labels: Infotech, Economy - general
Indian SMEs lead IT spending growth in BRIC countries news
22 February 2008

PCThe total spending by Indian small and medium enterprises on IT, which has been growing rapidly over the past few years, is set to continue at 24 per cent, says a new study from Microsoft-AMI Partners.

This growth rate is the fastest amongst all BRIC (Brazil-Russia-India-China) countries, with Russia, China and Brazil following at 22.9 per cent, 20.4 per cent and 19.4 per cent respectively.

Further, while business growth and need for efficiency, to meet the challenges of globalisation are the main drivers for increasing IT adoption, customer push and compliance needs play important roles in finally triggering the IT purchase decision. the study, Report on IT Adoption in Indian SMEs notes.

The Microsoft-AMI Partners report on IT adoption in Indian SMEs, released earlier in the wek, reveals that while half of the 250 surveyed businesses cited the need to manage rapid growth as the key reason for adopting IT and 41 per cent  stated that IT helped them improve efficiency, a high 39 per cent  finally adopted technology to meet the need for regular interaction with large Indian or international customers. The report offers a view of the key trends in the overall business environment of SMEs across verticals and places IT adoption in this perspective.

"Larger customers are more demanding ", says Rajeev Mittal, group director, SME, Microsoft India, "SMEs are forced to provide more customisation, improve communication and turnaround time and comply with regulatory norms.", In fact 30 per cent  of respondents confirmed that standards' compliance was an important trigger for IT purchase. 

The Indian SMEs are on a firm growth trajectory according to the report, with 60 per cent of PC-using businesses expecting 20 per cent growth and 16 per cent planning to add branch offices to expand operations. SMEs are also likely to emerge as dominant recruiters with 50 per cent planning to add over two employees each next year.

One of the softer insights thrown up by the report includes SMEs feeling that being IT savvy enhances their image. 39 per cent of SMEs averred that it is important to keep up with technology trends, while 56 per cent felt that being perceived as IT savvy or 'hi-tech' gave them a competitive edge. 

In the three distinct 'adoption waves' of IT by SMEs, a majority (45 per cent) are going through the first wave of building basic infrastructure - investing in portable PCs / notebooks equipped with anti-virus and office productivity suites.

Internet usage is frequent and a basic company website sometimes exists. Only 10 per cent are in the 'connectivity phase' and use their websites for transactional purposes.

This stage also sees the deployment of LANS, servers and firewalls along with collaborative applications. The third wave, about 2 per cent, is where ERP applications, intranets and managed security solutions start appearing, and companies are leveraging the full benefits of IT. 'Businesses in this segment are witnessing the highest growth," says Raju Chellam, Singapore-based Vice President of AMI Asia-Pacific. "They are also the most ambitious, having learnt to use and connect IT to maximize their workflow efficiencies and save costs and hence see a greater impact of IT on bottom-line." 

The report also shows that SMEs in the retail space, finding trained employees and managing margin pressures a challenge, while for the services segment challenges revolve more around accessing relevant market intelligence and enhancing customer satisfaction. 

The report makes a set of five recommendations that can help policymakers, regulators, IT companies and financing intermediaries to come together to help SMEs overcome the challenges of local and global competition and contribute to country's growth by leveraging the power of information technology.

  • These include industry exchange programs to enable IT users across SMEs to share best practices both within India and across BRIC nations and other countries, 
  •  The setting up of a joint web portal by the industry that serves as a central repository of information for SMEs on ICT related issues, helping them choose the right technology, understand various uses/features in depth and sharing case studies in similar scenarios 
  • The report recommends that the IT reseller and channel community be empowered to service the IT needs of the SMEs 
  • To build a strong pool of IT skilled talent, the report recommends integration of IT into the polytechnics and ITIs in India and 
  • A call to stakeholders to create easily accessible funds has also been made. 

"We hope the industry as well as government bodies will benefit from this effort and will be able to craft tailored programmes / solutions that will in the end only boost the segment that is already well on its way to becoming the growth engine of the Indian economy." added Mittal


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Indian SMEs lead IT spending growth in BRIC countries