Small businesses spending big on VPN, firewalls

Small and medium enterprises (SMEs, or companies with up to 999 employees) in India are likely to spend $9.7 billion on information technology (IT) infrastructure in 2008, up 22 per cent over 2007, due to a boom in the overall economy and a rise in the number of small enterprises (small businesses, or companies with up to 99 staffs).

According to a recent survey by New York-based Access Markets International (AMI) Partners, more than 80 per cent of SMEs in India are confident about reporting revenue growth in 2008 over last year.

"The liberalisation of India's economic policy, de-regulation of key sectors and progressive moves toward integrating India with the global economy has been the key drivers of revenue growth among SMEs," pointed out Partha Sarathi Sengupta, manager, strategic market analysis at AMI-Partners.

Improving the Internet or networking bandwidth or connection speed, and helping staff collaborate more effectively, will be the two major issues for Indian small enterprises this year.

According to AMI, SMEs are adopting the latest Internet technologies and 63 per cent of Internet-using SMEs are broadband-enabled, with the current Internet penetration among all SMEs reporting at a little over 60 per cent.

The demand for firewalls and VPNs is expected to surge among medium enterprises.

"VPN solutions experienced a tremendous growth among medium enterprises in 2007 due to increased broadband penetration, increasing notebook users, workforce mobility and a telecommuting culture," Sengupta pointed out.

According to AMI, while a significant number of small enterprises are still at a basic hardware usage level, some of them are reaching higher levels in the maturity chain and are adopting solutions too.

About 12 per cent of the total IT spend by SMEs was on service and support in 2007. Small enterprises spent the bulk of it on computing support services, while medium enterprises (medium businesses, or companies with 100 to 999 staff) spent on network management and development and integration services.

"Larger medium enterprises (companies with 500 to 999 staff) are looking at end-to-end IT services and this will be a major growth engine for the market," Sengupta said.

There has also been a considerable increase in mobile employees across India.

About 42 per cent of small enterprises and 72 per cent of medium enterprises in India have mobile employees. As the economy grows, business travel is on the rise, lending new meaning to the words "mobile connectivity". This, coupled with the availability of wireless technology has resulted in a mobile boom.

Notebook PC penetration currently stands at 22 per cent among small enterprises and 86 per cent among medium enterprises in India.

According to AMI, affordable mobile computing products, the cellular explosion in India and wireless LAN, have contributed to the current growth of the notebook market.