TIME TO FIX PROFITS!
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Nov, 01 2011

TIME TO FIX PROFITS!

Ever thought of starting your own IT venture? Want to make money by using your skills? Worried? Don't be, as we guide you through the changing world of IT repair business.

IN inflationary times when prices are sky rocketing, consumers feel the pinch while investing in a product all over again. Rather, they prefer to repair a product and reap the benefits for long. With this comes the role of IT repair services industry, as market's major portion is in a dismantled state, owing to the presence of unauthorised vendors and inexperienced service providers scattered across the nation.

IT repair services industry is not new. It was started a long time ago by the US-based Singer Sewing Machine Company. The industry's potential is huge, as technology product managers/original equipment manufacturers (OEMS) failed to realise the needs of after-sale services industry. Entrepreneurs are hopping on to the eco-friendly ideas to do their bit for global warming. GenNext entrepreneurs have started thinking of increasing their revenues by delivering an after-sale services to tangible products such as mobile phones/laptops or other digital gadgets of diverse brands.

Presently, India's after-sale services market is in a nascent stage. A few years ago, digital repair industry had no significant footprint in the India. But with the assurance of new-age entrepreneurs for constant supply of spare parts and maintenance for installed base of customers, the market has started to gain impetus. It's all about post-sale services that are rendered through service centres, serving as a one-stop-shop for consumer needs. Through their highly skilled after-sales service team, they offer multitude of services for almost every brand.

The IT repair services industry is fast catching up in India with the introduction of franchise-operated service centres that are devised to ensure quick response, offering enhanced personalised services of various brands to customers. These exclusive service centres are well-equipped with trained service engineers to handle all kinds of repair-related queries.

We have handpicked a few companies that offer chip-level services to all types of customers, including business clients.

Club Laptop: Life savior

After popularising cartridge refilling business, Club Laptop stores, conceptualised by a team of four persons, figured out market gaps in the IT and services space. ”Despite the market for laptops growing exponentially, manufacturers were not keen about the after-market. Before Club Laptop, standards offered in India were restricted to unorganised sector, which were not in a position to offer turnaround in times, security and quality,” notifies Samit Lakhotia, Co-founder Director, Strategy and Business Development at Club Laptop.

As far as laptop after-care market is concerned, it is completely unorganised and for this, Club Laptop has invested on quality and technical proficiency, along with strong partnerships with component manufacturers globally, so that they can cater to a wide range of brands and laptop manufacturers.

Phonecare: One-stop shop

Phonecare, a Mumbai-based brand of mobile phone repair, is the brainchild of Rajesh Dungrani, who is a CEO at Phonecare Services Pvt. Ltd. On highlighting the market scenario, Rajesh Dungrani says: “Today, the IT repair market in India is totally unorganised. There are company-owned or authorised service centres in a few cities. The Indian market is highly unregulated with a large number of non-authorised service centres. Most customers tend to get confused on which vendor to choose due to lack of available information and forums with price being the only decision parameter.” Moving ahead, Dungrani, informs: “We offer complete chip-level repair solution for all mobile phones, laptops, cameras, gaming devices and other digital gadgets.”

Amatra: Chip-level services

Incorporated by CS Srinath in 2004, who, earlier, worked in various MNCs for around 12 years, launched a brand that has grown from 800 sq.ft test and repair centre (TRC) facility to 7,000 sq.ft TRC, 51 employees and providing services to over 300 companies. The company opted for franchising to provide top-notch, chip-level repair services to consumers, who are spread across various regions. With the help of franchising, Amatra also intends to offer certified products at a low-cost with warranty. According to Sathish KS, Executive Director Heading Sales & Operations, Amatra: “Unlike other competitors, who focus on repairing laptops out-of-warranty, AMATRA Gadget Stores offers repair of printers, desktop, laptop, routers, SMPS, UPS etc.”

