Indian small businesses don't see need for IT

While they make up over 98 percent of the country's commercial companies, only one in six owns a computer, a new study shows.

Although small businesses make up over 98 percent of enterprises in India, only one in six of such companies currently owns a computer, according to a new study by AMI-Partners.

While over half of these small businesses intend to jump onto the computing bandwagon by year-end, spurring potential sales of 4.8 million PCs in 2005, more than 60 percent still do not see the relevance of technology to their business, says AMI.

One reason for the country's low PC adoption is the perceived high costs involved, noted Dev Chakravarty, senior analyst at the research firm, in a media statement.

"Indian small businesses are definitely price-sensitive when it comes to the purchase of computers," he said. "However, non-PC small businesses have clearly stated that there are other factors to consider such as the high cost of PC maintenance/support, and the expense of training courses. Moreover, there appears to be a dearth of PC financing/leasing options and a lack of awareness among small businesses about such finance programs."

In addition, many of India's small businesses are reluctant to introduce IT into their workplaces because of fears that data may get "stolen or copied", Chakravarty explained. And almost 40 percent admitted that they are hampered by the "complexities" of PC installation, support and utilization.

Vendors need to start introducing financing and leasing initiatives that specifically target India's small businesses, and to "spread awareness of these programs and educate small business owners about the advantages of computers", said Chakravarty.

The good news is that non-PC companies also fear being left behind in the race for "business and technological superiority". Over 40 percent admitted being apprehensive that others with PCs and Internet access, would gain a competitive advantage, according to the AMI study. More than a third of the respondents cited direct pressure from suppliers and customers as a motivation for purchasing PCs.

White-box computers still rule the mind space of small businesses intending to purchase a computer in the next 12 months, the study found. Though the gap in pricing of branded and white-box PCs has narrowed, over half of prospective PC purchasers have expressed a desire to buy unbranded PCs. HCL, Lenovo and HP-Compaq are among the respondents' preferred branded desktop vendors.