Ready to serve

Service contracts present a win-win situation for both clients and integrators. Hurrairah bin Sohail looks at the state of service contracts across Asia and ascertains the steps integrators need to take to be prepared for the future.

The benefits of service contracts in today’s pro AV market are undeniable. They offer system integrators an easy way to escape the rat-race of hardware commoditization, where every product must be aggressively pushed onto the client with ever diminishing profit margins. Instead service contracts allow system integrators to establish a steady revenue stream that can guarantee cash inflow over a longer duration of time.

On the end user’s side service contracts can also prove to be beneficial. Seeing that a service contract eliminates the cost of having to maintain AV staff on payroll the savings can be used to invest in better quality equipment.

Integrators are not blind to the advantages of service contracts. Karan Manral who is the lead for marketing and special projects at Actics, a system integrator in India, said: “When you see profit margins going down on installs, and also going down on products; you need to gain profitability in some other way. Service contracts are an area system integrators should shift some part of their attention to.”

With the benefits to all parties involved extremely obvious, it begs the question as to how prevalent service contracts are in Asia. The answer to that question is difficult to pin down and changes according to the different markets across the region and their varying levels of maturity.

Starting with the mature market of Singapore, system integrators do not see many opportunities for service contracts. However the education sector may be a fruitful area for growth. System integrators in Singapore have noticed a trend where secondary schools have been eschewing procuring equipment in favour of leasing it. These schools are willing to engage in a service contract where, for the duration of the lease, maintenance of the equipment is handled by the contractor.

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