Seven Seas announces major restructure
UAE-based solutions provider Seven Seas Computers has announced a major restructure to move the emphasis of its business from low-margin, high volume PC sales to high end enterprise and consulting business, at the cost of 29 jobs.
Seven Seas Computers has announced a major restructure, to focus resources on the high end enterprise market. Twenty nine jobs will be lost as a result of the reshuffle, which the UAE solution provider says has been necessitated by declining margins in the lower end of the market, mainly branded PCs and PC accessories.
“This is a refocusing of our efforts, we are addressing the marketplace with a model that is economically viable and profitable,” said Mehboob Hamza, director of Seven Seas. He said that margins on low-margin, high volume lines had eroded so far that it was no longer economical to address those lines using a traditional model of selling: “It is a case of changing before changes hits us.”
The company will expand staffing on the high end and in its growing consultancy business, while deploying more technology-based solutions to cater for the low end. Most of the redundancies will be at this end of the business.
“This definitely not an exit from the lower end of the market, this is a refocusing of our efforts,” explained Mark Richards, general manager of Seven Seas. “The reality of the marketplace is that the margins are no longer high enough to sell directly and to manage accounts properly. We could reduce the cost of the sales force, but that would mean putting lower quality sales people in front of the customer, and that would mean diminishing the companies reputation. We prefer to go through call centres and the Internet and have a dedicated sales team for that high volume business that will use technology to be more effective in their approach.”
Richards said that pressure on PC pricing had gotten so bad that change was inevitable. He described the job losses as “painful but necessary”, saying that margins had gone below 2% on some volume business, particularly highly competitive government tenders. “What is really amazing is the number of companies that are still addressing this business,” he said.
Richards said that the IT business was still healthy in the region. “Our revenues grew by 45% last year, this year we anticipate the same growth, and of course, with this refocus then our margins will increase significantly higher than that.”
The restructure is already under way, with a CRM package from SalesLogix being deployed, and its Dubai customer service call centre being expanded to cater for sales support as well. The company’s website, www.sscomp.co.ae, will also be promoted more intensively to drive business through online channels. “The business that was profitable can still be profitable, based on a model that supports the revenues, margins and costs structures. This business model redesign is in sync with our major partners, like Compaq, that already have an eCRM model and approach to SME customers. This gels well with their delivery system,” said Hamza.