How VARs Can Help US, European Firms Crack The Indian Market
By now, it’s universally acknowledged among American (and North American and European) IT organizations that India is one of the richest sources of talent in the world. Each year, Indian universities churn out millions of IT graduates, many of whom are skilled enough that companies can put them to work in American companies immediately. Many companies have gone as far as setting up outposts in India, to which they outsource certain development tasks either because they would be prohibitively expensive to assign to engineers in the States, or because they simply don’t have the developers they need to complete the project in their home countries.
This is the Indian technology story most people know. But there’s another Indian technology story that is only starting to be talked about overseas, and that’s the rise of India as a major consumer of technology itself. Between multi-billion dollar mandates from the Indian government for the development of smart cities and Indian entrepreneurs beginning to leverage the talent coming out of Indian, the Indian market is going to be spending a lot more on IT.
Why sell through VARs?
As India’s economy rapidly expands and modernizes, American and European companies are increasingly planning entrances into this market. One might think that because a lot of companies have various footholds in India, such as satellite offices in Indian or relationships with Indian dev-shops, that the transition to selling to this market would be a relatively smooth one.
That hasn’t been the case. Apple, which is perhaps the world’s most famous brand, has had very public woes with attempting to sell iPhones to the Indian market. And while Apple’s is a story of a consumer technology company failing to comprehend the Indian consumer technology market, it illustrates the difficulty most companies will find with entering the Indian market: a severe lack of knowledge.
IT vendors have long known how important it is to understand your market, whether it’s geographically, demographically or vertically-defined. That’s why the strategy of developing a product and then partnering with VARs, who repackage and market the product to align with the needs of various target markets, is such a popular one among software development businesses – even when these companies are selling within their own country.
I believe that for most companies, this strategy is the one that will prove most effective in India as well. Indian VARs know what Indian companies need. They know who the consumers are, they know what the regulations are. And they have the relationships with potential customers. As a new company, trying to replicate that knowledge – especially in a market as complex as India’s – is an expensive and risky proposition. Though it’s true VARs take a cut of whatever they sell, they are undoubtedly the less risky proposition. And if they drive sales of your product, they are certainly worth the cost.
How to start a successful channel program in India
The company I work for, Rocket Software, is actually in the process of expanding our offerings to the Indian market. Like many software developers, we already have development shops in India, and are exploring how our solutions can serve the IT needs of Indian companies and governmental organizations. To do that, we are currently identifying channel partners of our own.
To run a successful channel program, the first thing to note is that you have to choose the right VARs. It sounds simple, but in working with VARs for nearly three decades, we’ve learned that not every VAR is right for every vendor (and there are certainly VARs out there that no company should partner with). Nonetheless, working with VARs has been an extremely successful strategy for us and that’s because we’ve always followed several key principles.
The first is to work out clear and mutually-favorable agreements with the VARs we partner with. Often, the only way to know whether a given VAR is the right seller for your product is to already have experience working with them. For that reason, it is important to specify beforehand metrics and timelines that will determine whether the trial relationship is a successful one and worth renewing.
Other than that, the most important factor to consider when identifying potential VARs is the culture fit. Try to find partners that share your values and goals. And try to find VARs that you and your employees enjoy working with. A VAR relationship is just as much a personal relationship as it is a business one. The better you two get along, the easier it is for the VAR to believe in your product and the easier it is, in turn, for them to sell it.
India: A new frontier for IT vendors
India is one of the world’s great economic success stories, and the emphasis of its people and government on STEM education has been a major contributor to that success. The next stage of India’s development will mean changes for the global IT industry, as foreign companies increasingly try to sell their products and services to Indian businesses and organizations. Companies that effectively leverage Indian VARs will be well-positioned to make the most of these coming changes.
(The author is MD & VP of Rocket Software’s Centers of Excellence (CoE), India and China.)