SPs are the Flavor of the day

Around one and a half years back, we at CyberMedia decided to reposition this
publication. This decision came about because of the emergence of new shining
stars of the Indian IT industry-the Solution Providers (SPs). The idea was to
recognize the increasingly important role played by the SPs.

So, over the next six months or so, we gave DQ Channels a complete makeover.
Yes, there was a lot of skepticism from other trade media-which was natural-and
also from some sections of the industry. However, one year down the line,
everybody now acknowledges and applauds what we embarked on.

And our position has been doubly vindicated by the announcement of IBM
acquiring Network Solutions (Netsol), which has been the number one SP as well
as channel partner of the country for the last two years. Undoubtedly, the Big
Blue couldn't have chosen a better SP to acquire.

Netsol has very good skills in a whole gamut of services including
infrastructure management, network design and implementation, structured
cabling, network management, remote management, IP telephony, convergence
solutions, security, wireless etc. Over the last couple of months, this
Bangalore-based major led by a rather low-profile Sudhir Sarma, has been
focusing on security, professional services and remote network management.

In terms of topline also, Netsol towers above everyone. In 2004-05, its
revenue was Rs 203 crore, which was way ahead of the next in the list-Frontier
Business Systems who clocked around Rs 150 crore.

The most interesting part of this deal is the fact that IBM plans to retain
the Network Solutions brand despite the latter being its wholly owned
subsidiary. This clearly indicates how strong is Netsol's position in the
market and IBM's recognition of this fact.

Now that this deal is over, will it open the floodgates for more such deals?
Unlikely, because there are hardly any more SPs who would come close to Netsol
in terms of skills and brand name. However, what this deal will do is turn the
spotlight on

the fast expanding SP community. Now, they will be looked at more closely and
seriously, something which was not there

till now.

But one thing is for sure, and that is, other leading SPs will now fancy
their chances of either being acquired or getting VC funding, which a number of
them need desperately as funding has been an issue with them for quite some
time.

Asim Raina