It's a Not-So-Small World

What's the old Steven Wright joke? "It's a small world, but I wouldn't want to paint it."

That's just about right. Satellite communications, e-mail, the Internet and reliable air travel have made the world an increasingly compressed place. We can reach out to anyone, anytime, anywhere.

At the same time, though, the world is expanding. According to Gartner, global spending on IT goods and services will approach $3 trillion annually by 2008. And guess what? Most of the world buys exclusively indirect. That's a tremendous opportunity for solution providers willing to take the plunge into the international channel.

But that foray isn't reserved just for top players on the VARBusiness 500. A VARBusiness Quick Check survey found that 18 percent of solution providers are conducting some business internationally, reaping one-fifth of their revenue from foreign and emerging markets.

"We're seeing more and more partners go global, and I think that's having a big impact in terms of how we, as companies, approach the partner community," says John Thompson, vice president and general manager of Hewlett-Packard's Solution Partners Organization for the Americas.

Some may say that international business is a game for the giant global integrators; after all, they don't call it IBM Global Services for nothing. Who else can tackle the capital expenses, language barriers, regulations and tariffs than the IGSes of the world? But there are a number of trends that will entice and, in some cases, force domestic solution providers to expand their worldview and think on an international level. Here are a few things to consider:

Vendor expansion. Major multinationals--think HP, IBM, Microsoft and Symantec--are pushing further into the international channel. The emerging markets know and appreciate the indirect model, but they don't have the experience building and selling systems that U.S. solution providers do. That's why vendors are looking to their domestic partners to help train their foreign peers, complement each other's technical strengths and work jointly to develop new markets, particularly in the Big Four regions: Brazil, China, India and Russia.

Global collaboration. There's a good reason why vendors want to pair up U.S. and foreign solution providers: Different experiences and expertise could spur innovation. Meanwhile, U.S. solution providers can use cutting-edge technology to attack problems in emerging markets. Best of all, they can make money doing it.

Get more, pay less. Offshoring isn't just for the Fortune 500. Domestic solution providers can leverage developers and ISVs in faraway lands to build code and custom applications for local customers. Yes, computer engineers in India still make a quarter of what their American counterparts do, but even they are re-offshoring their contracts to cheaper labor in China. Solution providers would do well to leverage the rich global pool of IT talent.

The Indians are coming. Many solution providers are content to forge ahead in their domestic bubbles. But they're not safe. Foreign solution providers are beginning to snap up their U.S. counterparts, creating a foothold in the American market. Eventually, domestic VARs will be forced to look beyond their parochial territories for new revenue streams.

Opportunity. These days, there's little reason not to go international. Everything from professional consulting to managed services can be handled from anywhere on the globe. With a little help from vendors, U.S. solution providers could find themselves playing successfully on the world stage. My best advice: Grab your paintbrush and start at the equator.

LAWRENCE M. WALSH (lwalsh@cmp.com) is the editor of VARBusiness and GovernmentVAR magazines.