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Sep, 16 2010

At the vanguard of change

The unorganised business services sector in India is witnessing a major turnaround. The reason: professional competence being brought in by foreign firms, which is changing the way business is being done.

Taking a cue from global trends, the business services segment in India is moving up the ladder, marked by the entry and enviable growth of several foreign companies. The innovative concepts of international firms seem to have caught on the attention, thereby empowering and projecting the services sector for a bigger growth. Affirming the march of the Indian business services industry on the path of positivity, Chandra Narra, Managing Director, Sir Speedy, India, a commercial printing and marketing services provider, states, “As India’s economy (one of the fastest growing in the world) is shining, new businesses are growing at a speed like never before.”

The sectors seeing considerable growth are cartridge refilling, signage, digital printing and marketing services to name a few. The cartridge refilling services segment, which had virtually been non-existent in India till a decade ago, is today making rapid strides both in terms of revenue and expansion. Explaining the situation prevalent in as early as 2006 in the cartridge refilling segment, Naveen Rakhecha, Chief Executive Officer, Cartridge World, India, says, “Refilling was a bad word then. People were facing problems of low-quality unorganised refills. But the negativity attached to this concept has now reversed. Today, even corporates are actively considering this option.” According to industry estimates, the total size of printer cartridges market in India is over Rs 4,000 crore and is growing at about 30-35 per cent year-on-year basis.

Speedy success

The business services sector in India has witnessed the emergence of categories such as courier and logistics, printing and marketing solutions, cartridge refilling, signage and corporate consulting, barter and exchange services. International brands such as Sign-A-Rama, Sir Speedy, DHL, Cartridge World and BBX have been successful in carving out footprints in the Indian market. As per industry experts, the presence of foreign brands in the business services sector has not only raised the levels of competition but has also made branded options available for customers. This has resulted in high moolah for companies, which are now planning aggressive expansion.

Australia-based Cartridge World is focusing on gaining a major share in the Rs 4,000-crore cartridge refilling market in India. States Rakhecha, “It has been over three years of fantastic performance for us here. India has emerged as the fastest growing country in the Cartridge World system. ” Sharing the expansion plans, he adds, “Currently, we have over 81 operational stores across 36 cities and 20 more stores will be launched within the next three months across India. We will continue to expand rapidly.”

Outlining the expansion plans of US-based signage company, Ravi Venkatramani, its Master Franchisor in India, explains, “Sign-A-Rama has spent the last few years priming itself for growth in India. We have successfully proven our business model in Chennai and Hyderabad and are now ready to roll out across the country. We will soon have stores across south India and then move onto other territories of the country. We have agreements in place to start more franchises in Chennai, Hyderabad, Mumbai and Coimbatore later this year.”

Another global player, DHL has emerged as one of the game changers in the express and logistics services, an industry that has not got the deserved recognition. The growth curve for DHL came due to the brand value it added to the segment apart from pairing with Blue Dart, its local partner in India. Commenting on the growth factors, R.S. Subramanian, Country Manager, DHL Express, India, explicates, “The fact that we have best in class infrastructure in terms of service centres, gateways, proficient tracking systems and superior customer service have helped us in building this brand value further. Moreover, the fact that we have the leading domestic express company Blue Dart as our domestic partner gives us the added merit. Blue Dart’s local knowledge combined with DHL's global reach is a key competitive edge, delivering maximum value to businesses across India.”

Likewise, barter and exchange services, though a relatively new concept, is gaining ground rapidly. Going by the industry estimates that put current barter trade volumes in India at Rs 120 to 130 crore, Amar Chandhok, Chief Executive Officer, BBX, India, is upbeat about the positive scenario. Highlighting the company’s growth, he says, “BBX in India started operations in November 2008 and established the first company-owned franchise in New Delhi within the first six months. Since then, we have set up two more franchises in Kanpur and Mumbai to facilitate member growth and capture potential trade, taking our total member base to around 600 businesses across the country.”

