Wag the dog! SMBs outstrip IT industry pace

09th February 2012
Wag the dog!  SMBs  outstrip IT industry pace

Bangalore, February 9, 2012: Leading globalization and market advisory firm Zinnov, suggests that the small and medium sector of the infotech industry in India may grow faster than the industry average and contribute more than one-third of the domestic spend by 2015.
The study titled ‘Indian SMB ICT Adoption Insights’ provides a detailed analysis of the different opportunities, challenges and scope related to IT spending and technology adoption in the sector.

The study finds that while the overall domestic IT spending is expected to grow at a  compounded annual growth rate of 12% to reach US $ 36bn by2015, SMBs will grow at a CAGR of 15% contributing $ 15billion by the same year. India is home to around 50 million SMBs , of which 10 million are technology-ready. Modern SMBs are investing heavily on tools like PCs, internet and website to market themselves and compete in global /domestic markets.
The study reveals that today 500,000 SMBs in India have websites and two million SMBs are accessing the Internet. Increased adoption of PCs by SMBs is another significant factor that will fuel the growth of this sector. Four million SMBs in the country are using PCs which is expected to grow at 30% from 2011 to 2015, resulting in doubling the base of SMBs with PCs.
The addressable opportunity of 10 million SMBs will continue to increase during 2011-2015 as more firms realize the necessity of organizing themselves with the help of technology. A lion’s share of (8.9 million which is 94%) technology-ready SMBs in the country are very small in size with an employee base of less than10. This clearly shows the increased awareness and interest level of base level SMBs in technology which is also an indicator of India’s technology progress, says Zinnov.

Retail is the single largest vertical by addressable opportunity with an overwhelming two million firms ready for technology adoption and expansion. Around 1.9 million professional services firms go to make up the second in the list followed by 1.2 million manufacturing enterprises and 1 million Hotels &Restaurants. By 2015, Retail will stand at 2.5 million n, followed by Professional Services at 2.3 million, Manufacturing at 1.6 million n and Hotels &Restaurants at 1.1 million n enterprises. Not far behind is the education segment which is expected to grow to 1.1 million units from the current 0.9 million units.

Says Kishan Bhat, Manager, Zinnov, said, “The Indian market is promising and challenging at the same time. We are optimistic about the growth outlook but there are serious concerns which need to be addressed immediately. Majority of SMBs still perceive IT adoption as a time consuming and complex process and therefore, prefer to stick to their existing traditional processes. There needs to be a categorical shift from legacy systems, and some fresh investments made from a long-term growth perspective.”