Small IT firms look at 65 per cent growth

But challenges are not far behind.

The Small and Medium Enterprises (SMEs) operating in the IT space are confident of achieving a 65 per cent growth rate in the next two years, a study conducted by Dun & Bradstreet, a provider of global business information, knowledge and insight, has said.

Kaushal Sampat, COO, Dun & Bradstreet, India, said, "Given the robust outlook for the Indian IT sector, the scope and role of SMEs have magnified manifold as they gear towards proving their competitiveness at the global level. The study reveals that IT SMEs are confident of a 65 per cent growth in the next two years, surpassing their growth rate of 43 per cent in the last 2 years."

In its study on 'Emerging IT SMEs of India 2007', 244 IT companies with an annual turnover of below Rs 10 crore (as of March 31, 2007), on a pan-India basis, were covered.

Despite the strong growth prospects, the IT SME sector is witnessing several challenges such as the acute shortage of skilled human resources, which is mostly faced by IT SMEs located at secondary and tertiary cities.

The 244 companies operate from a total of 437 locations across the country. Bangalore and Mumbai emerged as the top locations for operations, with 18 per cent and 17.6 per cent of the profiled companies operating from these two cities respectively.

"Overseas presence by 28 per cent of the sample encapsulates the changing trend in the SMEs' perspective, which are now willing to cross borders to pursue growth," Sampat pointed out.

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WHAT THEY FEEL

32 per cent of the companies offer IT services as well as software products

53 per cent face moderate problems in acquiring funding

36 per cent are now looking at cities such as Nagpur, Surat, Guwahati, and Chandigarh to develop centres

43 per cent feel that the withdrawal of tax sops for the IT, ITeS, BPO industry by 2009 will be a very significant factor in terms of deciding future industry growth

IT SMEs derive a bulk of their revenues from the domestic market and only 35 per cent of the companies are involved in exports

Salary hike and withdrawal of tax sops remain topmost concerns for IT SMEs