Business: India's first billion-dollar AV integrator?

• Features

• 06/12/2022

A big fish needs a big pond. The first step in determining whether we can eventually have an Indian integrator valued at a billion dollars is to figure out if the Indian market can support a business of that size and scale.

Mradul Sharma, managing director at 3CDN Workplace Tech, says: “I am cynically optimistic about having a billion-dollar integration company coming from India. India offers probably the highest potential in the region. It has the size and it has AV professionals that have the skillsets required in volume and those are essential in completing the equation towards becoming a billion-dollar integrator.”

Rhythm Arora, director at Qubix, adds: “We’re not there yet. But we have to start now to build a billion-dollar integration business in the next three to five years. I think the market is there but there is a lot of work to do.”

Having reached a consensus that creating and sustaining an Indian billion-dollar integrator is possible, it is time to start exploring the challenges that must be surmounted to get there.

Mradul starts by stating: “The biggest challenge is that we are not seeing money coming into the AV industry in India. If you want companies to grow it is important that they are getting investments in the right channels to hire more people, expand and grow. Coupled with that, the perspective of most system integrators is local, and the market is not going to grow with that. And it is not going to attract the private equity firms and venture capitalists which are necessary for the cash injection required to grow.”

Breaking out from the ‘local perspective’ is something that Rhythm also pinpoints: “To be honest, established Indian integrators need to start looking outside of the Indian market. We need to capitalise on our competitive advantages while we wait for our domestic market to mature so we are in position to benefit when that happens.”

However, Rhythm believes that a much bigger change in how Indian AV operates is required if a local billion-dollar integrator is to be created. He says: “To be a billion-dollar integrator you need someone to value your company at a billion dollars. And if you look at integration from a business perspective, we work on a project basis and that means that it is hard to have predictable revenue. Compare that to businesses that have recurring payments for services. It is easier to get a higher valuation if you can demonstrate steady revenue streams. So, to build that recurring, predictable revenue stream to get to that billion-dollar valuation you have to start looking towards offering services.”

Mradul says: “I’ve been a big advocate of manageability as a concept in the AV space. It’s already big in the IoT space because downtime in those deployments has an adverse effect on the business and customers. AV is slowly going in that direction. We can’t be box movers anymore and we need to evaluate our responsibility to our customers. From that standpoint, managed services will become a very important cog in the entire wheel of the AV systems integrator and that is going to give them the recurring revenue they need to move forward.”

While the importance of managed service offerings and SLAs is easily acknowledged, it does not form a core component of an Indian integrator’s business yet. Rhythm explains why: “It is very easy and cheap to hire resources to be present on site once a project is complete to manage the AV tech so much so that most users are willing to take on that burden themselves. With that, there is no meat in managed services left for an integrator. And there is that idea that we want to deliver ‘support free projects’ and we don’t want customers to get ‘hooked on support’ which means that managed services is not really a developed offering.”

Indian AV’s issue with talent do not end there and Mradul expands: “Right now we are at a point where there is a dearth of talent and AV system integrators in India are short of manpower. This is one of the key bottlenecks we have to look at. The investment in the right channels that I brought up earlier, growth of talent in our industry is one of those channels and it is vital for the emergence of the first Indian billion-dollar AV integrator.”

In Rhythm’s opinion, the Indian AV industry’s issues with talent lie in attraction. He says: “There is a lot of talent in India, manpower is not an issue. The problem is that AV is not advertised or known as a career path. When you are doing a job search finding a job in AV is not even on your radar because it is a small industry with a small circle of companies. We’re not as big as IT which is known to offer great packages and has a known career path and when it comes to technology and that is the first preference for college graduates. Infosys, Tata, companies like this are the destination for India’s premium talent and we need to compete with them.”

He continues: “I think as an industry, we need to do a better job of going out there and hiring new people, fresh grads out of college and expand the talent pool. And AV is definitely lucrative because of the margins on products and services, which means that it should be attractive to new talent. Someone will have to take the responsibility to put AV on the map for Indian talent to discover.”

Despite the magnitude of the task being clear and known, Mradul is still hopeful that an Indian billion-dollar AV integrator will be established. He concludes: “In my opinion, the AV industry is the most exciting service industry in the fitout space. It offers significant margins, which might not be consistent from project to project, but have the potential to be consolidated and improved with services. It is one of the fastest growing spaces, the percentage contribution towards AV as a component of the overall package is increasing year by year and these are really strong data points for investors to take note of.”

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