Dr Mobile: Cellular service provider

Aslam Nayyer, Managing Director of Dr Mobile, started his entrepreneurial journey with a mobile trading business in 1999 with mobile repair as side business. He asserts: “Initially, I was not focussing on repair domain. It was mobile sales. Later, I changed my focus to repair and targeted it as the main area of growth. Niche market and huge potential was perhaps the inspiration behind such a move.”

The company's business opportunity model is a completely repair-oriented. The main aim of selecting a franchise model was the need of organised, credible and low-cost repair services, as the local repairing providers were unreliable, unskilled and exorbitant in pricing. Another reason was the Turn Around Time (TAT), which was high in case of unorganised sector.

Profitability quotient

India’s IT repair services industry holds an immense potential, as majority of the market is unorganised in this segment. A large consumer base wants better after-sale services from industry’s bigwigs. Thus, this industry opens a new boulevard of opportunities for entrepreneurs, who are likely to start a service centre. As far as business scalability and profits are concerned, servicing and refurbishing industry scores well as compared to other industries. As Sathish rightly says: “In IT repair services industry, franchisees generally acquire a profit share of around 20 per cent.” Therefore, the repair industry is set for growth trajectory in times ahead.

Spreading wings

Today, brands opt for franchising model as a market tool for their brand's reach. As demand of repair and servicing of technology products is on the rise, franchisors expect to grab the market's largest share, which is still untapped. Seeing the market's potential, brands are aiming to strengthen their foothold in the market. On expansion, Nayyer says: “If we find a good investor we will be the only major player Pan-India in organised repair business Industry. We can then cross a mark of over 500 outlets in the next five years.” On the other side Dungrani said: “In five years, we see around 1,000 service centres in India. Also, we plan to take our brand overseas. We have already appointed master franchisee for Nepal and are in talks with a few countries.” Phonecare also plans to fill this gap by opening a chain of service centres all across India with presence in small towns and localities. Going ahead, Amatra will be coming up with 50 stores in the next two years.

Surviving challenges

In this hi-tech world, there is a dearth of qualified engineers, sourcing of spare parts and upgrading repair techniques is quite a challenge. So far, Phonecare has established a good sourcing channel from Hong Kong and China. All spare parts are of premium quality and warranty is also assured for repair. Considering this, Lakhotia enlightens: “We have strong partnership with various manufacturers in India and China. This is one of our biggest strengths- the ability to source efficiently and economically, a wide range of components and spare parts.”

Commenting on the same, Nayyer says: “We have our own in-house training centre where candidates are trained in both theory as well as practical aspects of mobile repair industry. We share technical details with our franchisees, as they are our integral part and our quality of service is completely based on knowledge sharing.” As far as franchisee selection is concerned, “We select franchisee with utmost care. A franchisee must have a prior experience in managing a business; he/she should be from service sector. A franchisee should have adequate financial resources and must have a strong entrepreneurial zeal to succeed,” says Dungrani. While KS says: “We provide training for both technical as well as managerial skills. Technical training includes guidance on latest technologies in Information and Communication Technology (ICT), warranty support etc. Management training includes skills like customer relationship, project management, process systems and governance etc.”

Road ahead

Customers these days want high-quality service, especially as they focus on getting a good value for their money. As far as India is concerned, post-sale service takes a backseat. Globally, the market is well-established in terms of offering an effective consumer services. This strategy works well to gain valuable customer insights and can be used at a later stage to introduce better products.

For investors, franchising in IT repair service sector offers a booming opportunity.

IN IT REPAIR SERVICE BUSINESS MARGINS ARE QUITE HIGH. THERE IS NO FIXED PERCENTAGE, AS IT DEPENDS ON THE DEVICE TYPE. FRANCHISEES CAN ENJOY GROSS MARGIN BETWEEN 40 PER CENT AND 60 PER CENT

Scattered market

IT repair market in India is unorganised. There are only company-owned or authorised service centres

Sought-after

The demand for repair and servicing of technology products in on the rise in India

Huge profit margin

Franchisees enjoy around 40-60 pc profits in IT repair business

Branching out

In five years, 1,000 service centres are expected to come up in India

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