Globalisation Pushing SMB IT Adoption: Zinnov

Zinnov Management Consulting recently released the findings of an in-depth study on ‘IT Opportunity in Indian SMB Sector’. The study provides a detailed analysis of the Indian SMB market and reveals that the total size of the Indian SMB space today is about 35 million units, with retail contributing 52 percent of the total landscape. Divulging specifics of the IT spend in the segment, the study reports that the spend on IT in 07-08 by the segment was $6.6 billion, which is around 30 percent of the total IT spend in India.

The study defines the term ‘SMB’ as organisations with employee strength up to 999. And clearly divides the segment into three main categories namely retail, manufacturing and services. Of this, the report states that the present retail sector has maximum contribution to the SMB landscape with about 15 to 18 million units. The next sector that significantly contributes to the landscape with 9.5 million units is the services sector, closely followed by the manufacturing sector contributing about 7.3 million units to the same.

The study states that ease and affordable availability of technologies is driving the overall technology adoption among the SMB fraternity, which is evident from the fact that India already has 5,000 IT/ITeS companies that have 100 percent PC penetration. Also, Internet is growing with a CAGR of 46 percent for the last seven years, according to the study. The work identifies a number of macro and micro economic factors that would impact the technology adoption in the sector and would become the reasons for growth.

Deep diving into the IT opportunity of the sector, the study highlights that India has seen an increase in the interest among many IT majors to cater to specific needs of the SMB sector. Growth in Internet and mobile penetration even in tier III cities and rural areas has led to awareness and affordability of technology. Globalisation in trade is further increasing the pressure for better efficiency with the help of IT, according to the study.

Talking about the report, Pari Natarajan, chief executive officer, Zinnov, said, “India’s explosive growth today is driven by its burgeoning SMB sector, which is experiencing revenue increases and double digit growth. Greater employee mobility, increased competition and expansion in terms of office locations have further pushed more SMBs in India to embrace IT and the Internet. In fact, the government today has realised the potential of this growing segment and is now trying to further develop this sector. Most of the big players in the industry, irrespective of the vertical they belong to, are eyeing this ever-growing lucrative market and are aggressively formulating strategies to tap it. All in all, the Indian SMB sector surely promises a very positive growth story.”

Globalisation in trade is further forcing SMBs to improve their efficiency of conducting business, highlights the study. Indian SMBs are exporting their products to the global market and are in direct competition with global players especially from low cost countries such as China and Bangladesh. The study also reveals that a large number of MNCs are entering the Indian market and are thereby offering direct competition to the local players.