The inception of branded products is also one of the factors making a difference in the business services industry. This is evident from the escalating demand for dependable quality products delivered by the foreign companies. As Rakhecha points out, “With Indian business services sector going branded, products come with a guaranteed quality. We believe quality speaks for itself and thus, along with ensuring efficient services, we are focusing on ensuring that we deliver our promise of OEM quality, affordable price every time without fail.”

Domestic deadlock

With growth comes the challenge. There is stiff competition from local players, lack of awareness among people and an unorganised market that act as roadblocks for foreign firms.

Venkatramani explains, “Challenges that foreign business services brands face in India often come from the differences that exist between the foreign brand’s product or service and what is currently being offered in India.”

Lack of awareness among Indian customers is one of the main impediments that foreign companies face. Says Chandhok, “One of the key challenges was to create awareness about the concept of barter in the current market domain (especially the small and medium scale businesses), which is dominated by cash. It was imperative to ensure that the marketing/sales team was professionally trained to understand the nuances of both the cash and barter economy and was able to clearly present the advantages of participation in the latter.”

So, what’s the key to success? Venkatramani suggests, “To be successful, foreign brands should make Indians change their habits or help them form new ones to incorporate the brand into their lives.”

Opines Rakhecha, “The key to success lies in differentiation and consistent customer education. The organised segment of the aftermarket industry needs to put in extra effort to interact and educate this segment effectively.”

For Sir Speedy, the growth and success of the brand in India is defined by a cautious move. Elaborating this approach, Narra states, “This is much of a ‘control-go’ strategy. Building our team, establishing relationships and management processes has been critical in establishing ourselves as leaders.”

Besides, acceptability of the services to the cautious and traditional customers in India is imperative in earmarking the brand’s success in the market. States Venkataramani, “Although the brand is foreign, the product and services are not. Sign-A-Rama has been able to carve out a path for itself, as there is a surfacing difference in products. Sign-A-Rama offers greater quality and customer service than the domestic signage providers.”

The ingress of foreign brands in business service franchise has also unleashed a healthy competition. For instance, the presence of foreign brands such as BBX in the barter and exchange services is expected to raise the bar of such services in the market. Quips Chandhok, “Tight competition will have a positive effect on the market and help raise the awareness about the barter concept to a new high.”

However, exceptions prevail. For DHL, challenges were few due to the company’s partnership with BlueDart. States Subramanium, “We faced no such challenges since we had Blue Dart, the leader in domestic express as our partner in India. We provide international express logistics solutions in over 220 countries worldwide and our domestic partner Blue Dart helps us reach across to over 22,000 locations in India.”

Thriving on franchising

Over the years, franchising in the business services sector has emerged as a rewarding and attractive option for foreign companies. Attributing the growth and success of Cartridge World in India due to the franchise route, Rakhecha asserts, “The business service franchise format business model helped us reach and educate customers quickly as the stores are franchisee-owned and operated. At Cartridge World, we believe that franchising by itself is not a business but a way of doing business. Franchising model maximises the chances of success in the quintessentially chosen business and one gets immediate brand recognition. Our franchisees play a very important role in the growth and success of Cartridge World.” According to Venkatramani, franchising is the best way to build brand in the business services sector in India. He affirms, “We believe that franchise is the best way to find great people to join the Sign-A-Rama team and take the brand to greater heights. The role that franchising plays in growth and profit generation for Sign-A-Rama in India is the key. Franchising is about systems, support and community all of which Sign-A-Rama excels.”

For Sir Speedy, franchising has been the key factor to propel its business in India. “Our desire is to open as many franchise locations across India but within a controlled and well-managed process. Our focus is now twofold, continued establishment of the master franchise locations and selling additional franchise locations to highly qualified entrepreneurs,” says Narra.

What’s ahead?

Foreign brands are optimistic about the future with hopes of a much organised business services sector wheeling up to form the backbone of the Indian economy. As Chandhok puts it, “I see the future of barter in India as positive. The inclusion and participation of small and medium scale businesses, small office, home office and service professionals will help gain the required momentum and possibly bring the concept at everyone's doorstep. Venkataramni confides, “The years ahead are ripe for success as the network of Sign-A-Rama franchises extends across the entire nation. The worldwide brand standing for quality signage and great customer service will extend pan India through the franchise network.”

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