Indian SMBs up hosted apps spend

Indian small and midsize business spend on hosted applications to reach US$45 million by year-end, with midsize firms accounting for about two-thirds, report notes.

Small and midsize businesses (SMBs) in India will chalk up US$45 million on hosted applications by end 2009, according to a study by AMI-Partners.

In particular, midsize businesses (MBs)--defined as companies with 100-999 employees--will account for 63 percent of the country's total SMB expenditure on software-as-a-service, the analyst firm said Tuesday in a statement. Small businesses, it added, are also increasingly adopting basic hosted applications.

Sumeeta Misra, Bangalore-based research associate at AMI-Partners, noted in the statement that the current economic environment have led cost-conscious SMBs in India to spend less on technology and IT infrastructure. As a result, companies are favoring a hosted model over customized or package-based software.

AMI-Partners attributed the popularity of hosted applications to the lack of upfront investment and "little or no allocation" of time or resources for software deployment and maintenance.

"During the current scenario, it makes more sense for companies to host IT applications with a third-party than managing all of them in-house. The total cost of ownership is decreased further [with the reduction in] hardware and support costs," said Misra.

According to AMI-Partners, the number of Indian businesses adopting software-as-a-service has on the whole grown 8 percent this year and the trend is expected to continue. It expects the country's SMB spending on hosted customer relationship management (CRM) this year to register a 10-percent increase over 2008, while hosted enterprise resource planning (ERP) and supply chain management (SCM) will grow at a "marginally lower rate".

Expenditure on hosted VoIP (voice over Internet Protocol) will also grow at more than 5 percent year-on-year, AMI-Partners predicted, as the Indian SMB market is increasingly attracted to on-demand collaboration applications.

Interest in cloud computing, the analyst firm added, is also on the rise in India as the technology enables customers to pay only for the computing resources they use. AMI-Partners noted the launch of many new products are on the cloud, that allows Indian organizations to use a wide range of services including development and off-premise hosting of managed applications off-premises.

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