India SMBs to invest $8 billion on IT solutions

KOLKATA

MARCH 20, 2007

Small and medium businesses (SMBs, companies with up to 999 employees) in
India are set to spend just over $8 billion to beef up their IT infrastructure,
up a robust 24 percent 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,”
said 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 percent of small
businesses (1-99 employees) and 86 percent of medium businesses (100-999
employees) experienced revenue increases in the past year, with 15 percent of
SMBs experiencing an overall increase of over 20 percent.

“Indian SMBs are eagerly competing with international companies,” said
Jalan. “About 15 percent 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
percent 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,” said Jalan. “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.