Hardware Services

By : |July 31, 1999 0

Customer satisfaction has emerged as a key marketing
strategy. Vendors are competing in providing aftersales service and going out of their way
to make customers happy. The maintenance arm of the vendors has become stronger and the
maintenance industry blossomed. Last year, third-party maintenance (TPM) accounted for
5,53,979 units, a growth of 51%. This time round, the percentage growth was 28% due to a
wider base with 7,11,286 machines coming under TPM. In terms of revenue the growth is
17.7%. The number of machines under maintenance under hardware vendors has been declining
steadily as the home and SOHO sectors grow, TPM grows alongside. Assemblers and
GIDs, the
major sellers in this segment, rarely, if ever, provide aftersales service due to which
most users go for TPM. Many users have shifted from system vendors to TPM providers once
the warranty period provided by the vendors ends. The tendency is to get multi-vendor
maintenance to reduce dependence on a single source. The growing SME sector has also
contributed to TPM’s growth since a typical SME unit purchases from the assemblers or
low-end brands without follow-up support.

The corporate sector remained dissatisfied as do single
users and SMEs. While in higher-end workstations and servers vendors rule the roost, for
PCs the tendency is to move to TPM once an annual maintenance contract (AMC) is over.
Major vendors fared poorly on various counts such as accessibility of support personnel,
response time and spare part availability.

Due to the continuing crunch in the market, TPM is growing
since users find it expensive to renew maintenance contracts. Hence, once the crunch
eases, TPM will also decline. However, in defence, one could say that in an age when more
and more vendors are trying to concentrate on their core competencies, diversifying into
maintenance, a different ball game altogether, is unlikely. Unless, like IBM, maintenance
has been a core competence for long.

Big boys make a splash
Last year too the big players retained their hold on the maintenance market. The
top slot went to Wipro Infotech, with a revenue figure of a whopping Rs 83
Following it in second and third places were majors CMC and Compaq. The major chunk of the
Wipro’s revenue came from the company’s maintenance of its own systems and TPM markets. In
the TPM market, CMC retained its hold as the top player, grossing Rs 58
crore. Wipro was a
distant second with Rs 37 crore, closely followed by CMS Computers.

Facilities management, which emerged as a potential growth
area in the previous year, made significant gains last year, grossing Rs 35
crore. The
leading player in the field was IBM Global Services, with a revenue of Rs 10 crore and
other major players were Wipro Infotech and CMC. Other rapidly emerging green pastures are
IT asset management, network management, site planning, environmental engineering and
structured cabling.

What is important for the users is the impact of
maintenance on the cost of ownership. If the average amount spent on maintenance is about
15% of the total money spent on hardware, peripherals and networking products, for the PC
user it is 8% and for high-end machine users it is 20%. On an average, the cost of vendor
maintenance came to Rs 10,234 per machine compared with last year’s Rs 8,314. For machines
under TPM, the average cost per unit of hardware came to Rs 6,748, compared with Rs 7,575
last year. TPM is not only cheaper than vendor maintenance but the price difference is
increasing in TPM’s favor.

The last word
Compared with international standards, maintenance costs much less in India, but
as customer audits show, the satisfaction levels are lower as well. However, maintenance
is likely to emerge as a significant sector as the installed base of systems grows in the
country. Also, quality of the product and maintenance quality are some of the issues which
are critical to productivity, and the Indian IT market is realizing this premise very

Top 20 Hardware Service Vendors 1998-99

Revenue (Rs Lakh)

Rank Company Own Systems Third Party Facilities Management Others Total
1 Wipro Infotech Group 3747 3747 800   8293
2 CMC   5792 780 1368 7940
3 Compaq 7128       7128
4 HCL Infosystems 6000       6000
5 IBM Global Services 3061 147 1034   4242
6 CMS Computers   3700     3700
7 Accel Automation 313 800 100   1213
8 PCS Industries 900 250   25 1175
9 Tata Infotech       1169 1169
10 Allied Digital Services 233 525 119 289 1166
11 Redington India   1101     1101
12 Tata Elxsi   985     985
13 SGI 876       876
14 DDE ORG Systems 624 30     654
15 Zenith Computers 550       550
16 IT&T   276 246   522
17 Nexus Computers 340       340
18 DataCraft RPG   322     322
19 MCS Software Solutions   201     201
20 OA Compserve 5 8 87 70 170


Trends in Hardware Services



Units Value (Rs Lakh) Asv Units Value (Rs Lakh) Asv Unit Growth % Value Growth %
Maintenance: Own systems 415296 42500 10234 426543 37911 8888 -2.6% 12.1%
Maintenance: Third party 711286 42319 6748 553979 41954 7573 28.4% 14.4%
Facilities management 3500 2126 64.6%
Others 5680
Total 93999 81991


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