Indian SMBs to invest US$8 billion on IT solutions

Small and medium businesses (SMBs, companies with up to 999 employees) in India are set to spend just over US $8 billion to beef up their IT infrastructure, up a robust 24% since last year. While computing products will still account for the bulk of IT investments, Internet spending is fast increasing as these enterprises embrace IP-enabled business process services.

This comes from the latest study by Access Markets International (AMI) Partners, Inc. “Growing awareness of computing technology and the benefits of Internet access have resulted in greater IT adoption among India’s SMBs,” says Neha Jalan, Kolkata-based Analyst at AMI-Partners. “Indian SMBs view technology adoption as an effective strategy by which to overcome competition. While reigning in costs is still their primary focus, the phenomenal growth of the Indian economy has made SMBs optimistic about future business prospects.”

That means an increasing number of SMBs are planning to recruit more staff, invest in new facilities, push advertising/promotional campaigns and build their IT infrastructure. AMI-Partners’ survey reveals that 93% of small businesses (1-99 employees) and 86% of medium businesses (100-999 employees) experienced revenue increases in the past year, with 15% of SMBs experiencing an overall increase of over 20%.

“Indian SMBs are eagerly competing with international companies,” Ms. Jalan says. “About 15% of businesses said they will respond to increased competition by boosting their capital outlay and investing in new technology. Technology is viewed as a tool for competitive advantage. MBs in India are adopting increasingly sophisticated technology in an effort to compete effectively with larger conglomerates.”

Investments in computing products such as PCs and printers still account for the lion’s share of SMB IT investments. SBs in India will invest in PC products and solutions. Despite SBs accelerating their IT investments, less than a third of India’s SBs own even a single PC. Among PC-penetrated SBs, over 40% said they considered buying additional hardware and upgrading their existing PCs as an important strategic move. This translates to a phenomenal opportunity for IT vendors eager to tap this latent market.

As businesses evolve, their relationship with customers enters a new phase. Customer satisfaction assumes greater importance, and with the acquisition of distantly located customers, comes the need for mobility and increased communication. Businesses with ‘always-on-the-move’ employees have increased by over twenty percentage points from last year, and recent SMB preferences for more value-added services from their telecom service providers, e.g. advanced mobile applications like mobile e-mail capabilities, IM, etc., are a testament to the increasing need for 24/7 access.

“Greater employee mobility, increased competition and expansion in terms of office locations have prompted Indian SMBs to rely more heavily on the Internet and basic applications,” Ms. Jalan says. “Increased dependency on the Internet also boosts the usage of mobile devices; availing services like banking/bill payment and online travel-booking are recent features among Indian SMBs.”

Buoyed by their adoption of sophisticated enterprise applications, MBs in India are deploying advanced security and storage solutions. Six in ten MBs surveyed listed increased IT storage capacity and deployment of enhanced storage solutions as a key strategic priority, while over half also listed enhancing enterprise IT security to be a key concern. Thus, investments in security and storage solutions are anticipated to grow dramatically in India in 2007.

(This is the press release of AMI Partners, Inc)

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