The pulse of the channel

This year has been characterised by hits and misses for the Middle East IT channel

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By  Clayton Vallabhan Published  November 19, 2012

Which of the following issues presents the greatest threat to the health of your business?

Even though many perceive the market to be showing signs of improvement, the underlying problem for the channel continues to be the erosion of margins on both hardware and off the shelf software offerings. As for factors deemed as threats to the health of their businesses, 39% of respondents felt pressure on margins was the number one threat, while 22% of those polled cited fewer projects and business opportunities in the Middle East as a threat to their survival. Surprisingly, 18% of respondents cited a lack of market visibility as an issues to the wellbeing of their business. Other detrimental factors raised as threats to channel businesses was the inability to finance businesses accounting for 2%, inability to manage costs came in at 6%, while those that felt customers delaying payments posed a threat to their business stood at 8%.

Ability to finance the business: 2%
Ability to manage costs: 6%
Customers delaying payments: 8%
Less opportunities: 22%
Lack of credit availability: 5%
Lack of market visibility: 18%
Pressure on margins: 39%

Which of the following issues poses the greatest risk to the health of the overall market?

When it came to the overall market outlook, 25% of the respondents cited the risk of delayed payments as a major issue that could escalate and cause irrecoverable damage to the entire channel. A further 24% felt that over-competition was definitely posing a major risk to the health of the entire market with 27% of those surveyed indicating that the unpredictable end-user demand could be one of the crippling factors for the overall IT and consumer electronics market in the region. Another 12% of the survey suggested that lack of skilled workforce posed a threat, while a further 12% of the respondents blamed reduced credit availability as a factor that could hurt the health of the overall IT market.

Delayed payment from customers: 25%
Lack of skills: 12%
Over-competition: 24%
Reduced credit availability: 12%
Unpredictable end-user demand: 27%

How would you assess the overall financial health of the Middle East channel at present?

Although the regional channel is optimistic about sales and profits, the overall financial health of the Middle East channel seems to leave much to be desired. More than half, 51% of respondents said that the financial wellbeing of the overall channel is no better or worse than it was in 2011. However, what was even more despondent was that nearly 27% perceived the financial wellbeing of the market to be unhealthy. The poll results show the challenges faced by the market when it comes to financial transparency and other related issues in the Middle East. Only 18% of those that participated in the poll expressed confidence that financial stability was returning, with an additional 4% of those surveyed indicating that the market was doing exceptionally well.

Very healthy: 4%
Healthy: 18%
No healthier or unhealthier than usual: 51%
Unhealthy: 27%
Very unhealthy: 2%

How would you currently assess the ability of your customers to meet their payments?

Accounts receivables and cash flow seem to continue to be a thorny issue for those involved in the regional channel. Only 45% of respondents said they have fewer concerns than usual considering the ability of their customers to meet payments. This is a decline of 19% compared to last year’s results where 66% of those polled sayid that they have lesser concerns than usual. About 39% said that they are more concerned than usual this year, up from a mere 10% who felt similarly in 2011. Shorter credit terms being offered by companies reflect this insecurity, but it seems the channel must act more diligently if the issue is to be resolved. Only 12% said that they have no concerns at all regarding the ability of their customers to meet payments.

I am extremely concerned: 4%
I have more concerns than usual: 39%
I have fewer concerns than usual: 45%
I have no concerns at all: 12%

What are your company’s hiring plans this year?

The channel realises the need for more skilled staff in its workforce, both to drive sales, as well as enter new market avenues. This leaves many channel partners looking to urgently hire the right people to deliver added value to their businesses. The market responded with an overwhelming 71% saying that they are actively recruiting and looking to broaden their company’s skill set, whilst also diversifying their product portfolios. About 25% of those polled said that their recruitment plans are currently on hold, compared to 53% last year. This definitely shows the channel is ready to move into new territory and is willing to make an investment in the right workforce for this shift to happen.

Our plans remain on hold: 25%
We are still actively recruiting: 71%
We plan to reduce our workforce: 4%

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