The globalization and market expansion advisory firm

The overall domestic IT spending is expected to grow at a CAGR of 12 percent to reach $36 billion by 2015, SMBs at the same time will grow at a CAGR of 15 percent contributing $15 billion by 2015, according to Zinnov. Zinnov defines a SMB as any organization with less than 1,000 employees. The globalization and market expansion advisory firm said that the addressable opportunity of SMBs will increase to 11 million units by 2015 from the current 10 million units. In an hour long presentation on, Indian SMB: IT Adoption Insights, in the first ever virtual channel cast organised by CRN, Kishen Bhat, Engagement Manager, Zinnov, highlighted the trends and opportunities, and challenges in IT adoption. The virtual channel cast was attended by 136 registered users—mainly tier-2 partners. He analyzed trends in the Indian SMB segment in two categories, namely, Unorganized and Sophisticated. The unorganized segment represents enterprises with lack of defined business processes, which runs for subsistence and by the 1st generation owners. The sophisticated group is tech-ready, has business processes adapted from industry benchmarks / global best practices, is keen to evolve as an enterprise and, is run by the 2nd generation owners. Sophisticated businesses have an aggressive outlook toward growth and they look at technology as an enabler of business transformation, and this category is viewed as the key driver of technology in the SMB space.

Currently, India is home to around 50 million SMBs of which 10 million are technology-ready. Transforming itself from the traditional pen and paper business culture, SMBs are increasingly adopting technology to run their overall businesses. Modern SMBs are investing on PCs, Internet and Websites to market themselves and compete in global and domestic markets, Bhat said. He said that five lakh SMBs have Websites and two million SMBs are accessing the Internet. “Increased adoption of PCs by SMBs is also 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 thirty percent from 2011 to 2015, resulting in doubling the base of SMBs with PC,” he said. According Bhat, the addressable opportunity of 10 million SMBs will continue to increase during 2011-2015. Off these, 8.9 million or 94 percent tech-ready SMBs are very small in size with an employee base of less than 10. 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. Splitting the SMB market in India, Bhat said that retail is the single largest vertical by addressable opportunity with 2 million firms ready for technology adoption and expansion, followed by professional services at 1.9 million, manufacturing at 1.2 million, hotels and restaurants.  “By 2015, retail will stand at 2.5 million, professional services at 2.3 million, manufacturing at 1.6 million and hotels and restaurants at 1.1 million enterprises. The education segment is not too far behind, and is expected to grow to 1.1 million units from the current 0.9 million units,” he added. 

While the SMB segment is witnessing steady growth, it also has challenges. The main roadblocks are the lack of technology know-how, lack of clarity on return on investments, cluttered product portfolio, high cost for technical support and high investments in legacy systems. Bhat said, “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.” He provided suggestions to vendors and partners tapping the SMB market, which include product localization which is very vital for growing in emerging markets, unique support models to showcase value and reduce the overall solution cost, customized pricing strategies to drive adoption of solutions and, solutions that understand local workflows and can offer a bouquet of services under the same umbrella.

Source: CRN News Network