Fiscal Lessons For The Future - CIOL News Reports

Fiscal Lessons For The Future

Solution providers need to incorporate learning lessons in their business strategies in order to face the tough situation in future, said Sanjeev Singhal, EVP-Finance and Accounts, Religare Enterprises, during the SP Summit

Amrita Tejasvi

Thursday, February 04, 2010

BANGKOK, INDIA: The world has just witnessed an economic recession and its retreat acted as learning chapters for all the industries across the globe.

Entrepreneurs learnt the lesson of how to manage the cash flow, fund availability, on the other hand allocating and also keeping the RoI on track when the market is squeezed and the space to sell is diminishing. The period that just got over was strangling the arms of small and medium enterprises. They had to be extra careful and strategic for planning their business for the year ahead.

Among everyone, the fraternity of solution providers was also in the same pool where they had to think and think again for deciding their business roadmap, allocating the fund in the right technology and investing in projects that would ensure a consistent and stable RoI.

When top notch SPs from all parts of the country assembled to participate in the SP Summit conducted by DQ Channels in the commercial capital of Thailand, Bangkok, they got the opportunity to interact with Sanjeev Singhal, Executive VP—Finance and Accounts, Religare Enterprises. Singhal, with his vast knowledge and experience shared his thoughts with SPs about the fiscal lessons one needs to learn for future.

Singhal said, “According to IMF, the world has witnessed a great recession and the world economy slowed down from five percent in 2007 to 3.7 percent in 2008. India is expected to grow by 7.7 percent in 2010. As far as the IT market is concerned, the volume of the business will certainly go high but capturing a large market share would be a challenge for the entrepreneurs.” While speaking to partners about the focus areas they should have concentrated on, while planning the business strategies, Singhal mentioned that SPs should enhance their focus on total cost of ownership (TCO).

“Last year was very bad as there was fund crisis but now the credit flow will smoothen and bank and financial companies would ease the fund sanctioning process. Till now it was getting difficult for the customers to get funds sanctioned from banks but the situation is expected to improve soon. However, in IT business, pressure on margins will increase and SPs will have to be smart enough to manage different aspects of funds,” elaborated Singhal. Further mentioning the ways and methods through which partners should be able to get the funds comfortably, Singhal suggested that the SPs need to adopt creativity and innovative methods in their business plans and the budgeting process.

“Creativity and innovation come from anywhere and everywhere. We need to involve people and welcome their suggestions. Solution providers need to be productive, they have to right size their manpower and should keep a benchmark ahead of them. These factors would help them in drawing a business that is protective enough to face a tough situation,” he said.

Elaborating more on the financial aspect of a company, Singhal added that SPs need to distinguish their good and bad revenue and they should posses a good costing system. Also, partners need to analyze their payroll cost, rental cost and communication cost in order to curb the non-required expenditures and if necessary they can opt for contract-based manpower services.

Sharing his view on the same, Ranjan Chopra, Team Computers mentioned that the employer-employee relationship must be long-term and not contract based. “I believe that one should build a long-term relationship with his employees. They should strengthen their potentials that can be used for the company's progress. A sense of ownership should be there among employees, so they will have a sense of belonging for the company. This would help in retaining people with potential and it can be an excellent tool for executing company's plans and strategies in future,” said Chopra. He further added, “Last nine months have been an eye opener for all of us. The business model is changing. Today, customers are more owned by the vendors, as they directly approach them. Funding is very essential to reach out to new levels.”

Singhal pointed out that consolidation has to happen to revive the situation and there are a number of options such as credit, lease finance, factoring, commercial paper and non-banking financial companies funding to do this. “Cash is king and the rest is generated, and in order to do this, funding arrangement should be well planned,” signed off Singhal.

©Reuters