Channel unfazed by Tech Data layoffs

One small reseller says he’s not sweating over Tech Data Canada’s latest cost-reducing measure.

Last week the Mississauga, Ont.-based distributor cut 28 jobs in order to accommodate lower sales based on lower volume being available in the technology market.

Tech Data Canada’s president Rick Reid said 22 people were laid off in Mississauga office, with another four in Vancouver and two in Montreal. And “a good number” of those laid off – about 60 per cent – were sales staff who dealt with smaller resellers.

But Wally MacKay, owner of Comox Computer, a reseller in Comox, B.C., said he doesn’t expect the cuts to affect his business because he no longer deals directly with Tech Data’s sales staff.

“Almost all of my dealings with them (Tech Data) are online,” said MacKay, adding that he’s been ordering product over the Web since it was made available in 1998. “They have an excellent online ordering system and that works best for me. I don’t even have to talk to anybody there.”

Reid said his company tried to make the reductions in areas where the fewest customers would be affected. The distributor has been promoting electronic ordering to resellers through campaigns, incentives and relaxed terms and conditions. This has increased the popularity of online ordering over the last three months – especially among smaller resellers who would otherwise be served by a pool of salespeople.

“Because the volume of calls (from smaller resellers) have come down over the last few months, that pool doesn’t need to be as big,” Reid said. “We need less people within the call centre to handle their calls . . . It’s as simple as that – it’s a restructuring.”

The distributor instead opted to hang onto salespeople who deal with the mid- to larger-sized resellers. “There’s more of a small team or one-to-one relationship and a reduction there would have been a very devastating impact on those resellers,” he said.

Reid said the cuts were entirely facilitated by the downturn in the entire technology sector. “It has nothing to do with Tech Data,” he said. “In fact, quite the contrary – our market share with our vendor partners is actually in the worst-case stable, in most cases rising. It’s just that the vendors in general, their volumes are down . . . Spending on IT is temporarily reduced.”

And that affects distributors, who are volume-dependent. “If all volumes are down and revenues are down, you don’t need as many people in accounting, you don’t need as many people on the phone,” he said.

Before opting for layoffs, the distributor introduced a reduced work week for its employees, added Reid, who was among the first to cooperate.

Tech Data’s plan, in the meantime, is to ride out the tough times until the company sees indications of an upturn in the tech sector. “We’ve made the ship a little leaner to put our costs more in line with our revenue expectations,” Reid said. “And we’ll continue to run at that level until it turns around and starts to get back to its previous levels, at which point I’ll go hire another 30, 40 or 50 people to accommodate the growth.”

However, Reid said it’s impossible for his firm to set a rehiring timeline at this point. “It’s a fool’s game to anticipate the change and be ready for it. When it changes, we will immediately start the hiring process.”

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Jim Love, Chief Content Officer, IT World Canada

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