Hardware: Buy Or Lease?

By Team Digit Published Date
01 - May - 2007
| Last Updated
01 - May - 2007
Hardware: Buy Or Lease?
"Buying means economical benefits and flexibility in operations"

Dr Agrawal's Eye Hospital Ltd is a listed private hospital. It has six branches in Chennai, and others in Jaipur, Trivandrum, Trichy, and Salem. The Hospital provides eye surgery along with ophthalmic services, and is also involved in research on ophthalmic subjects. Through the Eye Research Centre, free eye camps and free cataract surgeries to the needy in rural areas of Tamil Nadu and Andhra Pradesh are also conducted by the hospital.

"When we just started off with the hospital, we considered two major reasons for getting hardware for our hospitals-affordability and the availability of manpower to maintain it. Our services at all 11 branches are open 24 hours. Our daily use of hardware includes computers, printers, and other miscellaneous peripherals.

"We could not take the risk and afford to wait for three to four hours for a service engineer to fix our hardware: time was a major factor that made us decide we should own our hardware and have a team to manage it.

"Today, we buy our hardware-such as the latest high-quality printers, cartridges, and more. We have a team of IT engineers to provide us support services for all of these.
"Since we own the hardware, we sell them and buy new ones every two to three years. The payment and tax benefits we used to get earlier when we leased hardware are now covered, since we're well off with increased efficiency and prompt services.

"We definitely recommend buying hardware over renting: it means economical benefits and flexibility in business operations. You can have the latest hardware and support round the clock. Small enterprises who are just starting off, though, can think about renting hardware."

"Time was a major factor that made us decide we should own our hardware"

V Suresh, General Manager-Operations, Dr Agrawal's Eye Hospital Ltd.
"We're free from technological obsolescence"

Vcare Call Centers India (P) Ltd is a wholly-owned subsidiary of Call Centers India Inc., Seattle, which provides voice services with technical support to small, medium, and large organisations. They offer inbound services for Direct Responsive Television Marketing (DRTV) advertisements, outbound cold calling and telemarketing services, online research services, chat services including SMS chat, and e-mail support. The company currently serves 15 clients.

"We've leased IT hardware in our premises through CISCO Capital's leasing programmes. We have over 250 employees using the hardware with no trouble so far. We had estimated a number of benefits of getting hardware on lease, amongst them the fact that we'd be free from technological obsolescence.

"Upgrading any hardware is possible by incurring upgrade fees as decided with the vendor, and the latest hardware can be installed. Other financial benefits we enjoy are that we could appropriate the lease expenses as operational expenses, so they can now be skipped to be represented in the balance sheet. Also, we could convert our capital expenditure to other investments in accordance with our requirements.

"The cost of ownership of hardware is lowered, as we get different lease options. Regarding technological obsolescence, you can buy the hardware at the end of the lease period if you think it still suits your needs at the lower price, or return it.
"Leasing of hardware is recommended for business enterprises because they get the benefits of technological obsolescence, and strategic planning for enterprise expansion can be done securely. Yet, before going with this option, an organisation has to plan their future cash flow well to cover the expenditure of the lease. Other appropriate costing and minimal expenditure benefits can be enjoyed along with tax benefits."

"Before going with this option, an organisation has to plan their future cash flow well"

Sandip Mehra, CEO, Vcare Call Centers India (P) Ltd

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