SMEs optimistic of recovery

About 92 per cent believe that revenues will increase in 2010.

Most small and medium enterprises (SMEs) — or companies with up to 999 employees — are optimistic about 2010, in terms of overall business activity and profitability.

Verticals such as transportation, healthcare and FIRE (comprising banking and financial services, insurance and real estate), are expected to lead information and communication technology (ICT) deployment over the next three months.

These are the findings of a study by AMI Partners, which specialises in IT, internet, telecommunications and business services strategy.

Likewise, a study by Synovate Business Consulting and Alibaba.com reveals that around 56 per cent of Indian SMEs are optimistic about 2010 in terms of overall business activity.

Around 92 per cent of SMEs believe that revenues will increase in 2010 and that revenue growth will be around 6-15 per cent. Also, nearly 58 per cent believe that 2010 will be better for the performance and profitability of their own businesses.

The Synovate-Alibaba survey analysed data collected from 500 SMEs spread across diverse SME clusters in India and spanning various industry verticals.

Brian Wong, head of global sales, Alibaba.com, said, “The study reveals that despite the recession, the outlook for 2010 amongst SMEs in India is very optimistic, as companies are looking forward to reviving and growing their businesses. Around 50 per cent of SMEs were affected by the recession but more than 90 per cent seem to be confident of improving their revenues in 2010.”

Rati Ghose, senior manager-market insights at AMI-Partners, said, “With limited spending resources, due to recent economic conditions, it has become even more important to see where the pain areas of these verticals lie.”

However, most industries, including major SME clusters, experienced a fall in the number of customers, order quantities and values, coupled with increasing difficulties in managing international customers and increased competition from low-cost producing nations since the economic crisis set in last year.

With a mix of strategies and tools like aggressive focus on finding new sources of supply, exploring new markets, dedicated marketing, cost cutting, multi-tasking and staff training, the SME sector was able to withstand the crisis. Most SMEs in the textiles and ready-made garment industry (69 per cent), the gems and jewellery industry (71 per cent) and gifts and crafts industry (80 per cent) explored newer markets.