Indian SMBs more forward-looking in IT spend

Alongside expectations of worse times ahead, more small and midsize businesses in India mull over factors such as scalability for IT purchases, finds new study.
Written by Vivian Yeo, Contributor

Small and midsize businesses (SMBs) in India are getting more sophisticated in their IT spending plans, with more than 80 percent of small businesses planning to put in place a formal structure for their IT decision-making process, according to a new study.

Conducted by Access Markets International Partners (AMI-Partners), the study noted that Indian SMBs are becoming more aware of issues such as return on investment and total cost of ownership. Scalability was also increasing in importance--over 60 percent of SMBs said they prefer to buy IT products and services that allow them to scale as they grow.

"Until recently, buying IT products and services was done in an ad-hoc and unplanned manner," said Rati Ghose, senior manager for market insights at AMI-Partners. "India SMBs now consider several factors--including the organization's growth plans, geographic expansion, and manpower additions--before investing in IT."

The study also found that a significant proportion of concerned SMBs anticipate a revenue decline in the next 12 months. AMI-Partners defined concerned SMBs as those that expect the local, regional or global economy to get worse in the year ahead.

Pragmatic and cautious
The financial turmoil has caused many SMBs in India to lower IT budgets and rethink their purchases, said the research firm. Companies are also focusing on the optimal use of existing resources.

"Even before the effects of the current economic crisis were being felt, channel partners had started helping SMBs assess their needs, evaluate their current IT infrastructure and guide them on how to best utilize their resources optimally," said Ghose. "Now as the full impact of the global financial meltdown sets in, SMBs have lowered their IT budgets in the face of uncertain market conditions, liquidity crunch and other macro economic factors."

SMBs, she added, are assessing the criticality of projects, prioritizing and only meeting essential expenses.

According to AMI-Partners, channel players, which themselves are gearing up to provide a more solutions-oriented approach instead of merely supplying products, have an important role to play in helping SMBs in India take a longer-term and more systematic approach in their business planning.

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