
products they should focus on, as customers will demand better RoI and lower
operating cost

Whether or not India is going to feel the pinch of the recession in US is an
ongoing debate, but what is sure is that IT spending in companies across the
country is seeing a dip. According to IMF's World Economic Outlook, the Indian
economic growth is likely to slip to 7.9 percent in 2008 from 9.2 percent in
2007. In 2009, the Indian economy is expected to expand at a slightly higher
rate of eight percent.

Speaking about the effect of the recession on India, Stephen Roach, Chairman,
Morgan Stanley Asia said, “If the US goes into recession, you are going to feel
it in Asia and you are going to feel it in India.” So though we cannot say for
sure to what extent the US recession will impact India, we can be sure that
'India stands to catch a cold.'

As the echoes of US' recession is being to be heard in the Indian economy now
solution providers (SP) who have been banking on US backed contracts to keep the
cash registers ringing are getting increasingly worried. But is India really in
the throes of a recession?

According to Sanjiv Bhavnani, CEO of New Delhi-based Visesh Infotechnics, the
recent market trends and the impact it has made on the business, it is certain
that recession is happening in India. “Global recession is happening and as
usual it has had its impact in India too. With the rise in salaries and
difficult times faced by the industry, we can surely call it as a recession,” he
said.

However other SP differ over his point of view, and would like to term the
current market situation as a slowdown and not recession. G Balakrishnan,
Director of Mumbai's Ontrack Solutions is one of them.

“Frankly I refuse to believe that we are in a recession period. We are at
best in a slight slowdown. In the last few years we have been witnessing fast to
very fast growth and it's but natural for things to slowdown at some point of
time.” he said.

Even Saurin Shah, CEO of Mumbai's Ashtech Infotech agrees with Balakrishnan.
“We are witnessing a slowdown period and not a recession. There are lots of
differences between the two and the impact of recession would be huge than what
we are witnessing right now in our country,” he claimed. He also said that the
current scenario would continue for a time being.

For Ajay Mian, CEO of All eTechnologies, only time could say whether India is
in the recession period or not. He opines, “I feel that recession or slowdown
depends on how long it would last and the impact it makes in the business for
that time being.”

And market reports say...

Technically for a country to qualify for the recession there are few points
like rising inflation, huge unemployment crisis, dip in salaries apart from the
hit in the GDP. With, which the conclusion is simple that India is in its
gradual economical slowdown and not in the recession period.

However one can't rule out the impacts of US recession, which is happening in
India. According to the financial firm Morgan Stanley's annual tech report, the
uncertainty in the US may delay the tech spending in the first half of 2008 in
India, which clearly reflects the current situation in the Indian IT industry.

According to the Inter­national Monetary Fund report, the impact of the US
recession would be lesser in the emerging economies like India and China when
compared to the developed nations. Bhavnani of Visesh noted that at present
there is no drop in the domestic market as far as this situation is concerned.

“However this is the first quarter of this fiscal and I feel this will
deteriorate further and SP will feel the pinch only then,” he added and said
that the present situation would continue to remain for next two years and one
has to be prepared for facing the situation.

Shah of Ashtech too said that this impact of slowdown would continue for at
least one to three more quarters. Customers who were mostly focusing on the
international market especially US were the one's who were mostly affected. This
is primarily due to the depreciation of the dollar and obviously the
appreciation of the Indian rupee.

“Those who were concen­trating on the US markets were the most affected one's
due to the dollar depreciation as in one case their revenues were directly
affected and in another case due to instability, their IT spending were
literally in disparity,” he mentioned.

Echoing his views Mian of All eTechnologies said, “There has been a
significant impact for the people who have been highly concentrating on the US
and European markets. In general the salary has gone up and there are lots of
employment crisis happening. If it continues further for six more months then
there will be much more impact.”

Even though the impact due to the US recession has been less, All
eTechnologies wasn't spared by the effect of depreciation of dollar. “Definitely
in that area our revenue has seen a 15 percent dip than the previous years and
it is an ongoing crisis everywhere,” he claimed.

Are solutions the solution?

SPs who were pretty much focused on the domestic markets have survived this
crisis time. However they have also been the target for this general slowdown
due to the fact that the Indian companies have cut down their IT investments
considerably.

Almost every SP feels that the industry has seen a cut down in the IT
investments. But with the downturn in perspective, innovation is the buzzword
for sustaining during this rough patch.

With every organization cutting its investments to the core, there is no
denying that they will still consider ERP, CRM, SCM or FMS deployments. This
could be because they want to improve their efficiency to deal with the
competition and improve their bottom line or because the project is already
underway and completing it is the logical recourse.

