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Indian SMBs leapfrogging the technology curve

Aparna Dutt Sharma, Chief Executive Officer, IBEF

Jul 15, 2014 10:29

Small and medium businesses (SMBs) in India are aggressively investing in IT capability to stay ahead of competition. In the coming years, the growth in IT investments by SMBs is expected to outpace the overall growth in the Indian IT market. While IT revenues from the SMB market are expected to grow at a CAGR of 15 per cent to reach over US$ 18.5 billion by fiscal year 2018, the overall IT market is expected to grow by around 9-12 per cent in fiscal year 2015.

This trend has propelled big IT firms like HP, IMB and Cisco to increasingly focus on this segment with dedicated business units, clearly defined business metrics and focused customer acquisition strategies. HP now defines SMBs as firms with at least 10-15 employees as compared to the earlier definition that regarded firms with an employee strength of over 500 as SMBs. Cisco has devised strategies to tap 18 new Tier 2 cities to increase its penetration in the SMB segment. Cloud based services delivery is proving to be an effective mechanism to lower the cost of technology acquisition for these SMBs. The market for pay-per-use software is expected to grow at a CAGR of 25 per cent to reach US$ 370 million by 2018. Another useful strategy to improve penetration is through in-house financing arms that help these firms avoid large capital expenditures in one go, which is being deployed by companies like IBM.

Without the burden of legacy systems and with the added advantage of cloud and mobile technologies, Indian SMBs have a phenomenal opportunity to leapfrog the technology adoption curve and create sustainable business models in the long run. As trends indicate, they are leveraging this opportunity quite well!