Brief

80% of Indian SMBs confident about revenue growth in 2008

SMBs, or companies with up to 999 employees in India, are set to spend $9.7 billion on IT this year, up 22% over 2007, due to a boom in the overall economy and a rise in the number of SBs (small businesses, or companies with up to 99 staff) said Access Markets International (AMI) Partners, Inc’s latest report.

“More than 80% of SMBs are confident about reporting revenue growth in 2008 over last year,” said Partha Sarathi Sengupta, Manager - Strategic Market Analysis at AMI-Partners. “The liberalization of India’s economic policy, deregulation of key sectors and progressive moves toward integrating India with the global economy has been a key driver of revenue growth among SMBs.”

As the level of IT investment increases, there is a change in the perceived role of IT from a support function to an enabler of competitive advantage. SBs have started maturing in terms of IT infrastructure. While a significant number of them are still at a basic hardware usage level, some of them are reaching higher levels in the maturity chain. There is an increased expectation from IT by SMBs. CIO(s) are facing challenges in justifying the value derived from IT investments.

“Domestic demand for IT in India is witnessing a gradual transformation,” Sengupta said. “From being predominantly hardware-driven, to being solutions-oriented. This will result in a growing emphasis on IT services.”

Services stands out in the midst of a huge range of offerings, value-added services and multiple brands. About 12% of the total IT spend by SMBs was on service and support in 2007. SBs spent the bulk of it on computing support services, while MBs (medium businesses, or companies with 100 to 999 staff) spent on network management and development and integration services.

“Larger MBs (companies with 500 to 999 staff) are looking at end-to-end IT services and this will be a major growth engine for the market,” Sengupta said. “MBs are looking for total solutions which can help them achieve business goals which lead to the larger demand of tailor-made services.”

There has been a considerable increase in mobile employees across India. About 42% of SBs and 72% of MBs in India have mobile employees. As the economy booms, business travel is on the rise, lending new meaning to the phrase mobile connectivity. This, coupled with the availability of wireless technology has resulted in a mobile boom.

Notebook PC penetration currently stands at 22% among SBs and 86% among MBs in India. Affordable mobile computing products, the cellular explosion in India and wireless LAN have resulted in tremendous growth in the notebook market.

Improving Internet or networking bandwidth/connection speed and helping staff collaborate more effectively are two major issues for Indian SBs this year. SBs are adopting the latest Internet-related technologies now—63% of Internet-owning SBs are broadband-enabled. Comparatively Internet penetration among all SMBs now stands at a little over 60%.

“The demand for firewalls and VPNs is expected to surge among MBs,” Sengupta said. “VPN solutions experienced a tremendous growth among MBs in 2007 due to increased broadband penetration, increasing notebook users, workforce mobility and a telecommuting culture. Customers are increasingly demanding industry expertise from IT suppliers. The knowledge of verticals is critical for any IT supplier who wishes to engage customers in a meaningful conversation.”