Does this mean that a recession can't touch SPs, who are concentrating on
these solutions? Not necessarily! None of the SPs DQ Channels spoke to felt that
this period of slowdown is a boom time for them and concentrating on the
solutions would be an ideal route to escape the crisis.

“Honestly, I would like to agree with this thought that concentrating on
these solutions would be an ideal option. But I would also like to share a
thought that even these solutions are also counted as investments. In that case
if there is a cut in the IT services, it would be irrespective of any particular
service,” said Bhavnani of Visesh. He felt that if the clients try to hold their
reins then the SP's would feel the strain.

Shah of Ashtech feels that both the hardware and software solutions are
inseparable and go hand in hand. “You can't buy one and avoid another. If you
are installing the solutions, you need to upgrade the hardware too. So the fact
that solutions are being implemented without hardware is absolutely baseless and
you can't call this point of time as any boom for the SP's,” he said. He also
noted that the implemen­tation of solutions is on going process and it's
completely subjected to the requirements.

Even Ajay Mian, CEO, All eTechnologies echoes the same thought of that of
Shah. “I don't see any companies cutting down its IT requirements and still
installing the solutions. Hardware and solutions are always the combination and
both can't work by cutting down each other,” he claimed.

Ravi Verdes, CEO of Bangalore's Frontier Business Systems stated that due to
this impact the decision-making on the investments have become slow. “I can see
that the investments decisions have been a little slow. However the
implementations of solutions is a regular process and its all necessity driven.
We can't call this as a boom time for the SP focusing on the solutions, as every
SP has plethora of services to provide and he can't restrict himself to a
particular service and he usually doesn't,” Verdes claimed.

Mindset change

If the slowdown is the lock then the innovation is the key for growth feels
most of the SP's. More innovation is required from the customer's side and only
those who can offer innovative services would be able to stay in the race. One
has to find most viable solutions and offer different services to get out of
this ripple effect.

According to Mian, focusing on domestic market will considerably save the
SP's from the ongoing slow economy. “We are trying to focus aggressively on the
domestic market, as it hasn't been much affected by the impact of US recession,”
Mian said.

It is the right time to move to different verticals and cater different
services according to Ravi Verdes of Frontier. “Most of the SP's sticks to IT/ITeS,
however during this point of time they can start catering to different verticals
like manufacturing, educational and government, where the huge chunk of business
is available. Moreover there won't be any hiccups in those verticals as present
in the IT industry,” Verdes opined.

According to Shah, cost cutting in the services while delivering would be an
ideal way to react to this crisis time, as even the companies soul aim would be
in cutting their costs. The SP's also feel that this is also the right time to
look out for other markets apart from US and Europe like APAC regions.

Most SPs felt that this is not a closure period or a time to panic but a time
to show their endurance character and resilience ability, which no doubt each
one of them are showing and will keep showing.

Solutions to the rescue

Irrespective of whether there is a recession or a slowdown, as a SP there
are two things you can do in this situation. You can either worry about how you
will sail through the period or you can buck up and get smart-focus on products
that offer better return on investment (RoI), lower total cost of ownership and
cost savings.

The recession will force inefficient companies out of business. But you can
actually turn this situation in your favor and see it as an opportunity to
leverage on.

The first step is to identify the products and technologies that offer low
operating costs and better RoI. Secondly, advocate products where end-users can
easily understand its benefits and that are appropriate to their budget.

Virtualization

Products like thin clients, tapes, servers, videoconferencing solutions, etc
are all going to be 'in-demand' and thus SPs should cash on to the opportunity
by dealing in such products to grow their business.

Take thin clients for example. For a setup that is looking at acquiring more
computers but doesn't have the bandwidth financially to buy them all, a simple
solution is to go in for thin clients. According to NComputing, a virtualization
software and hardware company, an average person uses less than 10 percent of
the capacity of their PC. The rest is wasted.

NComputing taps into the other 90 percent, so that multiple users can
simultaneously share a single PC. Each user's monitor, keyboard, and mouse
connect to the shared PC through a small and very durable NComputing access
device. The access device itself has no CPU, memory or moving parts like a PC,
so it is rugged, durable, and easy to deploy and maintain. The company's
technology lowers desktop computing costs, improves manageability, and reduces
both energy consump­tion and e-waste.

Speaking about how NComputing solutions can benefit a company, Raj Shah,
Chief Marketing Officer, NCompu­ting shared, “There are three key benefits of
NComputing for a company (lets assume small enterprises). One, the initial
outlay for computers is reduced by at least 50 percent. Our X-series costs about
Rs 4,000 per seat. Add on a keyboard, mouse and monitor, and the total cost is
less than Rs 8,000-that is less than half the cost of a dedicated PC.”

