AMI-Partners: Indian SMBs to Invest US $8 Billion on IT Solutions This Year

March 14, 2007; 05:34 AM
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.

About the Studies

AMI’s 2006-2007 India Small Business Overview and Comprehensive Market Opportunity Assessment and 2006-2007 India Medium Business Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI’s annual surveys of SBs and MBs across India, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail [email protected], or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.