Indian SMEs Lead IT Spend Growth In BRIC

The share of Indian Small and Medium Enterprises, in total IT spend has been growing rapidly over the past few years, and now there is evidence that growth in SMB IT spend is set to continue at a robust 24%. This growth rate is the fastest amongst all BRIC countries, with Russia, China and Brazil following at 22.9%, 20.4% and 19.4% respectively.

Further, while business growth and need for efficiency, to meet the challenges of globalization are the main drivers for increasing IT adoption, customer push and compliance needs play important roles in finally triggering the IT purchase decision.

The Microsoft-AMI Partners report on IT adoption in Indian SMEs, 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% stated that IT helped them improve efficiency, a high 39% finally adopted technology to meet the need for regular interaction with large Indian or international customers.

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“Larger customers are more demanding,” says Rajeev Mittal, group director, SME, Microsoft India. “SMEs are forced to provide more customization, improve communication and turnaround time and comply with regulatory norms.”

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

In the 3 distinct ‘adoption waves’ of IT by SMEs, a majority (45%) 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. (10%) are in the ‘connectivity phase’ and use their websites for transactional purposes. The third wave (2%) is where ERP applications, intranets and managed security solutions start appearing, and companies are leveraging the full benefits of IT.

The report makes a set of 5 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 programmes that will enable IT users across SMEs to share best practices both within India and across BRIC nations and other countries, and 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.