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Outlook for 2010 remains positive with a predicted rise in IT spending by nearly 9%, says AMI study

Bangalore, India – May 27, 2009 – India SMBs (small and medium businesses, with up to 999 full-time employees) are gradually recovering from the stagnation experienced during the economic downturn and are moving ahead, hiring new employees, opening new sites and marginally  increasing spending on IT. The overall spending on IT by India SMBs totaled US$9.9 billion and is predicted to rise by over 8% in 2010, says New York-based Access Markets International (AMI) Partners, Inc., a leading consulting firm specializing in IT and Telecom sectors.

“India SMBs are gradually shrugging off the laid-up effects of the economic downturn and utilizing information technology as a key tool to remain competitive,” says Ms. Swati Sasmal, Sr. Director - Research at AMI-Partners, India.

A significant proportion of India SMBs are well on their way toward the Second Wave of IT adoption. Some are even likely to migrate to the third. The key booster of this rapid adoption of technologies is the Internet. Its growth has promoted the usage of various Internet-related technologies, e-commerce, e-purchase, website adoption and also the intranet (for better intra-firm collaboration). The focus on collaborative technologies is also borne out by AMI SMB survey results. Over 40% of India SMBs are likely to focus on strategic IT issues that help employees collaborate more effectively and productively through technology.

“Our study shows, that within spending categories, Internet shows the fastest year-over-year growth,” noted Ms. Sasmal. “In value terms, this sector occupies the second-highest portion of the IT spending pie at present, behind computing. The increased adoption of most technologies and applications within India SMBs has been a direct or indirect consequence of availability of the Internet and broadband access.”

Due to increased competition, India SMBs also focus on building a long-term, real-time relationship with customers in a bid to cement customer ties and customer loyalty. “AMI results mention that close to well over half of India SMBs are striving to improve their existing customer experiences and retention in the next quarter; moreover almost half of them would like to invest in new customer acquisition activities & methods,” indicated Ms. Sasmal. This bears out the emphasis of India SMBs on CRM. The need to focus on retaining customers is all the more important when one realizes that the cost of acquiring a new customer is much more than that of retaining an old customer – further, this cost-concern is all the more relevant in the aftermath of the economic downturn. Although the current contribution of CRM spending to overall IT expenditure of India SMBs is quite marginal, the future holds considerable promise.

“Irrespective of business models, industries, geographic locations or IT resources, SMEs share a common requirement of a transparent and scalable technology that provides long-term investment protection and remains responsive to changing environments. SMEs in India are witnessing IT adoption from the very beginning to the ‘last mile’ of their business operations”, said Deb Deep Sengupta, Vice President SME and Channels, SAP India. “Today, Enterprise applications offerings for SME customers help them achieve faster time to value, allows effective use of resources and accelerates decision-making capabilities with instant and complete business information and insight. Also readily available are forward looking pay-per use models, to get customers start quickly with extensive set of end-to-end enterprise applications while still having the option to gradually deploy the full, integrated suite at their own pace.”

Another trend among India SMBs is the growth of line-of-business applications that assist in overall business process improvement. The broker in the financial segment, for example, utilizes trading-related software that enables information exchange, storage, and management within ecosystem players—that is, brokers, stock exchanges, and customers. It makes available real-time, updated market information to all relevant personnel.

For customers who want vendors to provide solutions for their needs, customization is essential. So a key task of channel partners is to have the requisite customization ability to provide products and solutions for customers. Looking at the vertical-specific solution needs, vendors should observe the SMB segments by verticals closely and thereby build a strong, focused, go-to-market strategy.

Related Studies

AMI-Partners’ has numerous reports covering different aspects of the India Small and Medium Business Markets. Based on AMI’s annual and quarterly surveys, these studies track a broad spectrum of issues to

• Understand the impact of the economic environment on IT purchase decision-making from an SMB perspective.

• Identify IT and telecom-related mindset, attitudes, expectations, purchases and plans from a quarterly perspective as they unfold during 2009—in particular as the impact of the economic stimulus is felt and the current recession gives way to a more stable economy. • Determine shifts in ICT quarterly spending (QoQ) by comparing across major product categories.

• Track changes in buying process and criteria.

For more information about this study, related studies or AMI-Partners, email indiaresearch@ami-partners.com.For our global SMB research, e-mail ask_ami@ami-partners.com or visit our web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence — with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and ―go-to-market solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.