IT spending by SMBs set to grow: AMI survey

Expenditure on IT and telecom related products and services by small and medium businesses ( SMBs) in India is expected to grow at compound growth rate (CGAR) of 14 per cent during 2003-2008, says the New York-based Access Markets International (AMI) Partners, Inc in a recent study.

Out of the total expenditure of $17.5 billion in 2003, share of IT is estimated to be around $7.1 billion with a forecast growth rate of 26 per cent CGAR. Share of telecom related expenditure was expected to be around $10.4 billion at a growth rate of less than 3 per cent.

The study also revealed nearly 80 per cent of the IT related expenses was expected to be incurred at six major metropolitan areas, namely Chennai, Bangalore, Delhi, Hyderbad, Kolkata and Mumbai.

In the last year, nearly 25 per cent of SSIs that own a PC recorded a more than 10 per cent annualised revenue growth.

The study said PC shipments to Indian SMBs was around 1.655 million units. Shipments were expected to register a 24 per cent CGAR owing to falling cost of machines and the increasing desire to replace existing PCs.

Unfortunately, lack of high-speed internet access could restrict SMBs competitiveness in global markets.

SMBs in Asian nations such as China and Korea enjoyed 46 per cent and 92 per cent broadband penetration, but in India, only 16 per cent of firms enjoyed high speed access.

Currently, implementing cost effective, scaleable, connectivity solutions was the major target of SMBs in the top six metros.

SMBs at these locations spent nearly $48 million in the last 12 months to address security concerns as increased internet use had exposed the firms to risks.

IT and telecommunications spending among SMBs worldwide was expected to touch $868 billion by 2004 end, AMI reported in another study titled "SMB Global Model".

AMI said this figure could exceed $1.1 trillion during 2008, a 7.2 per cent CGAR during 2003-2008.