Secondly, the support costs are greatly reduced. Instead of taking care of
seven PCs in a small office, only one PC needs to be managed and eventually
upgraded/replaced. “Plus, we reduce electrical costs by 80 percent because the
NComputing devices only use one to five watts of power (compared to 115 watts
for the average PC),” Shah added.

Video communications

While thin clients offer productivity of computers, what does one do when
there is a cost cutting in the company, which affects the travel budgets? How
about suggesting unified com­munications (UC) or videocon­ferencing (VC)
solutions.

Since meetings must go on, SPs can suggest their clients to go for this
solution, which will not only drastically cut down on their budgets, but will
also offer immense convenience for every­one. IP is increasingly becoming a
favored medium for everyone, with the combination of voice, video and data that
it offers.

Speaking about the benefits of IP, Odd Johnny Winge, Executive VP-Products,
Tandberg said, “IP is making more bandwidth available and unified communications
is making the technology more accessible for the user.” Speaking about the
target verticals for VC, Winge shared that the most important market for
Tandberg was the enterprise and public sector market. “The public sector is
growing and more and more public departments and ministries are realizing the
productivity benefits of visual communications,” he added.

Shedding light on how videoconferencing is amongst the greenest technologies
and giving an example of the savings involved, Winge further said, “We have
customers saving more than 13,500 flights and reducing carbon emission by over
5,000 tons after the implemen­tation of our solution.”

Storage

A vendor in the storage segment, Quantum claims that it has continued to see
increasing demand for its backup, recovery and archive solutions. “Especially
hot are the newest technologies like LTO-4HH tape drives, and disk-based backup
with built-in data de-duplication,” said Jim Simon, Director-Marketing, APAC,
Quantum.

“Data de-duplication tech­no­­logy reduces space, power, and cooling
requirements enough to make it practical to use disk as a retention medium for
weeks or months without breaking the operational budget. However, as data needs
to be retained for multiple quarters and years and the demand for fast recovery
diminishes, the most effective retention medium for most users is tape. Tape
cartridges in a tape library consume power at lower rates than any disk system,
and tape cartridges stored in a vault consume the least of all, as well as
providing the lowest aggregated storage cost per GB,” added Simon.

Server consolidation is another feature that many companies are going to be
eying. IBM System p Server Consoli­dation solutions combined with IBM System
Storage offerings enable enterprises to reduce the number of single-application
servers and consolidate them on fewer, more powerful high-performance servers
that are less costly to manage. By deploying a System p5 server, one can expect
the following benefits:

• Reduce the IT infrastructure complexity and cost of management by reducing
  the number of physical servers and the associated floor space and utility
  costs
• Increase operational effici­ency with higher utilization of server
  processor, network and database resources with optional Advanced POWER
  virtualization (standard on select models) and storage virtualization
• Deliver high-performance and reliability features to meet availability and
  performance service levels via IBM POWER5 technology
• Enable flexible growth to meet business demands with Capacity Upgrade on
  Demand (optionally available on select servers)

Green IT

A lot has been said about Green IT, especially as environmental concerns
keep growing. Vendors, the world over, and now in India as well, is turning to
Green IT.

And it's important that SPs also understand the benefits of Green IT and
propagate them. This is because there is often actually a thin line between
economical products that offer better productivity and green products.

While SPs must focus on offering products that offer better cost of operation
and RoI, it is also beneficial for them to understand that these products are
also inevitably environ­mentally friendly. Responding to whether companies in
India are ready for Green IT, Shah shared, “Our product does not force any
compromises between good economics and green compu­ting. The employees get
affordable computing that works just like traditional PCs, and the environment
gets the green benefit of low energy use and e-waste.”

WeP Peripherals has also recently introduced energy efficient UPS. The new
690VA (Volt Ampere) 415Watt UPS enables green mode wherein if minimum load is
not connected to the UPS, it will turn off output power within 45 seconds.

Speaking about the new product, Ramdinsanga Saiwi, Marketing Manager, WeP
Peripherals said, “This UPS has been designed keeping in mind the growing demand
for such products targeting customers across various industrial seg­ments. This
is especially useful in our country because it offers support during
unpredictable power cuts.”

Conclusion

During these hard times, it is imperative to keep a finger on the pulse of
the IT buying of companies. One must understand what the client requires. But
it's not enough to just know what they want. As SPs, your job is also to
customize the solutions to suit the needs of the end-user and make sure it fits
into their budgets. This is sure to get your business on a roll.

RUTH SAMSON and NR SETHURAMAN