DCG ponders COD business model

Dubai Computer Group (DCG) has said that it's considering to adopt a ‘cash-on-delivery' (COD) policy as part of its ongoing efforts to 'clean up' the Dubai channel following a spate of reseller runaways in the Emirates in recent months.

The local IT body, which is part of the Dubai Chamber of Commerce and Industry, says it's reflecting on implementing a COD policy among its members as a short-term measure to clear rogue IT companies that come into the market with the sole purpose of causing disruption to the channel's wellbeing.

Shailendra Rughwani, president, DCG, said although the COD policy has not yet been adopted by members, it's one of the many suggestions that are under consideration and was brought forward at a recent association meeting. "We feel this is one of the ways to clean up the market even if this is followed through for a few months. However, we are aware of the challenges this might cause to ‘genuine' companies operating in the Dubai channel. We are considering different views from members with the aim of understanding the consequences and implementing the best option that will be recommended," he said.

Rughwani said the process to recover lost amounts from its members as a result of runaways was progressing well as the DCG has formed committees in the past two months that are working with law enforcement agencies. "Each committee has started taking independent action as per the situation and in consultation with the DCG. The process is lengthy as the owners are absconding not only from the UAE, but their home towns as well. The steps we are taking as DCG are definitive and we are confident of the outcome at least in some of the cases," he said.

Rughwani said that aside from the impending COD policy measure, the DCG has made strides in getting financial transparency among IT companies in Dubai. "We believe that this is our foremost objective but remains a challenge as we are talking about different companies with different structures. It was suggested at our recent meeting to appoint a single auditing firm to be entrusted with the responsibility to audit all the DCG member companies," he said.

He said this would be ideal and will go a long way in controlling the market but the DCG is yet to get consensus from all stakeholders. "These initiatives can only work if all members agree and not just a few companies. We are planning to discuss further on this in our upcoming meetings," he said.

Rughwani said part of the problem in dealing with reseller runaways has to do with the fact that in the current market conditions, it is easy to setup an IT company and get the credit insurance within a short span. "I believe the lower barriers of entry and easy access to credit has exacerbated the problem that is creating a bad name for the IT industry in Dubai," he said.

Rughwani said going forward, the DCG is tightening its code of conduct and implementing strict guidelines for its members to follow when doing business. "We encourage our members to report to the DCG if they see anyone engaging in unethical business practices such as under undercutting and other unethical conduct. We even have a secure portal on the Website where members can log in and report such activities which will be investigated and appropriate action taken," he said.

The Dubai channel has experienced an increase in reseller runaways in recent months after several reseller companies exited the market leaving behind huge debts estimated to be as high as $15m.

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