CA to reduce Asian presence

Software vendor will close its Malaysian office, with more downsizing possibly to follow as the company moves to a channel strategy.

This story carries an editor's note. Read below for details.

Software vendor CA is closing its Malaysian office, tallying up to a total count of six offices in the region that have already closed, or that will be downsized soon.

In a statement released Tuesday, the U.S.-based company confirmed its office in Malaysia will be "migrating to a channel partnership strategy" for its sales and account operations.

"We will maintain a direct sales relationship with our large global customers in the region and in their headquartered countries, but the majority of our customers will now be served by independent [third-party] organizations," said CA in the statement.

In sum, the software vendor will no longer maintain a direct presence in the affected markets, where its customers will be serviced by appointed partners.

As a result, the company confirmed that its staff strength will be downsized.

Daphne Chung, Asia-Pacific research manager at IDC's system infrastructure and middleware software research division, said in an e-mail interview: "A more indirect or channels sales model allows vendors to broaden their reach into the customer base at a more cost-effective manner, compared to putting more [its own] sales people on the ground."

According to some media reports, CA's other offices in the region may also see the same fate.

ZDNet Asia's sister site, ZDNet Taiwan, said in a news article (published in Chinese) that the vendor's Taiwan office will be reduced to a six-person team--encompassing technical and finance employees--down from some 60 staff.

CA has no plans to shut its Taiwan office, Hong Kong-based Raj Seth, CA's vice president of corporate communications for Asia-Pacific and Japan, said in an e-mail interview.

While Seth did not comment directly on the company's moves to lower its headcount, he confirmed plans to shift CA's overall regional operations to a channel strategy. He noted that channel partners will become the vendor's "primary sales interface".

According to the ZDNet Taiwan report, CA's Hong Kong office will cease operations from Nov. 28, with its office in Thailand to follow suit at an undisclosed date.

Total tally: six to close?
Last month, CA closed its Philippine and Indonesian offices, bringing the tally to a possible six in the region.

In addition, the ZDNet Taiwan article said the company is currently evaluating options to retain or shut down operations in Singapore and Beijing. CA has five other offices in the region: India, Australia, New Zealand, Japan and Korea.

CA declined to comment on its plans for the other offices.

Seth said: "Our new strategy arises from the realization that to provide a credible local presence, we must have an established local industry leader as our go-to-market entity."

He added that the company embarks on this new regional strategy "from a position of financial strength".

CA reported a 5 percent growth in revenues for its 2007 fiscal year, ended Mar. 31, at US$3.94 billion over last year's US$3.77 billion.

IDC's Chung foresees little disruption for customers as a result of CA's latest plans, but said the software vendor may have to deal with clients that are unused to a channel model.

"In particular, CA and its partners will have to work to win over those customers who insist or require a direct sales relationships with CA, and who do not fall into CA's category for large global customers in the region," she said.

In April 2006, CA's former chief executive Sanjay Kumar pleaded guilty to charges of financial fraud--two years after he was ousted from the company.

Editor's note: CA has issued a clarification since this article was published. Refer to our follow-up story posted on Nov. 22, 2007, for more details.

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