Renting in T&M sector catching up

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With the recent entry of Livingston Group in India, it seems that the new business model of renting in the T&M sector is catching up. Having served various countries across the globe for over 40 years, this UK based company finds great potential for this model in India due to the huge growth and opportunity in the telecom sector. The Indian market is not new to Livingston as it has been operating here for the last four years, catering to the specialised needs of Huawei, Tellabs and ZTE.

By Richa Chakravarty

Thursday, July 15, 2010: Livingston has a range of services covering rental, leasing, rent-to-buy, used equipment, equipment disposal, and calibration management, which will enable its customers to source equipment when and where and whatever time required. The company has agreements with global companies like Agilent, EXFO, Fujikura, JDSU, Ascom and Tektronix, who are their principal suppliers.

“Our approach has always been to follow our customers to where their project is in operation, and since customers like door-to-door service and deal with local partners, we plan to operate in India with an Indian perspective,” says David J Hollywood, group finance director, Livingston India Pvt Ltd.

Scope in rental model

The entire T&M market in India is worth US$ 170 million and by conservative estimates; the share of the rental business is US$ 5 million. Compared to an outright purchase, rentals are getting more popular because of the huge capital expenditure required to procure them, long lead time in deliveries and rapid obsolescence due to advancements in technology in T&M equipment.

Research shows that in the T&M domain, over 50 per cent of purchased equipment is either infrequently or never used after the initial reason for purchase. There are huge benefits that customers can reap through the rental model. Design and R&D departments are constantly looking for innovations in products and business models, and this option seems to be economical and cost effective, as customers have to pay only for the specified period of time. For short term needs, for a specific project or when there is uncertainty about the equipment being used continuously over its lifespan, it makes sense to rent. With rentals, one has the flexibility to change or upgrade without the worry of cost or 

maintenance. Renting seems to be an acceptable concept for the short term because in the long term, say, over a span of four years, the customer ends up paying twice the price of the equipment.

“Our concept makes sense in a way—when the requirement for certain T&M equipment is over, customers can return it and whenever they have a need for it they can always place an order. Meanwhile we can use this equipment in another country,” says Philippe Suel, international development director, Livingston India Pvt Ltd.

“We often receive requests from customers to rent T&M equipment, hence, I see great scope for this model in India,” adds Neeru Gambhir, Agilent Technologies.

The challenges

A major challenge for Livingston is to create an edge over its competitors as there are a number of players in the T&M market. Pme India and Toshniwal Corporation are among a few players operating with the same business model. Toshniwal Corporation is one of the first Indian companies to start T&M rentals as an organised business. Livingston has already made a mark globally and has an overall inventory of around US$ 90 million, with the average age of the equipment being two years. Each year, the company purchases between US$ 17-20 million worth of new equipment, stocking 200 pieces of equipment of the same model.

“It completely depends on how customers accept this model because educating them about the benefits of renting, in terms of pricing, is itself a major challenge,’’ says Sai Venkat, Tektronix India Pvt Ltd.

With updated state of the art inventory, quality service, timely supply of equipment (within seven days of placing the order), high standard of maintenance, immediate availability of equipment and the capability to invest, Livingston is sure to make a niche for itself.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine

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