Indian SMBs to spend more on software

Companies will fork out US$576 million this year for packaged software--mostly on productivity, OSes, databases and utilities, says analyst.

Spending on packaged software by small and midsize businesses (SMBs) in India will grow 25 percent this year to reach US$576 million, say researchers from Access Markets International (AMI) Partners.

AMI--which identifies SMBs as companies with one to 999 employees--said the bulk of spending will go toward productivity, operating systems, databases and utilities software. These four software categories will comprise close to 70 percent of the overall packaged software spending in India this calendar year, says AMI.

"We expect the market to grow at a huge 25 percent this year [compared to 2005], following last year's similarly impressive growth," said Nirupam Chaudhuri, research manager at AMI. He noted that as most of the purchases will come from channels, IT vendors are increasingly marketing their products through channel partners.

Chaudhuri explained that channels provide both the market reach and the customer knowledge. As Indian SMBs are spread around several clusters across the country, he noted that the reach channel partners provide becomes a crucial factor.

The analyst further pointed out that in the last few years, a number of factors such as the global slowdown in IT spending, the strengthening Indian rupee and the country's growing IT maturity, have resulted in an overall boost to India's tech sector. And, SMBs will not be overlooked, he said.

"There is considerable demand for micro-vertical specific solutions, which are being developed by a few focused ISVs and some major vendors" said Chaudhuri. "These low-cost micro-vertical specific solutions suit the specific needs and [cash] pockets of SMBs."