PC spend by Indian SMBs to pick up

Nearly a third of small and midsize firms in India hold hope for an economic revival within three months and 23 percent plan to buy basic IT goods, finds new study.

About one in four small and midsize businesses (SMBs) in India will invest in basic IT products in the next three months, according to AMI-Partners.

On Monday, the research house specializing in SMB research forecasted that 23 percent of smaller companies will spend on items such as desktops. The forecast was based on the current economic conditions, as well as the country's SMB spending in the last three months, it said. AMI-Partners defines SMBs as companies with fewer than 1,000 employees.

In addition, 30 percent of SMBs surveyed by AMI-Partners are optimistic of an economic revival within the same period. PC shipments generally have a close relationship with a country's gross domestic product and other economic indicators, it added.

The new forecast is, however, marginally lower than the purchase propensity SMBs exhibited in the last three months.

Future PC purchases by Indian SMBs, noted AMI-Partners, are likely to be driven by enhancements of compliance requirements and adoption of various PC-based applications, such as accounting software.

According to the research firm, SMBs in the country have not cancelled or shelved IT adoption plans. However, these businesses have postponed such decisions as a significant proportion is experiencing tighter cash flow and sharp declines in revenues.

Indian SMBs, it added, remain receptive to IT expenditure, particularly where it resonates with efforts to enhance productivity, improve customer relations and expand business capabilities.

To capitalize on companies' inclination to spend, IT vendors must identify new bundling opportunities for hardware, software and services, said AMI-Partners. Such IT packages or offerings should provide value-add to SMBs, yet help them cut significant costs.

Given the current emphasis on operating expenditure over capital expenditure, the utility model is gaining favor, the research firm noted. In its survey, 17 percent of SMBs indicated they would very likely invest in software applications if they are available on a flexible monthly, per-user payment structure.

Another promising area is data communication, said AMI-Partners. With the downturn, SMBs making an effort to reduce travel costs are likely to utilize Web-based collaborative technologies such as videoconferencing or VoIP (voice over Internet Protocol) calls.