India SMBs Turn To IT To Address Current Economic Shortfalls: AMI

As part of AMI’s “2008-2009 India SMB Market Overview Studies, Impact of Economy: Changing Dynamics, Opportunities & Challenges,” AMI has included additional analyses to assess demographics, attitudes, current IT adoption and planned IT purchases among ‘Concerned SMBs’ as compared to the remainder of the SMBs in India. This new business segment was introduced to understand the effect of global recession on India SMBs. AMI defines ‘Concerned SBs’ (small businesses up to 99 employees) as those who expect their local/ regional economy to worsen in the next 12 months and “Concerned MBs” (medium businesses with 100 to 999 employees) as those who believe that the national and global economies as well as the local/ regional economy will ‘get worse’ in the same time frame.

In some areas of technology adoption, ‘Concerned MBs’ are likely to show fewer adoption plans in this time period as they are adopting a ‘wait and see’ attitude regarding future market conditions. However, it is interesting to note that in usage of some technologies (such as hosted CRM and SaaS adoption) these ‘Concerned MBs’ show higher adoption levels than other SMBs.

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“In the era of global recession SMBs feel that they need to maintain better customer relationship management to increase customer loyalty,” says Kalyan Banga, research analyst at AMI-Partners. “SaaS adoption also comes to the forefront since many SMBs are gradually awakening to the intrinsic advantages of SaaS – viz. lower upfront cost and TCO, less maintenance hassles, the ability to reduce IT staff, etc.” About 20 percent of India SMBs indicate that using hosted software applications to supplement internal IT resources will be a key strategic focus area for them in the next 12 months.

The impact of the current economic downturn on local/ regional economies is of greater concern to small businesses than to their MB counterparts. Conversely, these same SBs are not being as greatly affected by changes in the national and global economy as the mid-market firms. “A major reason for this is that most SBs (84 percent) have only a single location, earn almost three-fourths of their revenues from local areas, and operations are mainly confined to local territories,” says Banga.

In addition to the economy, there are several major business challenges facing India SMBs today. More than two thirds of firms state that local competition is their greatest hurdle to overcome, followed closely by increasing customer satisfaction and loyalty, and improving employee productivity. India SMBs are looking for IT solutions to help address the current shortfalls. According to a recent AMI study, 40 percent of India SMBs are seeking to leverage technology to reduce costs/ make processes more efficient and improve employee productivity. As a specific example, over half of India SMBs are planning to improve processes or invest in training to increase employee productivity. Another key technology for India SMBs is CRM software – over one-third of SMBs are considering CRM usage to help them manage customer relationships and retain customers as a key strategic IT issue in the next 12 months.